<PAGE> 1
As filed with the Securities and Exchange Commission on August 4, 1997
1933 Act Reg. No. 33-44611
1940 Act Reg. No. 811-6463
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 12 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 14 X
---- ---
(Check appropriate box or boxes.)
AIM INTERNATIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, TX 77046
(Name and Address of Agent for Service)
Copy to:
<TABLE>
<S> <C>
P. Michelle Grace, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the effective
date of this Amendment
</TABLE>
It is proposed that this filing will become effective (check appropriate box)
<TABLE>
<S> <C>
immediately upon filing pursuant to paragraph (b)
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X on August 4, 1997 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on _________________ pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of rule 485
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</TABLE>
(continued on next page)
<PAGE> 2
If appropriate, check the following box:
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant continues its election to register an indefinite number of its
shares of Common Stock pursuant to Rule 24f-2 under the Investment Company Act
of 1940 and accordingly, filed its Rule 24f-2 Notice for the fiscal year ended
October 31, 1996, on December 20, 1996.
<PAGE> 3
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
N-1A ITEM NO.
I. AIM ASIAN GROWTH FUND
<TABLE>
<CAPTION>
PROSPECTUS LOCATION
PART A
<S> <C> <C>
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . Financial Highlights; Performance
Item 4. General Description of Registrant . . . . . . . . . . . . . . . Cover Page; Summary;
Investment Objective and Policies;
Hedging Strategies and Other
Investment Techniques; Risk Factors;
Investment Restrictions; General
Information; Management
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . N/A
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . Summary; Dividends, Distributions
and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . How to Purchase Shares;
Terms and Conditions of Purchase of
the AIM Funds; Determination of Net
Asset Value; Management
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . How to Redeem Shares
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
II. AIM EUROPEAN DEVELOPMENT FUND
<TABLE>
<CAPTION>
PROSPECTUS LOCATION
PART A
<S> <C> <C>
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . Financial Highlights; Performance
Item 4. General Description of Registrant . . . . . . . . . . . . . . . Cover Page; Summary;
Investment Objective and Policies;
Hedging Strategies and Other
Investment Techniques; Risk Factors;
Investment Restrictions; General
Information; Management
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . N/A
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . Summary; Dividends, Distributions
and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . How to Purchase Shares;
Terms and Conditions of Purchase of
the AIM Funds; Determination of Net
Asset Value; Management
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . How to Redeem Shares
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 4
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
III. AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
PROSPECTUS LOCATION
PART A
<S> <C> <C>
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . Financial Highlights; Performance
Item 4. General Description of Registrant . . . . . . . . . . . . . . . Cover Page; Summary;
Investment Objective and Policies;
Hedging Strategies and Other
Investment Techniques; Risk Factors;
Investment Restrictions; General
Information; Management; Portfolio
Turnover
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . Summary; Dividends, Distributions
and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . How to Purchase Shares;
Terms and Conditions of Purchase of
the AIM Funds; Determination of Net
Asset Value; Management
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . How to Redeem Shares
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
IV. AIM INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
PROSPECTUS LOCATION
PART A
<S> <C> <C>
Item 1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . Financial Highlights; Performance
Item 4. General Description of Registrant . . . . . . . . . . . . . . . Cover Page; Summary;
Investment Objectives and Policies;
Hedging Strategies; Other Investment
Techniques; Risk Factors; Investment
Restrictions; General Information;
Management
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5A. Management's Discussion of Fund Performances . . . . . . . . . . [included in annual report]
Item 6. Capital Stock and Other Securities . . . . . . . . . . . . . . . Summary; Dividends, Distributions
and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . . . . How to Purchase Shares;
Terms and Conditions of Purchase of
the AIM Funds; Determination of Net
Asset Value; Management
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . How to Redeem Shares
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 5
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
AIM INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL INFORMATION LOCATION
PART B
<S> <C> <C>
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . . . . . Introduction;
General Information About the
Company; Miscellaneous Information
Item 13. Investment Objectives and Policies . . . . . . . . . . . . . . Hedging Strategies and
Other Investment Techniques;
Investment Restrictions
Item 14. Management of the Fund Registrant . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal
Holders of Securities . . . . . . . . . . . . . . . . . . . Miscellaneous Information
Item 16. Investment Advisory and Other Services . . . . . . . . . . . . Management; The Distribution Plans
Item 17. Brokerage Allocation and
Other Practices . . . . . . . . . . . . . . . . . . . . . . Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . . . General Information about the
Company; Miscellaneous Information
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . . . . How to Purchase and Redeem Shares;
Net Asset Value Determination
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends, Distributions, and Tax
Matters
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . Management; The Distributor
Item 22. Calculations of Performance Data . . . . . . . . . . . . . . . Performance
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 6
[AIM LOGO
APPEARS HERE]
THE AIM FAMILY OF FUNDS --REGISTERED TRADEMARK--
AIM ASIAN GROWTH FUND
(A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
AUGUST 4, 1997
AIM ASIAN GROWTH FUND (the "Fund") is a diversified, series
investment portfolio of AIM International Funds, Inc. (the
"Company"), an open-end, series, management investment company. The
Fund seeks to provide long-term growth of capital. There is no
assurance that the Fund will attain its investment objective. The
Fund seeks to achieve its objective by investing in a diversified
portfolio of equity securities, the issuers of which are located in
Asia or the Pacific Rim and which are considered by the Fund's
investment advisor to have strong earnings momentum or demonstrate
other potential for capital appreciation.
The Fund has the ability to invest all of its assets in securities of
Pacific Rim issuers located in "emerging markets." See "Risk
Factors."
This Prospectus sets forth basic information about the Fund that
prospective investors should know before investing. It should be read
and retained for future reference. A Statement of Additional
Information, dated August 4, 1997, has been filed with the United
States Securities and Exchange Commission (the "SEC") and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the
Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material
incorporated by reference, and other information regarding the Fund.
Additional information about the Fund may also be obtained from
http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
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<S> <C> <C> <C>
SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUND................................. 4 FUNDS--Registered Trademark--.......... A-1
Table of Fees and Expenses............. 4 Introduction to The AIM Family of
Performance............................ 5 Funds............................... A-1
Investment Objective and Policies...... 5 How to Purchase Shares................. A-1
Hedging Strategies and Other Investment Terms and Conditions of Purchase of the
Policies............................ 6 AIM Funds........................... A-2
Risk Factors........................... 9 Special Plans.......................... A-9
Investment Restrictions................ 10 Exchange Privilege..................... A-11
Management............................. 11 How to Redeem Shares................... A-13
Organization of the Company............ 13 Determination of Net Asset Value....... A-17
Dividends, Distributions and Tax
Matters............................. A-18
General Information.................... A-20
APPLICATION INSTRUCTIONS................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND. AIM International Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end, series, management investment company.
Currently the Company offers six separate series portfolios. This Prospectus
relates to AIM Asia-Pacific Growth Fund (the "Fund"). The company also offers
other classes of shares in five other investment portfolios, AIM EUROPEAN
DEVELOPMENT FUND ("EUROPEAN FUND"), 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"),
(collectively, with AIM ASIAN GROWTH FUND, the "Funds") each of which pursues
unique investment objectives. All such other Funds offer multiple classes of
shares to different types of investors. The shares of the other Funds of
the Company have different sales charges and expenses, which may affect
performance. To obtain information about EUROPEAN FUND, AGGRESSIVE GROWTH FUND,
GROWTH FUND, INCOME FUND or EQUITY FUND, call (800) 347-4246. See "General
Information."
The investment objective of the Fund is to provide long-term growth of
capital. The Fund seeks to achieve its objective by investing in a diversified
portfolio of equity securities, the issuers of which are located in Asia or the
Pacific Rim ("Asia-Pacific" companies), and which are considered by the Fund's
investment advisor to have strong earnings momentum or demonstrate other
potential for capital appreciation. Any income realized by the Fund will be
incidental and will not be an important criterion in the selection of portfolio
securities. Under normal market conditions, the Fund will invest at least 80% of
its total assets in marketable equity securities (including common and preferred
stock, depositary receipts for stock and other securities having the
characteristics of stock) of Asia-Pacific companies. The Fund will not invest
in Japanese securities. The Fund may satisfy the foregoing requirement in part
by investing up to 20% of its total assets in securities exchangeable for or
convertible into equity securities. Under normal market conditions, at least
three countries will be represented in the Fund's portfolio of investments. The
Fund may invest, without limit, in securities of issuers located in "developing"
countries or "emerging markets." The Fund may invest up to 20% of its total
assets in securities of non-Asia-Pacific companies.
The Fund intends to achieve its investment objective by using a fully managed
investment policy providing for the selection of securities which meet certain
quantitative standards determined by AIM. The Fund will also seek to spread its
investments among countries or regions in accordance with the investment
advisor's assessment of prospects for relative economic growth, political
conditions, currency exchange fluctuations and other relevant factors. For more
complete information on the Fund's investment objective, policies and
strategies, see "Investment Objective and Policies" and "Hedging Strategies and
Other Investment Policies."
RISK FACTORS. THE FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING
INTERNATIONAL DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH (a)
INVESTMENT IN FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND
ECONOMIC RISK, REGULATORY RISK AND MARKET RISK; AND (b) INVESTMENTS IN "EMERGING
MARKETS," WHICH INVOLVE EXPOSURE TO ECONOMIC STRUCTURES THAT ARE GENERALLY LESS
DIVERSE AND MATURE THAN IN THE UNITED STATES, AND TO POLITICAL SYSTEMS THAT MAY
BE LESS STABLE. IT IS NOT DESIGNED AS A COMPLETE INVESTMENT PROGRAM. FOR A
DISCUSSION OF THESE RISKS, SEE "RISK FACTORS."
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM, together with its subsidiaries, manages or advises 55 investment company
portfolios. As of July 1, 1997, the total assets advised or managed by AIM or
its subsidiaries were approximately $74.3 billion. Under the terms of the
Advisory Agreement, AIM supervises all aspects of the Fund's operations and
provides investment advisory services to the Fund. As compensation for these
services, AIM receives a fee based on the Fund's average daily net assets. Under
an Administrative Services Agreement, AIM may be reimbursed by the Fund for its
costs of performing, or arranging for the performance of, certain accounting and
other administrative services for the Fund. Under a Transfer Agency and Service
Agreement, A I M Fund Services, Inc. ("AFS"),
2
<PAGE> 8
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement and
shareholder services for the Fund. Under the terms of a sub-advisory agreement
(the "Sub-Advisory Agreement") between AIM and INVESCO Global Asset Management
Limited ("IGAM"), IGAM has been appointed by AIM to serve as investment
sub-advisor to the Fund. IGAM is an indirect, wholly owned subsidiary of
AMVESCAP plc, the indirect parent of AIM. The Sub-Advisory Agreement provides
that IGAM will furnish AIM with international economic and market research,
securities analyses and investment recommendations for the Fund's portfolio.
IGAM is not responsible for actual portfolio investment decisions for the Fund
or for the execution of transactions on behalf of the Fund. Under the
Sub-Advisory Agreement, AIM compensates IGAM for its services through the
payment of a portion of the fees paid by the Fund to AIM. See "Management."
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C
shares of the Fund which are offered by this Prospectus at an offering price
that reflects differing sales charges and expense levels. See "Terms and
Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions."
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 date
on which a purchase was made. Class B shares automatically convert to Class
A shares of the Fund eight years following the end of the calendar month in
which a purchase was made. Class B shares are subject to higher expenses
than Class A shares.
Class C Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a contingent deferred sales charge
of 1% on certain redemptions made within one year of the date such shares
were purchased.
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 the Fund and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated
distribution fees and any applicable contingent deferred sales charges on Class
B shares prior to conversion or Class C shares 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. ("AIM Distributors") intends to reject any order for
purchase of more than $250,000 for Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Fund is one of several mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Fund may be exchanged for shares of other funds in The AIM
Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
REDEEMING SHARES. 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 $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 date on which a purchase was
made. Class B shares redeemed after six years following the date of purchase
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Holders of Class C shares of the Fund may redeem all or a portion of their
shares at net asset value on any business day, less a 1% contingent deferred
sales charge for redemptions made within one year from the date such shares were
purchased. See "How to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund declares and pays dividends from net investment
income, if any, and makes distributions of realized capital gains, if any, on an
annual basis. Dividends and distributions of the Fund may be reinvested at net
asset value without payment of a sales charge in the Fund's shares or may be
invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E, THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, LA FAMILIA AIM DE
FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND
AIMFUNDS.COM AND INVEST WITH DISCIPLINE ARE SERVICE MARKS OF A I M MANAGEMENT
GROUP INC.
3
<PAGE> 9
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Fund 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 the estimated average net
assets of the respective classes of the Fund for the first period of operation.
The rules of the SEC require that the maximum sales charge be reflected in the
table, even though certain investors may qualify for reduced sales charges. See
"How to Purchase Shares."
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a %
of offering price)...................................... 5.50% None None
Maximum sales load on reinvested dividends and
distributions........................................... None None None
Deferred sales load (as a % of original purchase price or
redemption proceeds, whichever is lower)................ None* 5.00% 1.00%
Redemption fee............................................ None None None
Exchange fee.............................................. None None None
Annual Fund Operating Expenses (as a % of average net
assets)
Management fees........................................... 0.95% 0.95% 0.95%
Rule 12b-1 distribution plan payments..................... 0.35% 1.00% 1.00%
Other expenses............................................ 0.71% 0.78% 0.78%
----- ----- -----
Total fund operating expenses......................... 2.01% 2.73% 2.73%
===== ===== =====
</TABLE>
- ------------
* Purchases 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 FROM THE DATE SUCH SHARES WERE PURCHASED.
See the Investor's Guide, under the caption "How to Redeem Shares --
Contingent Deferred Sales Charge Program for Large Purchases."
EXAMPLES. An investor in the Fund would pay the following expenses on a $1,000
investment in Class A shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $ 74
3 years................................................... $115
</TABLE>
THE EXAMPLES ABOVE ASSUME PAYMENT OF A SALES CHARGE AT THE TIME OF PURCHASE;
ACTUAL EXPENSES MAY VARY FOR PURCHASES OF $1 MILLION OR MORE, WHICH ARE MADE AT
NET ASSET VALUE AND ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE FOR 18
MONTHS FOLLOWING THE DATE SUCH SHARES WERE PURCHASED.
An investor in the Fund would pay the following expenses on a $1,000
investment in Class B shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $ 78
3 years................................................... $115
</TABLE>
An investor in the Fund 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>
<S> <C>
1 year.................................................... $ 28
3 years................................................... $ 85
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $ 38
3 years................................................... $ 85
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period:
<TABLE>
<S> <C>
1 year.................................................... $ 28
3 years................................................... $ 85
</TABLE>
As a result of 12b-1 fees, a long-term shareholder in the Fund 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, Class B shares and Class C 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 THE FUND'S
ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In
addition, while the examples assume a 5% annual return, the 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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<PAGE> 10
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PERFORMANCE
The Fund's performance may be quoted in advertising in terms of total return.
All advertisements of the Fund will disclose the maximum sales charge (including
deferred sales charge) to which investments in the Fund's shares may be subject.
If any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance will be contained in the Fund's annual report to shareholders, which
is available upon request and without charge.
Standardized total return for Class A shares reflects the deduction of the
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.
Standardized total return for Class C shares reflects the deduction of a 1%
contingent deferred sales charge, if applicable, on a redemption of shares held
for the period.
The Fund's total return shows its overall change in value, including changes
in share price 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 the Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS
SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR
RESULTS. To illustrate the components of overall performance, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses. The stated period for quotations of average annual
total return will be for periods of one year and the life of the Fund
(commencing as of the effective date of its registration statement).
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such a practice will
have the effect of increasing the Fund's total return.
The performance of the Fund will vary from time to time, and past results are
not necessarily representative of future results. The Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund as well
as by general market conditions. A shareholder's investment in the Fund is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Fund.
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund, which is a fundamental policy that may
be changed only with the approval of the Fund's shareholders, is to provide
long-term growth of capital. The Fund intends to seek to achieve its investment
objective by investing in a diversified portfolio of equity securities, the
issuers of which are located in Asia or the Pacific Rim, and which are
considered by AIM to have strong earnings momentum or demonstrate other
potential for capital appreciation. Any income realized by the Fund will be
incidental and will not be an important criterion in the selection of portfolio
securities. There can be no assurance that the Fund will achieve its objective.
The Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of the Fund, as described below and
elsewhere in this Prospectus and in the Statement of Additional Information,
without approval of the Fund's shareholders, except in those instances in which
shareholder approval is expressly required.
Under normal market conditions the Fund will invest at least 80% of its total
assets in marketable equity securities, including common stock, preferred stock,
depositary receipts for stock and other securities having the characteristics of
stock (such as an equity or ownership interest in a company) of Asia-Pacific
companies. The Fund may satisfy the foregoing requirement in part by investing
in the securities of foreign issuers which are in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other
securities representing underlying securities of Asia-Pacific issuers. The Fund
may also satisfy such requirement by investing up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of
Asia-Pacific companies. The Fund will not invest in Japanese
securities. Any change to such policy must be submitted by AIM to the Company's
Board of Directors prior to the effectiveness of such change.
The Fund considers an issuer of securities to be an Asia-Pacific company if:
(i) it is organized under the laws of a country in Asia or the Pacific Rim and
has a principal office in a country in Asia or the Pacific Rim; (ii) it derives
a significant portion (i.e., 50% or more) of its total revenues from business in
Asia or the Pacific Rim; or (iii) its equity securities are traded principally
on a stock exchange in Asia or the Pacific Rim or in an over-the-counter market
in Asia or the Pacific Rim. The Fund also considers shares of Asian or Pacific
Rim closed-end management investment companies, the assets of which are invested
primarily in Asian or Pacific Rim equity securities, to be securities, of
Asia-Pacific companies.
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<PAGE> 11
In managing the Fund, AIM seeks to apply to a diversified portfolio of
international equity securities substantially 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. The 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
the Fund. It is expected that the Fund's portfolio, when fully invested, will
generally be comprised of two basic categories of companies: (1) "core"
companies, which AIM considers to have experienced consistent long-term growth
in earnings and to have strong prospects for outstanding future growth, and (2)
companies that AIM believes are currently experiencing a greater than
anticipated increase in earnings.
If a particular company meets the quantitative standards determined by AIM,
its securities may be acquired by the 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 the Fund, 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.
There are no prescribed limits on geographic asset distribution within Asia or
the Pacific Rim. Under normal market conditions, at least three countries will
be represented in the Fund's portfolio of investments. The Fund intends to
invest in securities of issuers in Asia as well as Pacific Rim countries such as
Australia and New Zealand. The Fund may invest, without limit, in "developing"
countries or "emerging markets." The Fund may invest up to 100% of its total
assets in securities of issuers located in "developing" countries or "emerging
markets." For a description of the risk factors associated with investments in
emerging markets, see "Risk Factors -- Emerging Markets." The Fund may invest up
to 20% of its total assets in securities of non-Asia Pacific companies.
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 the Fund in receiving financial
information supplied by foreign companies than comparable information supplied
by domestic companies. For these and other reasons, AIM from time to time may
encounter greater difficulty applying its disciplined stock selection strategy
to an Asia-Pacific equity investment portfolio than to a portfolio of domestic
equity securities.
AIM may invest a portion of the Fund's assets in (i) cash or high-grade
short-term securities, including repurchase agreements, commercial paper, time
deposits and master notes, denominated either in U.S. dollars or foreign
currencies, (ii) U.S. government obligations or investment grade corporate bonds
or other debt securities, and (iii) taxable municipal securities, when such
positions are deemed advisable in light of economic or market conditions or for
daily cash management purposes. In addition, AIM may invest, for temporary
defensive purposes, all or substantially all of the Fund's assets in the
securities described above. To the extent that the Fund is invested to a
significant degree in cash, high-grade short-term securities, U.S. government
obligations, investment grade corporate bonds or other debt securities, or
taxable municipal securities, its ability to achieve its investment objective of
growth of capital may be adversely affected. Under normal circumstances, the
Fund will invest no more than 20% of the value of its total assets in high-grade
short-term securities. 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, the 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 (c) expenses of enforcing its rights. The Fund intends to enter into
repurchase agreements with sellers believed by AIM to present minimal credit
risk. See "Investment Restrictions."
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HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES
The Fund may, at such times as AIM deems appropriate and consistent with the
investment objective of the Fund, write (sell) covered put or call options and
may purchase put or call options on its portfolio securities. The Fund 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 the 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. The Fund will not engage
in such transactions for speculative purposes. Any change to such policy must be
submitted by AIM to the Company's Board of Directors prior to the effectiveness
of such change.
OPTIONS. The Fund may purchase put or call options. Such options give the 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.
6
<PAGE> 12
The 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 the Fund owns the underlying
security covered by the call. A put option is "covered" if the Fund's custodian
segregates cash or liquid securities 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.
The 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 "collar."
Options are subject to certain risks, including the risk of imperfect
correlation between the option and the Fund's portfolio securities 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.
Options purchased or written by the Fund may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to such options. Such
options and the securities used as "cover" for such options, unless otherwise
indicated, would be considered illiquid securities.
The Fund will not write options if, immediately after such sale, the aggregate
value of the securities or obligations underlying the outstanding options would
exceed 25% of the Fund's total assets. The Fund will not purchase put options
(including options on securities indices and futures contracts) if, at the time
of investment, the aggregate premiums to be paid for such options would exceed
5% of its total assets.
FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held
by the Fund may be denominated in foreign currencies, the value of the Fund's
portfolio 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. The 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 hedge the value of its
portfolio against changes in market conditions or in exchange rates between
currencies (including the U.S. dollar). 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, the 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 the Fund's total assets will be committed to initial margin
deposits required pursuant to futures contracts. Percentage investment
limitations on the Fund's investment in options on futures contracts are set
forth above under "Options." Although the 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, the 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). The 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 the 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, the 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." 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. The 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
the 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 antici-
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<PAGE> 13
pated by the Fund when hedged positions were established. Successful use of
futures and forward contracts and options thereon is 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 Fund may lose the expected benefit of futures and
forward transactions and options thereon if markets move in an unanticipated
manner.
OTHER HEDGING TECHNIQUES. For hedging purposes, the 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.
TEMPORARY DEFENSIVE MEASURES. To a limited extent the Fund may employ certain
investment techniques intended to provide liquidity for temporary or emergency
purposes, provide flexibility in the purchase of new issues of securities,
protect the Fund from a decline in the market value of its securities and permit
the Fund to invest all of its assets. Those techniques include entering into
reverse repurchase agreements, lending portfolio securities, purchasing
securities on a "when-issued" basis, short sales "against the box" and investing
in closed-end investment companies.
REPURCHASE AGREEMENTS. The Fund 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. Reverse repurchase agreements involve the sale
by the Fund of a portfolio security with a simultaneous obligation to repurchase
the security at an agreed upon price, date and interest payment. The Fund will
enter into reverse repurchase agreements solely for temporary or defensive
purposes to facilitate the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests should they occur. The Fund will use
reverse repurchase agreements when the interest income to be earned from the
securities that would otherwise have to be liquidated to meet redemption
requests is greater than the interest expense of the reverse repurchase
transaction. The Fund may enter into reverse repurchase agreements in amounts
not exceeding 33-1/3% of the value of its total assets. Reverse repurchase
agreements involve the risk that the market value of securities retained by the
Fund in lieu of liquidation may decline below the repurchase price of the
securities sold by the Fund which it is obligated to repurchase. This risk, if
encountered, could cause a reduction in the net asset value of the Fund's
shares. Reverse repurchase agreements are considered to be borrowings under the
1940 Act.
LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio, 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, the 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, the 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.
BORROWING. The Fund may borrow money to a limited extent from banks
(including the Fund's custodian bank) for temporary or emergency purposes
subject to the limitations under the 1940 Act. The current provisions of the
1940 Act restrict borrowings and reverse repurchase agreements to an aggregate
of 33-1/3% of the Fund's total assets at the time of the transaction. In
addition, consistent with current interpretations of the Securities and Exchange
Commission, the Fund will not purchase additional securities while borrowings
from banks exceed 5% of the Fund's total assets.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
of 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 Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. If the Fund purchases a when-issued
security or enters into a delayed delivery agreement, the Fund's custodian bank
will segregate cash or liquid securities in an amount at least equal to the
when-issued commitment or delayed delivery agreement commitment.
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<PAGE> 14
SHORT SALES. The 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 the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short without payment of any further
consideration. The Fund will enter into such transactions only to the extent the
aggregate value of all securities sold short does not represent more than 10% of
the Fund's total assets at any given time.
ILLIQUID SECURITIES AND RULE 144A SECURITIES. The Fund will not invest more
than 15% of its total 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 Fund 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, the Fund's holdings of illiquid securities will be reviewed to determine
what, if any, action is required to assure that the Fund does not invest more
than 15% of its total assets in illiquid securities. See the Statement of
Additional Information.
CLOSED-END INVESTMENT COMPANIES. The Fund may invest up to 10% of its total
assets in the securities of certain closed-end investment companies. Shares of
closed-end investment companies are often traded at market prices that are less
than the net asset values of their shares. Such investments will involve the
payment of duplicative fees through the indirect payment of a portion of the
expenses, including advisory fees, of such closed-end investment companies.
PORTFOLIO TURNOVER. Any particular security will be sold, and the proceeds
reinvested, whenever such action is deemed prudent from the viewpoint of the
Fund's investment objectives, regardless of the holding period of that security.
The estimated portfolio turnover rate for the Fund is less than 100%. 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 the Fund, the portion
of the Fund's distributions constituting taxable capital gains may increase.
Reference is made to the Statement of Additional Information for additional
descriptions of the Fund's investment policies and the risks associated with the
permitted investments of the Fund.
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RISK FACTORS
FOREIGN SECURITIES. There can be no assurance that the Fund's investment
objective will be attained. The 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.
Investors should consider carefully the following special factors before
investing in the Fund.
Currency Risk. The value of the 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
the Fund may invest are not as developed as the United States economy and may be
subject to significantly different forces. Political or social instability,
deterioration of diplomatic relations, expropriation, nationalization or
confiscatory taxation, and limitations on the removal of funds or other assets
could also adversely affect the value of the Fund's investments. Individual
foreign economies may also differ favorably or unfavorably from the United
States economy in areas such as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency, and balance of
payments position, which may likewise affect the Fund's investments. Moreover,
foreign legal systems may be affected by the prevailing political climate and
the Fund may not be able to obtain legal remedies or enforce judgments in those
courts.
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 publicly available information about foreign securities than is
available about domestic securities. Foreign companies are not subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by the 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 the 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. In addition, 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.
EMERGING MARKETS. A developing country or emerging market country can be
considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the devel-
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<PAGE> 15
oped European countries (primarily in Western Europe), the United States,
Canada, Japan, Australia, New Zealand, Hong Kong and Singapore. The
characteristics of markets can change over time. Currently, investing in many
emerging markets may not be desirable or feasible because of the lack of
adequate custody arrangements for the Fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or other reasons. As desirable
opportunities to invest in securities in emerging markets develop, the Fund may
expand and further broaden the group of emerging markets in which it invests. In
the past, markets of developing countries have been more volatile than the
markets of developed countries; however, such markets often have provided higher
rates of return to investors. AIM believes that these characteristics can be
expected to continue in the future.
Many of the risks described above relating to foreign securities generally
will be greater for emerging markets than for developed countries. Many emerging
markets have experienced substantial rates of inflation for many years.
Inflation and rapid fluctuations in inflation rates have had and may continue to
have very negative effects on the economies and securities markets of certain
developing markets. Economies in emerging markets generally are heavily
dependent upon international trade and, accordingly, have been and may continue
to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also have
been and may continue to be affected adversely by economic conditions in the
countries with which they trade.
Also, the securities markets of developing countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of the United States and other more developed countries. Disclosure,
regulatory and accounting standards in many respects are less stringent than in
the United States and other developed markets. There also may be a lower level
of monitoring and regulation of developing markets and the activities of
investors in such markets, and enforcement of existing regulations has been
extremely limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States; this is particularly true with respect to emerging markets.
Such markets have different settlement and clearance procedures. In certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Such settlement problems may cause emerging market securities to
be illiquid. The inability of the Fund to make intended securities purchases due
to settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. Certain
emerging markets may lack clearing facilities equivalent to those in developed
countries. Accordingly, settlements can pose additional risks in such markets
and ultimately can expose the Fund to the risk of losses resulting from the
Fund's inability to recover from a counterparty.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. The Fund's portfolio securities in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the Board of Directors.
Investment in certain emerging market securities is restricted or controlled
to varying degrees. These restrictions or controls may at times limit or
preclude foreign investment in certain emerging market securities and increase
the costs and expenses of the Fund. Emerging markets may require governmental
approval for the repatriation of investment income, capital or the proceeds of
sales of securities by foreign investors. In addition, if a deterioration occurs
in an emerging market's balance of payments, the market could impose temporary
restrictions on foreign capital remittances.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The following restrictions may not be changed without approval of the Fund's
shareholders. The Fund may not:
1. Purchase a security if, as a result, with respect to 75% 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, and except that a Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order.
2. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by the Fund,
except that the Fund may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive order.
3. 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 SEC permits their exclusion.
4. Issue senior securities, except to the extent permitted by the 1940
Act, including permitted borrowings.
10
<PAGE> 16
A complete listing of investment restrictions applicable to the Fund, some of
which may be changed by the Board of Directors without shareholder approval, is
contained in the Statement of Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Fund is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Fund and persons or companies furnishing
services to the Fund, including the investment advisory agreement with AIM, the
administrative services agreement with AIM, the agreement with AIM Distributors
regarding distribution of the Fund's shares, the agreement with State Street
Bank and Trust Company as custodian, and the agreement with A I M Fund Services,
Inc. as transfer agent. The day-to-day operations of the Fund are delegated to
the officers of the Company and to AIM, subject always to the objective and
policies of the Fund and to the general supervision of the Board of Directors.
Information concerning the Board of Directors may be found in the Statement of
Additional Information. 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP plc, a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis.
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to
an investment advisory agreement dated as of February 28, 1997, as amended
[ ] 1997 (to add the Fund) (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises 55 investment
company portfolios (including the Fund). As of July 1, 1997, the total assets
advised or managed by AIM or its subsidiaries were approximately $74.3 billion.
Under the terms of the Advisory Agreement, AIM supervises all aspects of the
Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund.
SUB-ADVISOR. INVESCO Global Asset Management Limited, Cedar House, 41 Cedar
Avenue, Hamilton, HM12 Bermuda, serves as sub-advisor to the Fund pursuant to a
sub-advisory agreement between AIM and IGAM, dated as of [July 1997] (the
"Sub-Advisory Agreement"). By the terms of the Sub-Advisory Agreement, AIM has
appointed IGAM to provide AIM with international economic and market research,
securities analyses and investment recommendations with respect to the Fund's
investment portfolio. The Sub-Advisory Agreement provides that IGAM is not
responsible for the actual portfolio investment decisions of the Fund or for the
execution of portfolio transactions on behalf of the Fund. The Fund's portfolio
investment decisions and the execution of securities transactions to carry out
such decisions are solely the responsibility of AIM as the Fund's investment
advisor.
IGAM is an indirect, wholly owned, investment advisory subsidiary of AMVESCAP
plc. As of July 1, 1997, IGAM had total assets of approximately U.S.
$ , and was represented in countries. The professional investment
staff of IGAM includes experienced portfolio managers and research staff.
ADMINISTRATOR. AIM and the Company have entered into an Administrative
Services Agreement, dated as of February 28, 1997, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Fund. AIM is entitled to receive from the Fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board of Directors. Currently, AIM is reimbursed for the services of the
Fund's principal financial officer and his staff, and any expenses related to
such services.
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 Board of Directors,
AIM may take into account sales of shares of the Fund and other funds advised by
AIM in selecting broker-dealers to effect portfolio transactions on behalf of
the Fund.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Fund. AIM's investment staff consists of approximately 125
individuals. While individual members of AIM's investment staff are assigned
primary responsibility for the day-to-day management of each of AIM's accounts,
all accounts are reviewed on a regular basis by AIM's Investment Policy
Committee to ensure that they are being invested in accordance with the
accounts' and AIM's investment policies. The individuals on the investment team
who are primarily responsible for the day-to-day management of the Fund are A.
Dale Griffin, III and Barrett K. Sides. Mr. Griffin is Vice President of A I M
Capital Management, Inc. ("AIM Capital"), a wholly owned subsidiary of AIM, and
has been responsible for the Fund since its inception. Mr. Griffin has been
associated with AIM since 1989 and has a total of ten years of experience as an
investment professional. Mr. Sides is Assistant Vice President of AIM Capital
and has been responsible for the Fund since its inception. Mr. Sides has been
associated with AIM since 1990 and has a total of seven years of experience as
an investment professional.
FEES AND EXPENSES. Pursuant to the Advisory Agreement, AIM is entitled to
receive a fee from the Fund calculated at the annual rate 0.95% of the first
$500 million of net assets and 0.90% of net assets over $500 million. AIM is
also entitled to receive reimbursement of administrative costs incurred on
behalf of the Fund. Pursuant to the Sub-Advisory Agreement between AIM and IGAM
with
11
<PAGE> 17
respect to the Fund, IGAM is entitled to receive 0.20% of the first $500 million
of net assets and 0.175% of net assets over $500 million.
In addition, the Company and A I M Fund Services, Inc. P.O. Box 4739, Houston,
TX 77210-4739, a wholly owned subsidiary of AIM and registered transfer agent,
have entered into a Transfer Agency and Service Agreement, pursuant to which AFS
provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Fund.
FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees,
while retaining its ability to be reimbursed for such fees prior to the end of
each fiscal year. Any fee waivers will be shared proportionately by AIM and
IGAM. 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.
DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of the Fund (the "Distribution Agreements") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A, Class B and Class C shares of the Fund. The address of
AIM Distributors is P.O. Box 4739, Houston, Texas 77021-4739. 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 Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM Distributors sells Class B shares at net
asset value subject to a contingent deferred sales charge established by AIM
Distributors. AIM Distributors is authorized to advance to institutions through
whom Class B shares are sold a sales commission under schedules established by
AIM Distributors. The Distribution Agreement for the Class B shares provides
that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the
total 1.00% payable under the distribution plan applicable to Class B shares) of
the Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges in respect of the outstanding Class B
shares attributable to AIM Distributors; provided, however, that a complete
termination of the Class B shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay Contingent Deferred Sales Charges.
DISTRIBUTION PLANS. Class A and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of the Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of the Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.35% of the average daily net assets of Class A shares of
the Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of the Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. Payments
can also be directed by AIM Distributors to selected institutions who have
entered into service agreements with respect to Class A and Class C shares of
the Fund and who provide continuing personal services to their customers who own
Class A and Class C shares of the Fund. The service fees payable to selected
institutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of the Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of such amount, the
Fund pays a service fee of 0.25% of the average daily net assets attributable to
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 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.
12
<PAGE> 18
Activities that may be financed under the Class A and C 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 the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent, for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one
particular class over another.
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 SEC as an open-end series management investment company. The Company
currently consists of six investment portfolios: the Fund, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM
GLOBAL INCOME FUND and AIM INTERNATIONAL EQUITY FUND. The Board of Directors may
authorize additional portfolios in the future. Shares of the Fund are offered to
investors pursuant to this Prospectus, while shares of the Company's other
portfolios are offered to investors pursuant to separate prospectuses. The
authorized capital stock of the Company consists of 4,000,000,000 shares of
common stock with a par value of $0.001 per share, of which 200,000,000 shares
are designated Class A shares, 200,000,000 shares are designated Class B shares
and 200,000,000 shares are designated Class C shares of each investment
portfolio of the Company, and the balance of which are unclassified.
Class A shares, Class B shares and Class C shares of the Fund represent
interests in the 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 (such as those associated with
the shareholder servicing of their shares) and is subject to differing sales
loads (which may affect performance), 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 the 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, Class B
shares and Class C shares of the 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 the 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.
13
<PAGE> 19
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR CASH MANAGEMENT FUND(1),(2) AIM GLOBAL INCOME FUND
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INCOME FUND(2) AIM GROWTH FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM HIGH YIELD FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM INCOME FUND
AIM ADVISOR MULTIFLEX FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ADVISOR REAL ESTATE FUND AIM INTERNATIONAL EQUITY FUND
AIM AGGRESSIVE GROWTH FUND AIM LIMITED MATURITY TREASURY SHARES
AIM BALANCED FUND AIM MONEY MARKET FUND(1)
AIM BLUE CHIP FUND AIM MUNICIPAL BOND FUND
AIM CAPITAL DEVELOPMENT FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CHARTER FUND AIM TAX-EXEMPT CASH FUND(1)
AIM CONSTELLATION FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
</TABLE>
(1) Class A shares of AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND, and Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
(2)Fund closed to new investments on August 4, 1997. However, until October 3,
1997 the Fund will continue to accept investments (i) from shareholders of
record on August 4, 1997 of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND or (ii) on behalf of clients of selling group members who were
INVESCO Advisor Funds, Inc. selling group members on August 1, 1997. Please
refer to "Exchange Privilege" herein and the Fund's prospectus dated August
4, 1997.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-A 07/97
A-1
<PAGE> 20
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME
FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND,
AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM AGGRESSIVE GROWTH
FUND, AIM BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM
CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM
GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND
FUND, AIM VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM
AGGRESSIVE GROWTH FUND), the "Multiple Class Funds," may be purchased at their
respective net asset value plus a sales charge as indicated below, except that
Class A shares of AIM TAX-EXEMPT CASH FUND, Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold
without a sales charge and Class B shares (the "Class B shares") and Class C
shares ("Class C shares") of the Multiple Class Funds (except Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND) are sold at net asset value subject to a
contingent deferred sales charge payable upon certain redemptions. These
contingent deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-A 07/97
A-2
<PAGE> 21
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL
DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM ADVISOR INCOME FUND, AIM ADVISOR REAL ESTATE FUND, AIM BALANCED
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL
INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-A 07/97
A-3
<PAGE> 22
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 the Class A shares
of AIM TAX-FREE INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of
the next $1 million of such purchases, plus 0.50% of the next $17 million of
such purchases, plus 0.25% of amounts in excess of $20 million of such
purchases. See "Contingent Deferred Sales Charge Program for Large Purchases."
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), and which are sold at net
asset value and are not subject to a contingent deferred sales charge, in an
amount up to 0.10% of such purchases of shares of AIM LIMITED MATURITY TREASURY
SHARES, and in an amount up to 0.25% of such purchases of shares of AIM TAX-FREE
INTERMEDIATE SHARES.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price (0.60% of the
purchase price of the AIM ADVISOR INCOME FUND) of the Class C shares sold by the
dealer or institution, and will consist of a sales commission of 0.75% of the
purchase price (0.35% of the purchase price of the AIM ADVISOR INCOME FUND) of
the Class C shares sold plus an advance of the first year service fee of 0.25%
with respect to such shares. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. The
portion of the payments to AIM Distributors under the Class C Plan attributable
to Class C shares which constitutes an asset-based sales charge (0.75%) (0.35%
for AIM ADVISOR INCOME FUND) is intended in part to permit AIM Distributors to
recoup a portion of such on-going sales commission plus financing costs, if any.
MCF-A 07/97
A-4
<PAGE> 23
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES (except Class A shares of AIM ADVISOR CASH MANAGEMENT FUND)
are sold subject to the initial sales charges described above and are
subject to the other fees and expenses described herein. Class A shares of
AIM MONEY MARKET FUND are designed to meet the needs of an investor who
wishes to establish a dollar cost averaging program, pursuant to which
Class A shares an investor owns may be exchanged at net asset value for
Class A shares of another Multiple Class Fund or shares of another AIM Fund
which is not a Multiple Class Fund, subject to the terms and conditions
described under the caption "Exchange Privilege -- Terms and Conditions of
Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND)
are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the
average daily net assets of a Multiple Class Fund attributable to Class C
shares. See the discussion under the caption "Management -- Distribution
Plans." In addition, Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) redeemed within one year from the date such shares
were purchased are subject to a 1.00% contingent deferred sales charge. No
contingent deferred sales charge will be imposed if Class C shares are
redeemed after one year from the date such shares were purchased.
Redemptions of Class C shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. (A
contingent deferred sales charge may be imposed upon redemptions of Class A
and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND when such shares
were purchased in an exchange. See "How to Redeem Shares -- Multiple
Distribution System -- Class C Shares" and "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases").
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are, however, subject to
the other fees and expenses described in the prospectus for AIM MONEY
MARKET FUND.
MCF-A 07/97
A-5
<PAGE> 24
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM ADVISOR CASH MANAGEMENT FUND, AIM MONEY
MARKET FUND, AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because
each Money Market Fund uses the amortized cost method of valuing the securities
it holds and rounds its per share net asset value to the nearest whole cent, it
is anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT
FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class B and Class C
shares of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP or
SARSEP accounts should be linked;
MCF-A 07/97
A-6
<PAGE> 25
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds)
within the following 13 consecutive months. By marking the LOI section on the
account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii)
Class B and Class C shares of the Multiple Class Funds) at the time of the
proposed purchase. Rights of Accumulation are also available to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C
shares of AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum
MCF-A 07/97
A-7
<PAGE> 26
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any AIM Limited
Maturity Treasury Shares sold at net asset value to an employee benefit plan in
accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided:
MCF-A 07/97
A-8
<PAGE> 27
(a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is effected within 30 days of such redemption or repurchase;
and (b) that the unit holder or his dealer provides AIM Distributors with a
letter which: (i) identifies the name, address and telephone number of the
dealer who sold to the unit holder the units to be redeemed or repurchased; and
(ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is being funded exclusively by the proceeds from the
redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds, AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND), it is disadvantageous to effect such purchases while a
Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or twenty-fifth day of the applicable 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
MCF-A 07/97
A-9
<PAGE> 28
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; SARSEP plans; and SEP
plans (collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF-A 07/97
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<PAGE> 29
- --------------------------------------------------------------------------------
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 (except AIM
ADVISOR CASH MANAGEMENT FUND), listed below and referred to herein as the "Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 5.50% or 4.75% of the public offering price of such shares; Class A shares
(or shares which normally involve the payment of initial sales charges) of
certain of the AIM Funds, listed below and referred to herein as the "Lower Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 1.00% of the public offering price of such shares; and Class A shares or
shares of certain other funds, listed below and referred to herein as the "No
Load Funds," are sold at net asset value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY SHARE
CLASS A FUND -- CLASS A AIM TAX-FREE INTERMEDIATE
AIM ADVISOR INCOME FUND -- AIM GLOBAL INCOME SHARES -- CLASS A
CLASS A FUND -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR CASH MANAGEMENT FUND
AIM ADVISOR LARGE CAP AIM GROWTH FUND -- CLASS A -- CLASS A
VALUE FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM MONEY MARKET FUND
AIM ADVISOR MULTIFLEX AIM INCOME FUND -- CLASS A -- AIM CASH RESERVE SHARES
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MONEY MARKET
AIM BALANCED FUND -- CLASS A FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A AIM MUNICIPAL BOND
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM CHARTER FUND -- CLASS A OF CONNECTICUT -- CLASS A
AIM CONSTELLATION AIM VALUE FUND -- CLASS A
FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) effective August 4, 1997
(except with respect to shares of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND), no shares of any Load Fund, Class C of a Multiple Class Fund,
Lower Load Fund or No Load Fund may be exchanged for shares of AIM ADVISOR CASH
MANAGEMENT FUND or AIM ADVISOR INCOME FUND; (ii) effective October 3, 1997 no
share of any Load Fund, Class C of a Multiple Class Fund, Lower Load Fund or No
Load Fund may be exchanged for shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM
ADVISOR INCOME FUND; (iii) Load Fund share purchases of $1,000,000 or more which
are subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (iv) LOWER LOAD FUND SHARE PURCHASES
OF $1,000,000 OR MORE AND AIM Cash Reserve Shares of AIM MONEY MARKET FUND and
AIM TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN
AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT
DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT
DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD
SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (v) Class A shares and AIM
LIMITED MATURITY TREASURY SHARES may be exchanged for Class A shares or AIM
LIMITED MATURITY TREASURY SHARES, (vi) Class B shares may be exchanged only for
Class B shares; (vii) Class C shares may only be exchanged for Class C shares;
(viii) Class A shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged for
Class A shares of any Load Fund, Lower Load Fund or No-Load Fund at net asset
value; (ix) Class C shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged
for Class C shares of any Multiple Class Fund at net asset value; and (x) AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged for Class A
shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
MCF-A 07/97
A-11
<PAGE> 30
Broker-dealers and institutions of record for Class A or Class C shares
purchased pursuant to an exchange from Class A or Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND will be compensated according to the sales commission or
concession that would apply if these Class A or Class C share purchases had been
purchased in a manner other than pursuant to an exchange.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
MCF-A 07/97
A-12
<PAGE> 31
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares (except for Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-A 07/97
A-13
<PAGE> 32
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on
April 30, 1995 of these funds. Shareholders whose broker/dealers maintain a
single omnibus account with the Transfer Agent on behalf of those shareholders,
perform sub-accounting functions with respect to those shareholders, and are
unable to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996; or (v) on Class C shares of AIM
ADVISOR CASH MANAGEMENT FUND except in certain cases when the shares were
purchased in an exchange. Redemptions of shares of AIM ADVISOR CASH MANAGEMENT
FUND are generally not subject to a contingent deferred sales charge; however, a
contingent deferred sales charge may be applicable to redemptions of shares of
AIM ADVISOR CASH MANAGEMENT FUND if the redeemed shares were exchanged from
another Class C share fund and the one year holding period in such fund has not
been completed.
Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the fifth paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds.".
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
MCF-A 07/97
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(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund, Class A shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM Cash Reserve
Shares of AIM MONEY MARKET FUND which were acquired through an exchange of
shares which previously were subject to the 1% contingent deferred sales charge
will be credited with the period of time such exchanged shares were held, and
(ii) shares of any Load Fund which are subject to the 1% contingent deferred
sales charge and which were acquired through an exchange of shares of a Lower
Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the total amount invested in
a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of
intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the
shares being redeemed were purchased by an employer-sponsored Plan with at least
100 eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above on the basis of the value of each Plan
participant's aggregate investment in the AIM Funds, and not on the aggregate
investment made by the Plan or on the number of eligible employees; (2)
redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within 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
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Distributors has made arrangements with certain dealers and investment advisors
to accept telephone instructions for the redemption of shares. AIM Distributors
reserves the right to impose conditions on these dealers and investment
advisors, including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The Transfer Agent and AIM Distributors will not be liable for any
loss, expense or cost arising out of any telephone redemption request effected
in accordance with the authorization set forth at that item of the account
application if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures may include recordings of
telephone transactions (maintained for six months), requests for confirmation of
the shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT FUND and
the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not
apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as
MCF-A 07/97
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<PAGE> 35
certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES AND LIMITED MATURITY TREASURY SHARES
ONLY). Within 90 days of a redemption, a shareholder may invest all or part of
the redemption proceeds in Class A shares of any AIM Fund (except Class A shares
of AIM ADVISOR CASH MANAGEMENT FUND) and AIM Limited Maturity Treasury Shares at
the net asset value next computed after receipt by the Transfer Agent of the
funds to be reinvested; provided, however, if the redemption was made from AIM
Limited Maturity Treasury Shares or Class A shares of AIM TAX-FREE INTERMEDIATE
SHARES, the reinvested proceeds will be subject to the difference in sales
charge between the shares redeemed and the shares the proceeds are reinvested
in. The shareholder must ask the Transfer Agent for such privilege at the time
of reinvestment. A realized gain on the redemption is taxable, and reinvestment
may alter any capital gains payable. If there has been a loss on the redemption
and shares of the same fund are repurchased, all of the loss may not be tax
deductible, depending on the timing and amount reinvested. Under the Code, if
the redemption proceeds of fund shares on which a sales charge was paid are
reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales
charge within 90 days of the payment of the sales charge, the shareholder's
basis in the fund shares redeemed may not include the amount of the sales charge
paid, thereby reducing the loss or increasing the gain recognized from the
redemption; however, the shareholder's basis in the fund shares purchased will
include the sales charge. Each AIM Fund may amend, suspend or cease offering
this privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. This privilege may only be exercised once
each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE SHARES value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
MCF-A 07/97
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<PAGE> 36
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR CASH MANAGEMENT FUND.......... declared daily; paid monthly annually annually
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INCOME FUND................... declared and paid monthly monthly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES...... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
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 a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (except Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND) (iii) dividends and distributions attributable to Class A
shares or AIM Limited Maturity Treasury Shares may not be reinvested in Class A
shares of AIM ADVISOR CASH MANAGEMENT FUND or Class B or Class C shares, and
(iv) dividends and distributions attributable to the AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund
or in any Class B or Class C shares. Investors who have not previously selected
such a reinvestment option on the account application form may contact the
Transfer Agent at any time to obtain a form to authorize such reinvestments in
another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND).
Dividends on all shares may also be affected by other class-specific expenses.
MCF-A 07/97
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<PAGE> 37
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE
INTERMEDIATE 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 ADVISOR CASH
MANAGEMENT FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR REAL ESTATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE
INTERMEDIATE SHARES will qualify for this dividends received deduction. Shortly
after the end of each year, shareholders will receive information regarding the
amount and federal income tax treatment of all distributions paid during the
year. Certain dividends declared in October, November or December of a calendar
year are taxable to shareholders as though received on December 31 of that year
if paid to shareholders during January of the following calendar year. No gain
or loss will be recognized by shareholders upon the automatic conversion of
Class B shares of a Multiple Class Fund into Class A shares of such Fund. With
respect to tax-exempt shareholders, distributions from the Funds will not be
subject to federal income taxation to the extent permitted under the applicable
tax-exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of 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
MCF-A 07/97
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<PAGE> 38
other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
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 ADVISOR INTERNATIONAL VALUE FUND, AIM INTERNATIONAL EQUITY FUND, AIM
GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND
AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in
which it is eligible to do so, each of these funds may elect to pass through to
shareholders credits for foreign taxes paid. If the fund makes such an election,
a shareholder who receives a distribution (1) will be required to include in
gross income his proportionate share of foreign taxes allocable to the
distribution and (2) may claim a credit or deduction for such share for his
taxable year in which the distribution is received, subject to the general
limitations imposed on the allowance of foreign tax credits and deductions.
Shareholders should also note that certain gains or losses attributable to
fluctuations in exchange rates or foreign currency forward contracts may
increase or decrease the amount of income of the fund available for distribution
to shareholders, and should note that if such losses exceed other income during
a taxable year, the fund would not be able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND
FUND, AIM LIMITED MATURITY TREASURY SHARES AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE SHARES, for
which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box
2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of
the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
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 (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-A 07/97
A-20
<PAGE> 39
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-A 07/97
B-1
<PAGE> 40
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
MCF-A 07/97
B-2
<PAGE> 41
LOGO THE AIM FAMILY OF FUNDS(R)
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO Global Asset Management Limited
Cedar House, 41 Cedar Avenue
Hamilton HM12, Bermuda
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Bldg.
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) 347-4246 or write to
A I M Distributors, Inc. and request a free prospectus. Please read the
prospectus carefully before you invest or send money.
<PAGE> 42
[AIM LOGO
APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
AIM EUROPEAN DEVELOPMENT FUND
(A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
AUGUST 4, 1997
AIM EUROPEAN DEVELOPMENT FUND (the "Fund") is a diversified, series
investment portfolio of AIM International Funds, Inc. (the
"Company"), an open-end, series, management investment company. The
Fund seeks to provide long-term growth of capital. There is no
assurance that the Fund will attain its investment objective. The
Fund seeks to achieve its objective by investing in a diversified
portfolio of European equity securities, the issuers of which are
considered by the Fund's investment advisor to have strong earnings
momentum or demonstrate other potential for capital appreciation.
The Fund has the ability to invest a significant portion of its total
assets in securities of European issuers located in "emerging
markets." See "Risk Factors."
This Prospectus sets forth basic information about the Fund that
prospective investors should know before investing. It should be read
and retained for future reference. A Statement of Additional
Information, dated August 4, 1997, has been filed with the United
States Securities and Exchange Commission (the "SEC") and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the
Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material
incorporated by reference, and other information regarding the Fund.
Additional information about the Fund may also be obtained from
http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 43
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUND................................. 4 FUNDS--Registered Trademark--.......... A-1
Table of Fees and Expenses............. 4 Introduction to The AIM Family of
Performance............................ 5 Funds............................... A-1
Investment Objective and Policies...... 5 How to Purchase Shares................. A-1
Hedging Strategies and Other Investment Terms and Conditions of Purchase of the
Policies............................ 6 AIM Funds........................... A-2
Risk Factors........................... 9 Special Plans.......................... A-9
Investment Restrictions................ 10 Exchange Privilege..................... A-11
Management............................. 11 How to Redeem Shares................... A-13
Organization of the Company............ 13 Determination of Net Asset Value....... A-17
Dividends, Distributions and Tax
Matters................................ A-18
General Information.................... A-20
APPLICATION INSTRUCTIONS................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND. AIM International Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end, series, management investment company.
Currently the Company offers six separate series portfolios. This Prospectus
relates to AIM European Capital Growth Fund (the "Fund"). The Company also
offers other classes of shares in five other investment portfolios, AIM ASIAN
GROWTH FUND ("ASIAN FUND"), AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE
GROWTH FUND"), AIM GLOBAL GROWTH FUND ("GROWTH FUND"), AIM GLOBAL INCOME FUND
("INCOME FUND"), and AIM INTERNATIONAL EQUITY FUND ("EQUITY FUND"),
(collectively, with AIM EUROPEAN DEVELOPMENT FUND, the "Funds") each of which
pursues unique investment objectives. All such other Funds offer multiple
classes of shares to different types of investors. The shares of the other Funds
of the Company have different sales charges and expenses, which may affect
performance. To obtain information about ASIAN FUND, GLOBAL AGGRESSIVE GROWTH,
GLOBAL GROWTH, INCOME FUND or EQUITY FUND, call (800) 347-4246. See "General
Information."
The investment objective of the Fund is to provide long-term growth of
capital. The Fund seeks to achieve its objective by investing in a diversified
portfolio of European equity securities, the issuers of which are considered by
the Fund's investment advisor to have strong earnings momentum or demonstrate
other potential for capital appreciation. Any income realized by the Fund will
be incidental and will not be an important criterion in the selection of
portfolio securities. Under normal market conditions, the Fund will invest at
least 80% of its total assets in marketable equity securities (including common
and preferred stock, depositary receipts for stock and other securities having
the characteristics of stock) of European companies. The Fund may satisfy the
foregoing requirement in part by investing up to 20% of its total assets in
securities exchangeable for or convertible into equity securities. Under normal
market conditions, at least three European countries will be represented in the
Fund's portfolio of investments. The Fund may invest up to 65% of its total
assets in securities of European issuers located in "developing" countries or
"emerging markets." The Fund may invest up to 20% of its total assets in
securities of non-European companies.
The Fund intends to achieve its investment objective by using a fully managed
investment policy providing for the selection of securities which meet certain
quantitative standards determined by AIM. The Fund will also seek to spread its
investments among countries or regions in accordance with the investment
advisor's assessment of prospects for relative economic growth, political
conditions, currency exchange fluctuations and other relevant factors. For more
complete information on the Fund's investment objective, policies and
strategies, see "Investment Objective and Policies" and "Hedging Strategies and
Other Investment Policies."
RISK FACTORS. THE FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING
INTERNATIONAL DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH (a)
INVESTMENT IN FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND
ECONOMIC RISK, REGULATORY RISK AND MARKET RISK; AND (b) INVESTMENT IN "EMERGING
MARKETS," WHICH INVOLVE EXPOSURE TO ECONOMIC STRUCTURES THAT ARE GENERALLY LESS
DIVERSE AND MATURE THAN IN THE UNITED STATES, AND TO POLITICAL SYSTEMS THAT MAY
BE LESS STABLE. IT IS NOT DESIGNED AS A COMPLETE INVESTMENT PROGRAM. FOR A
DISCUSSION OF THESE RISKS, SEE "RISK FACTORS."
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM, together with its subsidiaries, manages or advises 55 investment company
portfolios. As of July 1, 1997, the total assets advised or managed by AIM or
its subsidiaries were approximately $74.3 billion. Under the terms of the
Advisory Agreement, AIM supervises all aspects of the Fund's operations and
provides investment advisory services to the Fund. As compensation for these
services, AIM receives a fee based on the Fund's average daily net assets. Under
an Administrative Services Agreement, AIM may be reimbursed by the Fund for its
costs of performing, or arranging for the performance of, certain accounting and
other administrative services for the Fund. Under a Transfer Agency and Service
Agreement, AIM Fund Services, Inc. ("AFS"),
2
<PAGE> 44
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement and
shareholder services for the Fund. Under the terms of a sub-advisory agreement
(the "Sub-Advisory Agreement") between AIM and INVESCO Global Asset Management
Limited ("IGAM"), IGAM has been appointed by AIM to serve as investment
sub-advisor to the Fund. IGAM is an indirect, wholly owned subsidiary of
AMVESCAP plc, the indirect parent of AIM. The Sub-Advisory Agreement provides
that IGAM will furnish AIM with international economic and market research,
securities analyses and investment recommendations for the Fund's portfolio.
IGAM is not responsible for actual portfolio investment decisions for the Fund
or for the execution of transactions on behalf of the Fund. Under the
Sub-Advisory Agreement, AIM compensates IGAM for its services through the
payment of a portion of the fees paid by the Fund to AIM. See "Management."
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C
shares of the Fund which are offered by this Prospectus at an offering price
that reflects differing sales charges and expense levels. See "Terms and
Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions."
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 date
on which a purchase was made. Class B shares automatically convert to Class
A shares of the Fund eight years following the end of the calendar month in
which a purchase was made. Class B shares are subject to higher expenses
than Class A shares.
Class C Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a contingent deferred sales charge
of 1% on certain redemptions made within one year of the date such shares
were purchased.
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 the Fund and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated
distribution fees and any applicable contingent deferred sales charges on Class
B shares prior to conversion or Class C shares 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. ("AIM Distributors") intends to reject any order for
purchase of more than $250,000 for Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Fund is one of several mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Fund may be exchanged for shares of other funds in The AIM
Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
REDEEMING SHARES. 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 $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 date on which a purchase was
made. Class B shares redeemed after six years following the date of purchase
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Holders of Class C shares of the Fund may redeem all or a portion of their
shares at net asset value on any business day, less a 1% contingent deferred
sales charge for redemptions made within one year from the date such shares were
purchased. See "How to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund declares and pays dividends from net investment
income, if any, and makes distributions of realized capital gains, if any, on an
annual basis. Dividends and distributions of the Fund may be reinvested at net
asset value without payment of a sales charge in the Fund's shares or may be
invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E, THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, LA FAMILIA AIM DE
FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND
AIMFUNDS.COM AND INVEST WITH DISCIPLINE ARE SERVICE MARKS OF A I M MANAGEMENT
GROUP INC.
3
<PAGE> 45
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Fund 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 the estimated average net
assets of the respective classes of the Fund for the first period of operation.
The rules of the SEC require that the maximum sales charge be reflected in the
table, even though certain investors may qualify for reduced sales charges. See
"How to Purchase Shares."
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a %
of offering price)...................................... 5.50% None None
Maximum sales load on reinvested dividends and
distributions........................................... None None None
Deferred sales load (as a % of original purchase price or
redemption proceeds, whichever is lower)................ None* 5.00% 1.00%
Redemption fee............................................ None None None
Exchange fee.............................................. None None None
Annual Fund Operating Expenses (as a % of average net
assets)
Management fees........................................... 0.95% 0.95% 0.95%
Rule 12b-1 distribution plan payments..................... 0.35% 1.00% 1.00%
Other expenses............................................ 0.70% 0.77% 0.77%
----- ----- -----
Total fund operating expenses......................... 2.00% 2.72% 2.72%
===== ===== =====
</TABLE>
- ------------
* Purchases 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 FROM THE DATE SUCH SHARES WERE PURCHASED.
See the Investor's Guide, under the caption "How to Redeem Shares --
Contingent Deferred Sales Charge Program for Large Purchases."
EXAMPLES. An investor in the Fund would pay the following expenses on a $1,000
investment in Class A shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $ 74
3 years................................................... $114
</TABLE>
THE EXAMPLES ABOVE ASSUME PAYMENT OF A SALES CHARGE AT THE TIME OF PURCHASE;
ACTUAL EXPENSES MAY VARY FOR PURCHASES OF $1 MILLION OR MORE, WHICH ARE MADE AT
NET ASSET VALUE AND ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE FOR 18
MONTHS FOLLOWING THE DATE SUCH SHARES WERE PURCHASED.
An investor in the Fund would pay the following expenses on a $1,000
investment in Class B shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year................................................... $ 78
3 years.................................................. $114
</TABLE>
An investor in the Fund 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>
<S> <C>
1 year................................................... $ 28
3 years.................................................. $ 84
</TABLE>
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $ 38
3 years................................................... $ 84
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period.
<TABLE>
<S> <C>
1 year.................................................... $ 28
3 years................................................... $ 84
</TABLE>
As a result of 12b-1 fees, a long-term shareholder in the Fund 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, Class B shares and Class C 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 THE FUND'S
ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In
addition, while the examples assume a 5% annual return, the Fund's actual
performance will
4
<PAGE> 46
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.
- --------------------------------------------------------------------------------
PERFORMANCE
The Fund's performance may be quoted in advertising in terms of total return.
All advertisements of the Fund will disclose the maximum sales charge (including
deferred sales charge) to which investments in the Fund's shares may be subject.
If any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance will be contained in the Fund's annual report to shareholders, which
is available upon request and without charge.
Standardized total return for Class A shares reflects the deduction of the
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.
Standardized total return for Class C shares reflects the deduction of a 1%
contingent deferred sales charge, if applicable, on a redemption of shares held
for the period.
The Fund's total return shows its overall change in value, including changes
in share price 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 the Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS
SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR
RESULTS. To illustrate the components of overall performance, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses. The stated period for quotations of average annual
total return will be for periods of one year and the life of the Fund
(commencing as of the effective date of its registration statement).
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such a practice will
have the effect of increasing the Fund's total return.
The performance of the Fund will vary from time to time, and past results are
not necessarily representative of future results. The Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund as well
as by general market conditions. A shareholder's investment in the Fund is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Fund.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund, which is a fundamental policy that may
be changed only with the approval of the Fund's shareholders, is to provide
long-term growth of capital. The Fund intends to seek to achieve its investment
objective by investing in a diversified portfolio of European equity securities,
the issuers of which are considered by AIM to have strong earnings momentum or
demonstrate other potential for capital appreciation. Any income realized by the
Fund will be incidental and will not be an important criterion in the selection
of portfolio securities. There can be no assurance that the Fund will achieve
its objective.
The Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of the Fund, as described below and
elsewhere in this Prospectus and in the Statement of Additional Information,
without approval of the Fund's shareholders, except in those instances in which
shareholder approval is expressly required.
Under normal market conditions the Fund will invest at least 80% of its total
assets in marketable equity securities, including common stock, preferred stock,
depositary receipts for stock and other securities having the characteristics of
stock (such as an equity or ownership interest in a company) of European
companies. The Fund may satisfy the foregoing requirement in part by investing
in the securities of European issuers which are in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other
securities representing underlying securities of European issuers. The Fund may
also satisfy such requirement by investing up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of European
issuers. Investments in foreign securities may include securities issued by
enterprises that have undergone or are currently undergoing privatization.
The Fund considers an issuer of securities to be a European company if: (i) it
is organized under the laws of a European country and has a principal office in
a European country; (ii) it derives a significant portion (i.e., 50% or more) of
its total revenues from business in Europe; or (iii) its equity securities are
traded principally on a stock exchange in Europe or in an over-the-counter
market in Europe. The Fund also considers European equity securities of
closed-end management investment companies, the assets of which are invested
primarily in European equity securities, to be securities of European companies.
5
<PAGE> 47
In managing the Fund, AIM seeks to apply to a diversified portfolio of
European equity securities substantially 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. The
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 the Fund. It
is expected that the Fund's portfolio, when fully invested, will generally be
comprised of two basic categories of European companies: (1) "core" companies,
which AIM considers to have experienced consistent long-term growth in earnings
and to have strong prospects for outstanding future growth, and (2) companies
that AIM believes are currently experiencing a greater than anticipated increase
in earnings.
If a particular European company meets the quantitative standards determined
by AIM, its securities may be acquired by the 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 the Fund, 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.
There are no prescribed limits on geographic asset distribution within the
European community. Under normal market conditions, at least three European
countries will be represented in the Fund's portfolio of investments. The Fund
intends to invest in securities of issuers in Western Europe (such as the United
Kingdom, Germany and the Netherlands) as well as companies of issuers in Eastern
Europe (such as Croatia, Czech Republic, all of Russia and Turkey). Many of the
countries in Eastern Europe are "developing" countries or "emerging markets."
The Fund may invest up to 65% of its total assets in securities of European
issuers located in "developing" countries or "emerging markets." For a
description of the risks associated with investment in emerging markets, see
"Risk Factors -- Emerging Markets." The Fund may invest up to 20% of its total
assets in securities of non-European companies.
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 the Fund in receiving financial
information supplied by foreign companies than comparable information supplied
by domestic companies. For these and other reasons, AIM from time to time may
encounter greater difficulty applying its disciplined stock selection strategy
to a European equity investment portfolio than to a portfolio of domestic equity
securities.
AIM may invest a portion of the Fund's assets in (i) cash or high-grade
short-term securities, including repurchase agreements, commercial paper, time
deposits and master notes, denominated either in U.S. dollars or foreign
currencies, (ii) U.S. government obligations or investment grade corporate bonds
or other debt securities, and (iii) taxable municipal securities, when such
positions are deemed advisable in light of economic or market conditions or for
daily cash management purposes. In addition, AIM may invest, for temporary
defensive purposes, all or substantially all of the Fund's assets in the
securities described above. To the extent that the Fund is invested to a
significant degree in cash, high-grade short-term securities, U.S. government
obligations, investment grade corporate bonds or other debt securities, or
taxable municipal securities, its ability to achieve its investment objective of
growth of capital may be adversely affected. Under normal circumstances, the
Fund will invest no more than 20% of the value of its total assets in high-grade
short-term securities. 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, the 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 (c) expenses of enforcing its rights. The Fund intends to enter into
repurchase agreements with sellers believed by AIM to present minimal credit
risk. See "Investment Restrictions."
- --------------------------------------------------------------------------------
HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES
The Fund may, at such times as AIM deems appropriate and consistent with the
investment objective of the Fund, write (sell) covered put or call options and
may purchase put or call options on its portfolio securities. The Fund 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 the 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. The Fund will not engage
in such transactions for speculative purposes. Any change to such policy must be
submitted by AIM to the Company's Board of Directors prior to the effectiveness
of such change.
OPTIONS. The Fund may purchase put or call options. Such options give the 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.
6
<PAGE> 48
The Fund may also 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 the Fund owns the underlying
security covered by the call. A put option is "covered" if the Fund's custodian
segregates cash or liquid securities 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.
The 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 "collar."
Options are subject to certain risks, including the risk of imperfect
correlation between the option and the Fund's portfolio securities 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.
Options purchased or written by the Fund may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to such options. Such
options and the securities used as "cover" for such options, unless otherwise
indicated, would be considered illiquid securities.
The Fund will not write options if, immediately after such sale, the aggregate
value of the securities or obligations underlying the outstanding options would
exceed 25% of the Fund's total assets. The Fund will not purchase put options
(including options on securities indices and futures contracts) if, at the time
of investment, the aggregate premiums to be paid for such options would exceed
5% of its total assets.
FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held
by the Fund may be denominated in foreign currencies, the value of the Fund's
portfolio 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. The 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 hedge the value of its
portfolio against changes in market conditions or in exchange rates between
currencies (including the U.S. dollar). 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, the 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 the Fund's total assets will be committed to initial margin
deposits required pursuant to futures contracts. Percentage investment
limitations on the Fund's investment in options on futures contracts are set
forth above under "Options." Although the 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, the 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). The 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 the 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, the 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." 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. The 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
the 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 antici-
7
<PAGE> 49
pated by the Fund when hedged positions were established. Successful use of
futures and forward contracts and options thereon is 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 Fund may lose the expected benefit of futures and
forward transactions and options thereon if markets move in an unanticipated
manner.
OTHER HEDGING TECHNIQUES. For hedging purposes, the 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.
TEMPORARY DEFENSIVE MEASURES. To a limited extent the Fund may employ certain
investment techniques intended to provide liquidity for temporary or emergency
purposes, provide flexibility in the purchase of new issues of securities,
protect the Fund from a decline in the market value of its securities and permit
the Fund to invest all of its assets. Those techniques include entering into
reverse repurchase agreements, lending portfolio securities, purchasing
securities on a "when-issued" basis, short sales "against the box" and investing
in closed-end investment companies.
REPURCHASE AGREEMENTS. The Fund 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. Reverse repurchase agreements involve the sale
by the Fund of a portfolio security with a simultaneous obligation to repurchase
the security at an agreed upon price, date and interest payment. The Fund will
enter into reverse repurchase agreements solely for temporary or defensive
purposes to facilitate the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests should they occur. The Fund will use
reverse repurchase agreements when the interest income to be earned from the
securities that would otherwise have to be liquidated to meet redemption
requests is greater than the interest expense of the reverse repurchase
transaction. The Fund may enter into reverse repurchase agreements in amounts
not exceeding 33-1/3% of the value of its total assets. Reverse repurchase
agreements involve the risk that the market value of securities retained by the
Fund in lieu of liquidation may decline below the repurchase price of the
securities sold by the Fund which it is obligated to repurchase. This risk, if
encountered, could cause a reduction in the net asset value of the Fund's
shares. Reverse repurchase agreements are considered to be borrowings under the
1940 Act.
LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio, 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, the 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, the 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.
BORROWING. The Fund may borrow money to a limited extent from banks (including
the Fund's custodian bank) for temporary or emergency purposes subject to the
limitations under the 1940 Act. The current provisions of the 1940 Act restrict
borrowings and reverse repurchase agreements to an aggregate of 33-1/3% of the
Fund's total assets at the time of the transaction. In addition, consistent
with current interpretations of the Securities and Exchange Commission, the Fund
will not purchase additional securities while borrowings from banks exceed 5%
of the Fund's total assets.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
of 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 Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. If the Fund purchases a when-issued
security or enters into a delayed delivery agreement, the Fund's custodian bank
will segregate cash or liquid securities in an amount at least equal to the
when-issued commitment or delayed delivery agreement commitment.
8
<PAGE> 50
SHORT SALES. The 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 the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short without payment of any further
consideration. The Fund will enter into such transactions only to the extent the
aggregate value of all securities sold short does not represent more than 10% of
the Fund's total assets at any given time.
ILLIQUID SECURITIES AND RULE 144A SECURITIES. The Fund will not invest more
than 15% of its total 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 Fund 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, the Fund's holdings of illiquid securities will be reviewed to determine
what, if any, action is required to assure that the Fund does not invest more
than 15% of its total assets in illiquid securities. See the Statement of
Additional Information.
CLOSED-END INVESTMENT COMPANIES. The Fund may invest up to 10% of its total
assets in the securities of certain closed-end investment companies. Shares of
closed-end investment companies are often traded at market prices that are less
than the net asset values of their shares. Such investments will involve the
payment of duplicative fees through the indirect payment of a portion of the
expenses, including advisory fees, of such closed-end investment companies.
PORTFOLIO TURNOVER. Any particular security will be sold, and the proceeds
reinvested, whenever such action is deemed prudent from the viewpoint of the
Fund's investment objectives, regardless of the holding period of that security.
The estimated portfolio turnover rate for the Fund is less than 100%. 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 the Fund, the portion
of the Fund's distributions constituting taxable capital gains may increase.
- --------------------------------------------------------------------------------
RISK FACTORS
FOREIGN SECURITIES. There can be no assurance that the Fund's investment
objective will be attained. The 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.
Investors should consider carefully the following special factors before
investing in the Fund.
Currency Risk. The value of the 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
the Fund may invest are not as developed as the United States economy and may be
subject to significantly different forces. Political or social instability,
deterioration of diplomatic relations, expropriation, nationalization or
confiscatory taxation, and limitations on the removal of funds or other assets
could also adversely affect the value of the Fund's investments. Individual
foreign economies may also differ favorably or unfavorably from the United
States economy in areas such as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency, and balance of
payments position, which may likewise affect the Fund's investments. Moreover,
foreign legal systems may be affected by the prevailing political climate and
the Fund may not be able to obtain legal remedies or enforce judgments in those
courts.
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 publicly available information about foreign securities than is
available about domestic securities. Foreign companies are not subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by the 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 the 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. In addition, 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.
EMERGING MARKETS. General. A developing country or emerging market country can
be considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the developed European countries (primarily in
Western Europe), the United States, Canada, Japan, Australia, New Zealand, Hong
Kong and Singapore. The characteristics of markets can change over time.
Currently, investing in many emerging markets may not be
9
<PAGE> 51
desirable or feasible because of the lack of adequate custody arrangements for
the Fund's assets, overly burdensome repatriation and similar restrictions, the
lack of organized and liquid securities markets, unacceptable political risks or
other reasons. As desirable opportunities to invest in securities in emerging
markets develop, the Fund may expand and further broaden the group of emerging
markets in which it invests. In the past, markets of developing countries have
been more volatile than the markets of developed countries; however, such
markets often have provided higher rates of return to investors. AIM believes
that these characteristics can be expected to continue in the future.
Many of the risks described above relating to foreign securities generally
will be greater for emerging markets than for developed countries. Many emerging
markets have experienced substantial rates of inflation for many years.
Inflation and rapid fluctuations in inflation rates have had and may continue to
have very negative effects on the economies and securities markets of certain
developing markets. Economies in emerging markets generally are heavily
dependent upon international trade and accordingly, have been and may continue
to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also have
been and may continue to be affected adversely by economic conditions in the
countries with which they trade.
Also, the securities markets of developing countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of the United States and other more developed countries. Disclosure,
regulatory and accounting standards in many respects are less stringent than in
the United States and other developed markets. There also may be a lower level
of monitoring and regulation of developing markets and the activities of
investors in such markets, and enforcement of existing regulations has been
extremely limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States; this is particularly true with respect to emerging markets.
Such markets have different settlement and clearance procedures. In certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Such settlement problems may cause emerging market securities to
be illiquid. The inability of the Fund to make intended securities purchases due
to settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. Certain
emerging markets may lack clearing facilities equivalent to those in developed
countries. Accordingly, settlements can pose additional risks in such markets
and ultimately can expose the Fund to the risk of losses resulting from the
Fund's inability to recover from a counterparty.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. The Fund's portfolio securities in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the Board of Directors.
Investment in certain emerging market securities is restricted or controlled
to varying degrees. These restrictions or controls may at times limit or
preclude foreign investment in certain emerging market securities and increase
the costs and expenses of the Fund. Emerging markets may require governmental
approval for the repatriation of investment income, capital or the proceeds of
sales of securities by foreign investors. In addition, if a deterioration occurs
in an emerging market's balance of payments, the market could impose temporary
restrictions on foreign capital remittances.
Eastern European Markets. The Fund intends to invest in the securities of
issuers domiciled in Eastern European countries. Investment in the securities of
issuers in Eastern European markets involves certain additional risks not
involved in investment in securities of issuers in more developed capital
markets, such as (i) low or non-existent trading volume, resulting in a lack of
liquidity and increased volatility in prices for such securities, as compared to
securities of comparable issuers in more developed capital markets, (ii)
uncertain national policies and social, political and economic instability
(including the possibility that such countries could revert to a centralist
planned government), increasing the potential for expropriation of assets,
confiscatory taxation, high rates of inflation or unfavorable diplomatic
developments, (iii) possible fluctuations in exchange rates, differing legal
systems and the existence or possible imposition of exchange controls, custodial
restrictions or other foreign or U.S. governmental laws or restrictions
applicable to such investments, (iv) national policies which may limit the
Fund's investment opportunities such as restrictions on investment in issuers or
industries deemed sensitive to national interests, and (v) the lack of developed
legal structures governing private and foreign investments and private property.
Eastern European capital markets are emerging in a dynamic political and
economic environment brought about by the recent events there that have reshaped
political boundaries and traditional ideologies. In such a dynamic environment,
there can be no assurance that the Eastern European capital markets will
continue to present viable investment opportunities for the Fund. In the past,
Eastern European governments have expropriated substantial amounts of private
property, and most claims of the property owners have never been finally
settled. There is no assurance that such expropriations will not recur. In such
an event, it is possible that the Fund could lose the entire value of its
investments in the affected Eastern European markets.
The currencies of Eastern European countries are not, at present, freely
convertible into other currencies. Also, certain Eastern European authorities
presently require that securities of certain Eastern European issuers be held by
custodians in Eastern Europe. At
10
<PAGE> 52
this time, it is possible that certain Eastern European countries may not have
available institutions qualified under the 1940 Act to hold Fund assets.
Therefore, the Fund may need to seek an exemptive order from the SEC prior to
investing in certain Eastern European countries. There is no assurance that the
SEC would issue such an order.
Reforms currently underway and anticipated throughout Eastern Europe are
directed at political and economic liberalization, with efforts to develop
increasingly market-oriented economies and to decentralize the economic and
political decision-making processes currently in the forefront. There can be no
assurance that these reforms will continue or, if continued, will achieve their
goals; in addition, there is the possibility that reforms may be reversed in the
future.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The following restrictions may not be changed without approval of the Fund's
shareholders. The Fund may not:
1. Purchase a security if, as a result, with respect to 75% 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, and except that a Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order.
2. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by the Fund,
except that the Fund may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive order.
3. 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 SEC permits their exclusion.
4. Issue senior securities, except to the extent permitted by the 1940
Act, including permitted borrowings.
A complete listing of investment restrictions applicable to the Fund, some of
which may be changed by the Board of Directors without shareholder approval, is
contained in the Statement of Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Fund is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Fund and persons or companies furnishing
services to the Fund, including the investment advisory agreement with AIM, the
administrative services agreement with AIM, the agreement with AIM Distributors
regarding distribution of the Fund's shares, the agreement with State Street
Bank and Trust Company as custodian, and the agreement with A I M Fund Services,
Inc. as transfer agent. The day-to-day operations of the Fund are delegated to
the officers of the Company and to AIM, subject always to the objective and
policies of the Fund and to the general supervision of the Board of Directors.
Information concerning the Board of Directors may be found in the Statement of
Additional Information. 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP plc, a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis.
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to
an investment advisory agreement dated as of February 28, 1997, as amended
[ ] 1997 (to add the Fund) (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its subsidiaries, manages or advises 55
investment company portfolios (including the Fund). As of July 1, 1997, the
total assets advised or managed by AIM or its subsidiaries were approximately
$74.3 billion.
Under the terms of the Advisory Agreement, AIM supervises all aspects of the
Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund.
SUB-ADVISOR. INVESCO Global Asset Management Limited, Cedar House, 41 Cedar
Avenue, Hamilton, HM12 Bermuda, serves as sub-advisor to the Fund pursuant to a
sub-advisory agreement between AIM and IGAM, dated as of [July ], 1997 (the
"Sub-Advisory Agreement"). By the terms of the Sub-Advisory Agreement, AIM has
appointed IGAM to provide AIM with international economic and market research,
securities analyses and investment recommendations with respect to the Fund's
investment portfolio. The Sub-Advisory Agreement provides that IGAM is not
responsible for the actual portfolio investment decisions of the Fund or for the
execution of portfolio transactions on behalf of the Fund. The Fund's portfolio
investment decisions and the execution of securities transactions to carry out
such decisions are solely the responsibility of AIM as the Fund's investment
advisor.
11
<PAGE> 53
IGAM is an indirect, wholly owned, investment advisory subsidiary of AMVESCAP
plc. As of July 1, 1997, IGAM had total assets of approximately U.S. $ , and
was represented in countries. The professional investment staff of IGAM
includes experienced portfolio managers and research staff.
ADMINISTRATOR. AIM and the Company have entered into an Administrative
Services Agreement, dated as of February 28, 1997, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Fund. AIM is entitled to receive from the Fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board of Directors. Currently, AIM is reimbursed for the services of the
Fund's principal financial officer and his staff, and any expenses related to
such services.
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 Board of Directors,
AIM may take into account sales of shares of the Fund and other funds advised by
AIM in selecting broker-dealers to effect portfolio transactions on behalf of
the Fund.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Fund. AIM's investment staff consists of approximately 125
individuals. While individual members of AIM's investment staff are assigned
primary responsibility for the day-to-day management of each of AIM's accounts,
all accounts are reviewed on a regular basis by AIM's Investment Policy
Committee to ensure that they are being invested in accordance with the
accounts' and AIM's investment policies. The individuals on the investment team
who are primarily responsible for the day-to-day management of the Fund are Paul
A. Rogge and Clas G.Olsson. Mr. Rogge is Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly owned subsidiary of AIM, and has been
responsible for the Fund since its inception. Mr. Rogge has been associated with
AIM since 1991 and has a total of six years of experience as an investment
professional. Mr. Olsson has been responsible for the Fund since its inception.
Mr. Olsson has been associated with AIM since 1994 and has a total of three
years of experience as an investment professional. Prior to joining AIM, he was
a broker assistant with Merrill Lynch, Pierce, Fenner & Smith Incorporated.
FEES AND EXPENSES. Pursuant to the Advisory Agreement, AIM is entitled to
receive a fee from the Fund calculated at the annual rate 0.95% of the first
$500 million of net assets and 0.90% of net assets over $500 million. AIM is
also entitled to receive reimbursement of administrative costs incurred on
behalf of the Fund. Pursuant to the Sub-Advisory Agreement between AIM and IGAM
with respect to the Fund, IGAM is entitled to receive 0.20% of the first $500
million and 0.175% of net assets over $500 million.
In addition, the Company and A I M Fund Services, Inc. P.O. Box 4739, Houston,
TX 77210-4739, a wholly owned subsidiary of AIM and registered transfer agent,
have entered into a Transfer Agency and Service Agreement, pursuant to which AFS
provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Fund.
FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees,
while retaining its ability to be reimbursed for such fees prior to the end of
each fiscal year. Any fee waivers will be shared proportionately by AIM and
IGAM. 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.
DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of the Fund (the "Distribution Agreements") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A, Class B and Class C shares of the Fund. The address of
AIM Distributors is P.O. Box 4739, Houston, Texas 77021-4739. 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 Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM Distributors sells Class B shares at net
asset value subject to a contingent deferred sales charge established by AIM
Distributors. AIM Distributors is authorized to advance to institutions through
whom Class B shares are sold a sales commission under schedules established by
AIM Distributors. The Distribution Agreement for the Class B shares provides
that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the
total 1.00% payable under the distribution plan applicable to Class B shares) of
the Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges in respect of the outstanding Class B
shares attributable to AIM Distributors; provided, however, that a complete
termination of the Class B shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay Contingent Deferred Sales Charges.
DISTRIBUTION PLANS. Class A and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of the Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of the Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.35% of the average daily net assets of Class A shares of
the Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of the Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish con-
12
<PAGE> 54
tinuing personal shareholder services to their customers who purchase and own
Class A or Class C shares of the Fund. Payments can also be directed by AIM
Distributors to selected institutions who have entered into service agreements
with respect to Class A and Class C shares of the Fund and who provide
continuing personal services to their customers who own Class A and Class C
shares of the Fund. The service fees payable to selected institutions are
calculated at the annual rate of 0.25% of the average daily net asset value of
those Fund shares that are held in such institution's customers' accounts which
were purchased on or after a prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of
the average net assets of the Fund attributable to the customers of such dealers
or financial institutions are characterized as a service fee, and payments to
dealers and other financial institutions in excess of such amount and payments
to AIM Distributors would be characterized as an asset-based sales charge
pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on
the total amount of sales charges, including asset-based sales charges, that may
be paid by the Company with respect to the Fund. The Class A and C Plan does not
obligate the Fund to reimburse AIM Distributors for the actual expenses AIM
Distributors may incur in fulfilling its obligations under the Class A and C
Plan on behalf of the Fund. Thus, under the Class A and C Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee. Payments pursuant to the
Plans are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of such amount, the
Fund pays a service fee of 0.25% of the average daily net assets attributable to
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 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 and C 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 the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent, for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one
particular class over another.
For additional information concerning the operation of the Plans, see the
Statement of Additional Information.
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ORGANIZATION OF THE COMPANY
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 six investment portfolios: the Fund, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM
INTERNATIONAL EQUITY FUND and AIM ASIAN GROWTH FUND. The Board of Directors may
authorize additional portfolios in the future. Shares of the Fund are offered
to investors pursuant to this Prospectus, while shares of the Company's other
portfolios are offered to investors pursuant to separate prospectuses. The
authorized capital stock of the Company consists of 4,000,000,000 shares of
common stock with a par value of $0.001 per share, of which 200,000,000 shares
are designated Class A shares, 200,000,000 shares are designated Class B shares
and 200,000,000 shares are designated Class C shares of each investment
portfolio of the Company, and the balance of which are unclassified.
13
<PAGE> 55
Class A shares, Class B shares and Class C shares of the Fund represent
interests in the 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 (such as those associated with
the shareholder servicing of their shares) and is subject to differing sales
loads (which may affect performance), 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 the 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, Class B
shares and Class C shares of the 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 the 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.
14
<PAGE> 56
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR CASH MANAGEMENT FUND(1),(2) AIM GLOBAL INCOME FUND
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INCOME FUND(2) AIM GROWTH FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM HIGH YIELD FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM INCOME FUND
AIM ADVISOR MULTIFLEX FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ADVISOR REAL ESTATE FUND AIM INTERNATIONAL EQUITY FUND
AIM AGGRESSIVE GROWTH FUND AIM LIMITED MATURITY TREASURY SHARES
AIM BALANCED FUND AIM MONEY MARKET FUND(1)
AIM BLUE CHIP FUND AIM MUNICIPAL BOND FUND
AIM CAPITAL DEVELOPMENT FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CHARTER FUND AIM TAX-EXEMPT CASH FUND(1)
AIM CONSTELLATION FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
</TABLE>
(1) Class A shares of AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND, and Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
(2)Fund closed to new investments on August 4, 1997. However, until October 3,
1997 the Fund will continue to accept investments (i) from shareholders of
record on August 4, 1997 of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND or (ii) on behalf of clients of selling group members who were
INVESCO Advisor Funds, Inc. selling group members on August 1, 1997. Please
refer to "Exchange Privilege" herein and the Fund's prospectus dated August
4, 1997.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-A 07/97
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<PAGE> 57
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME
FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND,
AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM AGGRESSIVE GROWTH
FUND, AIM BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM
CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM
GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND
FUND, AIM VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM
AGGRESSIVE GROWTH FUND), the "Multiple Class Funds," may be purchased at their
respective net asset value plus a sales charge as indicated below, except that
Class A shares of AIM TAX-EXEMPT CASH FUND, Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold
without a sales charge and Class B shares (the "Class B shares") and Class C
shares ("Class C shares") of the Multiple Class Funds (except Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND) are sold at net asset value subject to a
contingent deferred sales charge payable upon certain redemptions. These
contingent deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-A 07/97
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<PAGE> 58
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL
DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM ADVISOR INCOME FUND, AIM ADVISOR REAL ESTATE FUND, AIM BALANCED
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL
INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-A 07/97
A-3
<PAGE> 59
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 the Class A shares
of AIM TAX-FREE INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of
the next $1 million of such purchases, plus 0.50% of the next $17 million of
such purchases, plus 0.25% of amounts in excess of $20 million of such
purchases. See "Contingent Deferred Sales Charge Program for Large Purchases."
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), and which are sold at net
asset value and are not subject to a contingent deferred sales charge, in an
amount up to 0.10% of such purchases of shares of AIM LIMITED MATURITY TREASURY
SHARES, and in an amount up to 0.25% of such purchases of shares of AIM TAX-FREE
INTERMEDIATE SHARES.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price (0.60% of the
purchase price of the AIM ADVISOR INCOME FUND) of the Class C shares sold by the
dealer or institution, and will consist of a sales commission of 0.75% of the
purchase price (0.35% of the purchase price of the AIM ADVISOR INCOME FUND) of
the Class C shares sold plus an advance of the first year service fee of 0.25%
with respect to such shares. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. The
portion of the payments to AIM Distributors under the Class C Plan attributable
to Class C shares which constitutes an asset-based sales charge (0.75%) (0.35%
for AIM ADVISOR INCOME FUND) is intended in part to permit AIM Distributors to
recoup a portion of such on-going sales commission plus financing costs, if any.
MCF-A 07/97
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<PAGE> 60
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES (except Class A shares of AIM ADVISOR CASH MANAGEMENT FUND)
are sold subject to the initial sales charges described above and are
subject to the other fees and expenses described herein. Class A shares of
AIM MONEY MARKET FUND are designed to meet the needs of an investor who
wishes to establish a dollar cost averaging program, pursuant to which
Class A shares an investor owns may be exchanged at net asset value for
Class A shares of another Multiple Class Fund or shares of another AIM Fund
which is not a Multiple Class Fund, subject to the terms and conditions
described under the caption "Exchange Privilege -- Terms and Conditions of
Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND)
are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the
average daily net assets of a Multiple Class Fund attributable to Class C
shares. See the discussion under the caption "Management -- Distribution
Plans." In addition, Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) redeemed within one year from the date such shares
were purchased are subject to a 1.00% contingent deferred sales charge. No
contingent deferred sales charge will be imposed if Class C shares are
redeemed after one year from the date such shares were purchased.
Redemptions of Class C shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. (A
contingent deferred sales charge may be imposed upon redemptions of Class A
and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND when such shares
were purchased in an exchange. See "How to Redeem Shares -- Multiple
Distribution System -- Class C Shares" and "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases").
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are, however, subject to
the other fees and expenses described in the prospectus for AIM MONEY
MARKET FUND.
MCF-A 07/97
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<PAGE> 61
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM ADVISOR CASH MANAGEMENT FUND, AIM MONEY
MARKET FUND, AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because
each Money Market Fund uses the amortized cost method of valuing the securities
it holds and rounds its per share net asset value to the nearest whole cent, it
is anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT
FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class B and Class C
shares of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP or
SARSEP accounts should be linked;
MCF-A 07/97
A-6
<PAGE> 62
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds)
within the following 13 consecutive months. By marking the LOI section on the
account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii)
Class B and Class C shares of the Multiple Class Funds) at the time of the
proposed purchase. Rights of Accumulation are also available to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C
shares of AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum
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initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any AIM Limited
Maturity Treasury Shares sold at net asset value to an employee benefit plan in
accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided:
MCF-A 07/97
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(a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is effected within 30 days of such redemption or repurchase;
and (b) that the unit holder or his dealer provides AIM Distributors with a
letter which: (i) identifies the name, address and telephone number of the
dealer who sold to the unit holder the units to be redeemed or repurchased; and
(ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is being funded exclusively by the proceeds from the
redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds, AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND), it is disadvantageous to effect such purchases while a
Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or twenty-fifth day of the applicable 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
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<PAGE> 65
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; SARSEP plans; and SEP
plans (collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF-A 07/97
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds (except AIM
ADVISOR CASH MANAGEMENT FUND), listed below and referred to herein as the "Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 5.50% or 4.75% of the public offering price of such shares; Class A shares
(or shares which normally involve the payment of initial sales charges) of
certain of the AIM Funds, listed below and referred to herein as the "Lower Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 1.00% of the public offering price of such shares; and Class A shares or
shares of certain other funds, listed below and referred to herein as the "No
Load Funds," are sold at net asset value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY SHARE
CLASS A FUND -- CLASS A AIM TAX-FREE INTERMEDIATE
AIM ADVISOR INCOME FUND -- AIM GLOBAL INCOME SHARES -- CLASS A
CLASS A FUND -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR CASH MANAGEMENT FUND
AIM ADVISOR LARGE CAP AIM GROWTH FUND -- CLASS A -- CLASS A
VALUE FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM MONEY MARKET FUND
AIM ADVISOR MULTIFLEX AIM INCOME FUND -- CLASS A -- AIM CASH RESERVE SHARES
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MONEY MARKET
AIM BALANCED FUND -- CLASS A FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A AIM MUNICIPAL BOND
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM CHARTER FUND -- CLASS A OF CONNECTICUT -- CLASS A
AIM CONSTELLATION AIM VALUE FUND -- CLASS A
FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) effective August 4, 1997
(except with respect to shares of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND), no shares of any Load Fund, Class C of a Multiple Class Fund,
Lower Load Fund or No Load Fund may be exchanged for shares of AIM ADVISOR CASH
MANAGEMENT FUND or AIM ADVISOR INCOME FUND; (ii) effective October 3, 1997 no
share of any Load Fund, Class C of a Multiple Class Fund, Lower Load Fund or No
Load Fund may be exchanged for shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM
ADVISOR INCOME FUND; (iii) Load Fund share purchases of $1,000,000 or more which
are subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (iv) LOWER LOAD FUND SHARE PURCHASES
OF $1,000,000 OR MORE AND AIM Cash Reserve Shares of AIM MONEY MARKET FUND and
AIM TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN
AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT
DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT
DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD
SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (v) Class A shares and AIM
LIMITED MATURITY TREASURY SHARES may be exchanged for Class A shares or AIM
LIMITED MATURITY TREASURY SHARES, (vi) Class B shares may be exchanged only for
Class B shares; (vii) Class C shares may only be exchanged for Class C shares;
(viii) Class A shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged for
Class A shares of any Load Fund, Lower Load Fund or No-Load Fund at net asset
value; (ix) Class C shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged
for Class C shares of any Multiple Class Fund at net asset value; and (x) AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged for Class A
shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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<PAGE> 67
Broker-dealers and institutions of record for Class A or Class C shares
purchased pursuant to an exchange from Class A or Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND will be compensated according to the sales commission or
concession that would apply if these Class A or Class C share purchases had been
purchased in a manner other than pursuant to an exchange.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
MCF-A 07/97
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<PAGE> 68
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares (except for Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-A 07/97
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<PAGE> 69
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on
April 30, 1995 of these funds. Shareholders whose broker/dealers maintain a
single omnibus account with the Transfer Agent on behalf of those shareholders,
perform sub-accounting functions with respect to those shareholders, and are
unable to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996; or (v) on Class C shares of AIM
ADVISOR CASH MANAGEMENT FUND except in certain cases when the shares were
purchased in an exchange. Redemptions of shares of AIM ADVISOR CASH MANAGEMENT
FUND are generally not subject to a contingent deferred sales charge; however, a
contingent deferred sales charge may be applicable to redemptions of shares of
AIM ADVISOR CASH MANAGEMENT FUND if the redeemed shares were exchanged from
another Class C share fund and the one year holding period in such fund has not
been completed.
Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the fifth paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds.".
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
MCF-A 07/97
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<PAGE> 70
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund, Class A shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM Cash Reserve
Shares of AIM MONEY MARKET FUND which were acquired through an exchange of
shares which previously were subject to the 1% contingent deferred sales charge
will be credited with the period of time such exchanged shares were held, and
(ii) shares of any Load Fund which are subject to the 1% contingent deferred
sales charge and which were acquired through an exchange of shares of a Lower
Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the total amount invested in
a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of
intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the
shares being redeemed were purchased by an employer-sponsored Plan with at least
100 eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above on the basis of the value of each Plan
participant's aggregate investment in the AIM Funds, and not on the aggregate
investment made by the Plan or on the number of eligible employees; (2)
redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within 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
MCF-A 07/97
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<PAGE> 71
Distributors has made arrangements with certain dealers and investment advisors
to accept telephone instructions for the redemption of shares. AIM Distributors
reserves the right to impose conditions on these dealers and investment
advisors, including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The Transfer Agent and AIM Distributors will not be liable for any
loss, expense or cost arising out of any telephone redemption request effected
in accordance with the authorization set forth at that item of the account
application if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures may include recordings of
telephone transactions (maintained for six months), requests for confirmation of
the shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT FUND and
the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not
apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as
MCF-A 07/97
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<PAGE> 72
certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES AND LIMITED MATURITY TREASURY SHARES
ONLY). Within 90 days of a redemption, a shareholder may invest all or part of
the redemption proceeds in Class A shares of any AIM Fund (except Class A shares
of AIM ADVISOR CASH MANAGEMENT FUND) and AIM Limited Maturity Treasury Shares at
the net asset value next computed after receipt by the Transfer Agent of the
funds to be reinvested; provided, however, if the redemption was made from AIM
Limited Maturity Treasury Shares or Class A shares of AIM TAX-FREE INTERMEDIATE
SHARES, the reinvested proceeds will be subject to the difference in sales
charge between the shares redeemed and the shares the proceeds are reinvested
in. The shareholder must ask the Transfer Agent for such privilege at the time
of reinvestment. A realized gain on the redemption is taxable, and reinvestment
may alter any capital gains payable. If there has been a loss on the redemption
and shares of the same fund are repurchased, all of the loss may not be tax
deductible, depending on the timing and amount reinvested. Under the Code, if
the redemption proceeds of fund shares on which a sales charge was paid are
reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales
charge within 90 days of the payment of the sales charge, the shareholder's
basis in the fund shares redeemed may not include the amount of the sales charge
paid, thereby reducing the loss or increasing the gain recognized from the
redemption; however, the shareholder's basis in the fund shares purchased will
include the sales charge. Each AIM Fund may amend, suspend or cease offering
this privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. This privilege may only be exercised once
each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE SHARES value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
MCF-A 07/97
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<PAGE> 73
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR CASH MANAGEMENT FUND.......... declared daily; paid monthly annually annually
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INCOME FUND................... declared and paid monthly monthly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES...... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
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 a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (except Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND) (iii) dividends and distributions attributable to Class A
shares or AIM Limited Maturity Treasury Shares may not be reinvested in Class A
shares of AIM ADVISOR CASH MANAGEMENT FUND or Class B or Class C shares, and
(iv) dividends and distributions attributable to the AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund
or in any Class B or Class C shares. Investors who have not previously selected
such a reinvestment option on the account application form may contact the
Transfer Agent at any time to obtain a form to authorize such reinvestments in
another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND).
Dividends on all shares may also be affected by other class-specific expenses.
MCF-A 07/97
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<PAGE> 74
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE
INTERMEDIATE 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 ADVISOR CASH
MANAGEMENT FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR REAL ESTATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE
INTERMEDIATE SHARES will qualify for this dividends received deduction. Shortly
after the end of each year, shareholders will receive information regarding the
amount and federal income tax treatment of all distributions paid during the
year. Certain dividends declared in October, November or December of a calendar
year are taxable to shareholders as though received on December 31 of that year
if paid to shareholders during January of the following calendar year. No gain
or loss will be recognized by shareholders upon the automatic conversion of
Class B shares of a Multiple Class Fund into Class A shares of such Fund. With
respect to tax-exempt shareholders, distributions from the Funds will not be
subject to federal income taxation to the extent permitted under the applicable
tax-exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of 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
MCF-A 07/97
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<PAGE> 75
other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
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 ADVISOR INTERNATIONAL VALUE FUND, AIM INTERNATIONAL EQUITY FUND, AIM
GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND
AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in
which it is eligible to do so, each of these funds may elect to pass through to
shareholders credits for foreign taxes paid. If the fund makes such an election,
a shareholder who receives a distribution (1) will be required to include in
gross income his proportionate share of foreign taxes allocable to the
distribution and (2) may claim a credit or deduction for such share for his
taxable year in which the distribution is received, subject to the general
limitations imposed on the allowance of foreign tax credits and deductions.
Shareholders should also note that certain gains or losses attributable to
fluctuations in exchange rates or foreign currency forward contracts may
increase or decrease the amount of income of the fund available for distribution
to shareholders, and should note that if such losses exceed other income during
a taxable year, the fund would not be able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND
FUND, AIM LIMITED MATURITY TREASURY SHARES AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE SHARES, for
which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box
2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of
the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
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 (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-A 07/97
A-20
<PAGE> 76
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-A 07/97
B-1
<PAGE> 77
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
MCF-A 07/97
B-2
<PAGE> 78
[AIM LOGO APPEARS HERE]
THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO Global Asset Management Limited
Cedar House, 41 Cedar Avenue
Hamilton, HM 12 Bermuda
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Bldg.
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
<PAGE> 79
[AIM LOGO
APPEARS HERE]
THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK--
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
AUGUST 4, 1997
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.
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 August 4, 1997, has been filed with the United
States Securities and Exchange Commission (the "SEC") and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the
Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material
incorporated by reference, and other information regarding the Funds.
Additional information about the Funds may also be obtained from
http://www.aimfunds.com.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUNDS' 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 FUNDS 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.
<PAGE> 80
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUNDS................................ 4 FUNDS--Registered Trademark--........... A-1
Table of Fees and Expenses............. 4 Introduction to The AIM Family of
Financial Highlights................... 6 Funds................................ A-1
Performance............................ 11 How to Purchase Shares.................. A-1
Investment Objectives and Policies..... 11 Terms and Conditions of Purchase of the
Hedging Strategies..................... 14 AIM Funds............................ A-2
Other Investment Techniques............ 15 Special Plans.......................... A-9
Risk Factors........................... 18 Exchange Privilege..................... A-11
Investment Restrictions................ 19 How to Redeem Shares................... A-13
Portfolio Turnover..................... 19 Determination of Net Asset Value....... A-17
Management............................. 20 Dividends, Distributions and Tax
Organization of the Company............ 23 Matters................................ A-18
General Information.................... A-20
APPENDIX A................................ A-21
APPENDIX B................................ A-23
APPLICATION INSTRUCTIONS.................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
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 six separate series 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 the Funds' investment objectives and policies, see "Investment
Objectives and Policies."
The Company also offers other classes of shares in three other investment
portfolios, AIM ASIAN GROWTH FUND ("ASIAN FUND"), AIM EUROPEAN DEVELOPMENT FUND
("EUROPEAN FUND") AND AIM INTERNATIONAL EQUITY FUND ("EQUITY FUND")
(collectively, with AGGRESSIVE GROWTH FUND, GROWTH FUND AND INCOME FUND, the
"Funds") each of which pursues unique investment objectives. All such other
Funds offer multiple classes of shares to different types of investors. The
shares of the other Funds of the Company have different sales charges and
expenses, which may affect performance. To obtain information about ASIAN FUND,
EUROPEAN FUND or EQUITY FUND, call (800) 347-4246. ASIAN FUND and EUROPEAN FUND
are not available to investors at this time. See "General
Information."
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 "OTHER INVESTMENT
TECHNIQUES -- BORROWING."
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Funds' investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM, together with its subsidiaries, manages or advises 55 investment company
portfolios. As of July 1, 1997, the total assets advised or managed by AIM or
its subsidiaries were approximately $74.3 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 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 transfer agency, dividend distribution and disbursement, and
shareholder services for each Fund.
2
<PAGE> 81
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C
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 date
on 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.
Class C Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a contingent deferred sales charge
of 1% on certain redemptions made within one year of the date such shares
were purchased.
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 on Class B shares
prior to conversion or Class C shares 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. ("AIM
Distributors") will reject any order for purchase of more than $250,000 for
Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Funds' shares is A I M Distributors, Inc., 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 (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of each Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set
forth herein. See "Exchange Privilege."
REDEEMING SHARES. 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 date on which a purchase was
made. Class B shares redeemed after six years following the date of purchase
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Holders of Class C shares may redeem all or a portion of their shares at net
asset value on any business day, less a 1% contingent deferred sales charge for
redemptions made within one year from the date such shares were purchased. 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 of the Funds may be reinvested at net
asset value without payment of a sales charge in the Funds' shares or may be
invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, LA FAMILIA AIM DE
FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND
AIMFUNDS.COM AND INVEST WITH DISCIPLINE ARE SERVICE MARKS OF A I M MANAGEMENT
GROUP INC.
3
<PAGE> 82
THE FUNDS
- --------------------------------------------------------------------------------
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 for Class A and Class B shares set forth in the table are
based on the average net assets of the respective classes of the Funds for the
year ended October 31, 1996. The fees and expenses for Class C shares set forth
in the table are based on the estimated average net assets of Class C shares of
the Funds for the first period of operation. The rules of the SEC require that
the maximum sales charge be reflected in the table, even though certain
investors may qualify for reduced sales charges. See "How to Purchase Shares."
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH FUND GROWTH FUND INCOME FUND
-------------------------------- -------------------------------- -----------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A
-------- -------- -------- -------- -------- -------- -----------
<S> <C> <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 None 4.75% None None 4.75%
Maximum sales load on
reinvested dividends
and distributions..... None None None None None None None
Deferred sales load (as
a % of original
purchase price or
redemption proceeds,
whichever is lower)... None* 5.00% 1.00% None* 5.00% 1.00% None*
Redemption fee.......... None None None None None None None
Exchange fee............ None None None None None None None
Annual Fund Operating
Expenses (as a % of
average net assets)
Management fees......... 0.90% 0.90% 0.90% 0.85% 0.85% 0.85% 0.00%**
Rule 12b-1 distribution
plan payments......... 0.50% 1.00% 1.00% 0.50% 1.00% 1.00% 0.50%
Other expenses.......... 0.43% 0.47% 0.47% 0.58%** 0.63%** 0.63% 0.75%**
----- ----- ----- ----- ----- ----- -----
Total fund
operating
expenses....... 1.83% 2.37% 2.37% 1.93% 2.48% 2.48% 1.25%**
===== ===== ===== ===== ===== ===== =====
<CAPTION>
INCOME FUND
---------------------
CLASS B CLASS C
-------- --------
<S> <C> <C>
Shareholder Transaction
Expenses
Maximum sales load
imposed on purchase of
shares (as a % of
offering price)....... None None
Maximum sales load on
reinvested dividends
and distributions..... None None
Deferred sales load (as
a % of original
purchase price or
redemption proceeds,
whichever is lower)... 5.00% 1.00%
Redemption fee.......... None None
Exchange fee............ None None
Annual Fund Operating
Expenses (as a % of
average net assets)
Management fees......... 0.00%** 0.00%
Rule 12b-1 distribution
plan payments......... 1.00% 1.00%
Other expenses.......... 0.75%** 0.75%
----- -----
Total fund
operating
expenses....... 1.75%** 1.75%
===== =====
</TABLE>
- ---------------
* 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 FROM THE DATE SUCH
SHARES WERE PURCHASED. See the Investor's Guide, under the caption "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
** After fee waivers and expense reimbursements. If expenses had not been
reimbursed for the GROWTH FUND, other expenses would have been 0.59% and
0.64% for the Class A shares and Class B shares, respectively, and total
fund operating expenses would have been 1.94% and 2.49% for the Class A
shares and Class B shares, respectively. If management fees had not been
waived and expenses reimbursed for the INCOME FUND, management fees would
have been 0.70%, and other expenses would have been .82% and .83% for the
Class A shares and Class B shares, respectively, and total fund operating
expenses would have been 2.02% and 2.53% for the Class A shares and Class B
shares, 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........................................ $ 65 $ 66 $ 60
3 years....................................... $102 $105 $ 85
5 years....................................... $142 $147 $113
10 years...................................... $252 $262 $191
</TABLE>
THE EXAMPLES ABOVE ASSUME PAYMENT OF A SALES CHARGE AT THE TIME OF PURCHASE;
ACTUAL EXPENSES MAY VARY FOR PURCHASES OF $1 MILLION OR MORE WHICH ARE MADE AT
NET ASSET VALUE AND SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE FOR 18 MONTHS
FOLLOWING THE DATE SUCH SHARES WERE PURCHASED.
4
<PAGE> 83
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................................................. $ 74 $ 75 $ 68
3 years................................................ $104 $107 $ 85
5 years................................................ $147 $152 $115
10 years............................................... $257* $268* $193*
</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................................................. $ 24 $ 25 $ 18
3 years................................................ $ 74 $ 77 $ 55
5 years................................................ $127 $132 $ 95
10 years............................................... $257* $268* $193*
</TABLE>
- ---------------
* Reflects the conversion to Class A shares eight years following the end of the
calendar month in which a purchase was made; therefore years nine and ten
reflect Class A expenses.
An investor would pay the following expenses on a $1,000 investment in Class C
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................................................. $34 $35 $28
3 years................................................ $74 $77 $55
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Funds, 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................................................. $24 $25 $18
3 years................................................ $74 $77 $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, Class B shares and Class C 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.
5
<PAGE> 84
- --------------------------------------------------------------------------------
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 outstanding during the six months ended April
30, 1997, each of the years in the two-year period ended October 31, 1996 and
the period September 15, 1994 (date operations commenced) through October 31,
1994. The data for Class A and Class B shares for the six-month period ended
April 30, 1997 is unaudited. The information (other than the data for Class A
shares and Class B shares for the six months ended April 30, 1997) 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. Class C shares of the Funds commenced
operations on August 4, 1997.
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ---------------------- OCTOBER 31,
1997 1996 1995 1994
---------- --------- --------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARE
Net asset value, beginning of period.......... $ 15.76 $ 13.09 $ 10.22 $ 10.00
Income from investment operations:
Net investment income (loss)................ (0.07) (0.09)(a) (0.09)(a) --
Net gains on securities (both realized and
unrealized).............................. (0.17) 2.81 2.96 0.22
---------- -------- -------- -------
Total from investment operations......... (0.24) 2.72 2.87 0.22
---------- -------- -------- -------
Less distributions:
Distributions from net realized capital
gains..................................... -- (0.05) -- --
---------- -------- -------- -------
Net asset value, end of period................ $ 15.52 $ 15.76 $ 13.09 $ 10.22
========== ======== ======== =======
Total return(b)............................... (1.52)% 20.83% 28.08% 2.20%
========== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)...... $1,098,005 $919,319 $186,029 $18,410
========== ======== ======== =======
Ratio of expenses to average net assets....... 1.74%(c)(d) 1.83% 2.11% 2.02%(e)(f)
========== ======== ======== =======
Ratio of net investment income (loss) to
average net assets.......................... (0.89)%(c) (0.62)% (0.68)% 0.27%(f)(g)
========== ======== ======== =======
Portfolio turnover rate....................... 27% 44% 64% 2%
========== ======== ======== =======
Average brokerage commission rate(h).......... $ 0.0285 $ 0.0155 N/A N/A
========== ======== ======== =======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are annualized and based on average net assets of $1,061,124,353.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) After fee waivers and expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and expense reimbursements is 4.03%
(annualized) for 1994.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratio of net investment income
(loss) to average net assets before fee waivers and expense reimbursements
is (1.74)% (annualized) for 1994.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
6
<PAGE> 85
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ---------------------- OCTOBER 31,
1997 1996 1995 1994
---------- --------- --------- -------------
<S> <C> <C> <C> <C>
CLASS B SHARE
Net asset value, beginning of period......... $ 15.58 $ 13.02 $ 10.21 $ 10.00
Income from investment operations:
Net investment income (loss)............... (0.10) (0.17)(a) (0.14)(a) --
Net gains on securities (both realized and
unrealized)............................. (0.17) 2.78 2.95 0.21
---------- -------- -------- --------
Total from investment operations........ (0.27) 2.61 2.81 0.21
---------- -------- -------- --------
Less distributions:
Distributions from net realized capital
gains.................................... -- (0.05) -- --
---------- -------- -------- --------
Net asset value, end of period............... $ 15.31 $ 15.58 $ 13.02 $ 10.21
========== ======== ======== ========
Total return(b).............................. (1.73)% 20.09% 27.52% 2.10%
========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted)..... $1,037,626 $807,215 $118,199 $ 6,201
========== ======== ======== ========
Ratio of expenses to average net assets...... 2.28%(c)(d) 2.37% 2.62% 2.54%(e)(f)
========== ======== ======== ========
Ratio of net investment income (loss) to
average net assets......................... (1.42)%(c) (1.16)% (1.19)% (0.25)%(f)(g)
========== ======== ======== ========
Portfolio turnover rate...................... 27% 44% 64% 2%
========== ======== ======== ========
Average brokerage commission rate(h) $ 0.0285 $ 0.0155 N/A N/A
========== ======== ======== ========
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are annualized and based on average net assets of $969,834,513.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average assets would have been 2.27% (annualized)
for 1997.
(e) After fee waivers and expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and expense reimbursements is 4.43%
(annualized) for 1994.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratio of net investment income
(loss) to average net assets prior to fee waivers and expense reimbursements
is (2.14)% (annualized) for 1994.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
7
<PAGE> 86
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ----------------------- OCTOBER 31,
1997 1996 1995 1994
--------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARE
Net asset value, beginning of period................ $ 14.20 $ 12.32 $ 10.23 $10.00
Income from investment operations:
Net investment income (loss)................... (0.03) (0.01) (0.02) --
Net gains on securities (both realized and
unrealized).................................. 0.92 2.11 2.11 0.23
-------- -------- -------- ------
Total from investment operations............... 0.89 2.10 2.09 0.23
-------- -------- -------- ------
Less distributions:
Dividends from net investment income.............. -- -- (0.004) --
Distributions from net realized capital gains..... -- (0.22) -- --
-------- -------- -------- ------
Total distributions............................ -- (0.22) (0.004) --
-------- -------- -------- ------
Net asset value, end of period...................... $ 15.09 $ 14.20 $ 12.32 $10.23
======== ======== ======== ======
Total return(a)..................................... 6.27% 17.26% 20.48% 2.30%
======== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............ $148,010 $114,971 $ 23,754 $3,093
======== ======== ======== ======
Ratio of expenses to average net assets(b).......... 1.81%(c)(d) 1.93% 2.12% 1.95%(e)
======== ======== ======== ======
Ratio of net investment income (loss) to average net
assets(f)......................................... (0.50)%(c) (0.13)% (0.28)% 0.10%(e)
======== ======== ======== ======
Portfolio turnover rate............................. 43% 82% 79% 6%
======== ======== ======== ======
Average brokerage commission rate(g)................ $ 0.0427 $ 0.0234 N/A N/A
======== ======== ======== ======
</TABLE>
- ---------------
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets prior to fee waivers and/or expense reimbursements were 1.94%,
2.98% and 5.67% (annualized) for the periods 1996-1994, respectively.
(c) Ratios are annualized and based on average net assets of $135,558,903.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets before fee waivers and/or expense
reimbursements were (0.14)%, (1.14)% and (3.63)% (annualized) for the
periods 1996-1994, respectively.
(g) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
8
<PAGE> 87
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ---------------------- OCTOBER 31,
1997 1996 1995 1994
------------- --------- --------- -------------
<S> <C> <C> <C> <C>
CLASS B SHARE
Net asset value, beginning of period............ $ 14.05 $ 12.26 $ 10.22 $10.00
Income from investment operations:
Net investment income (loss).................. (0.07) (0.05) (0.04) --
Net gains on securities (both realized and
unrealized)................................ 0.91 2.06 2.08 0.22
-------- -------- -------- ------
Total from investment operations........... 0.84 2.01 2.04 0.22
-------- -------- -------- ------
Less distributions:
Distributions from net realized capital gains... -- (0.22) -- --
-------- -------- -------- ------
Total distributions........................ -- (0.22) -- --
-------- -------- -------- ------
Net asset value, end of period.................. $ 14.89 $ 14.05 $ 12.26 $10.22
======== ======== ======== ======
Total return(a)................................. 5.98% 16.60% 19.96% 2.20%
======== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)........ $176,519 $121,848 $ 17,157 $1,277
======== ======== ======== ======
Ratio of expenses to average net assets(b)...... 2.35%(c)(d) 2.48% 2.64% 2.51%(e)
======== ======== ======== ======
Ratio of net investment income (loss) to average
net assets(f)................................. (1.04)%(c) (0.69)% (0.79)% (0.47)%(e)
======== ======== ======== ======
Portfolio turnover rate......................... 43% 82% 79% 6%
======== ======== ======== ======
Average brokerage commission rate(g)............ $ 0.0427 $ 0.0234 N/A N/A
======== ======== ======== ======
</TABLE>
- ---------------
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets prior to fee waivers and/or expense reimbursements were 2.49%,
3.38% and 6.20% (annualized) for the periods 1996-1994, respectively.
(c) Ratios are annualized and based on average net assets of $151,507,217.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.69)%, (1.54)% and (4.16)% (annualized) for the
periods 1996-1994, respectively.
(g) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
9
<PAGE> 88
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------ ------------------------------------------------
PERIOD PERIOD
YEAR ENDED SEPTEMBER 15, YEAR ENDED SEPTEMBER 15,
OCTOBER 31, THROUGH OCTOBER 31, THROUGH
APRIL 30, ----------------- OCTOBER 31, APRIL 30, ----------------- OCTOBER 31,
1997 1996 1995 1994 1997 1996 1995 1994
--------- ------- ------- ------------- --------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.85 $ 10.74 $ 10.02 $10.00 $ 10.84 $ 10.73 $ 10.01 $10.00
Income from investment
operations:
Net investment income.... 0.35 0.79(a) 0.79 0.08 0.32 0.74(a) 0.74 0.07
Net gains (losses) on
securities (both
realized and
unrealized)............ (0.23) 0.25 0.75 0.01 (0.23) 0.24 0.75 0.01
------- ------- ------- ------ ------- ------- ------- ------
Total from investment
operations......... 0.12 1.04 1.54 0.09 0.09 0.98 1.49 0.08
------- ------- ------- ------ ------- ------- ------- ------
Less distributions:
Dividends from net
investment income...... (0.40) (0.81) (0.82) (0.07) (0.37) (0.75) (0.77) (0.07)
Distributions from net
realized capital
gains.................. (0.10) (0.12) -- -- (0.10) (0.12) -- --
------- ------- ------- ------ ------- ------- ------- ------
Total
distributions...... (0.50) (0.93) (0.82) (0.07) (0.47) (0.87) (0.77) (0.07)
------- ------- ------- ------ ------- ------- ------- ------
Net asset value, end of
period................. $ 10.47 $ 10.85 $ 10.74 $10.02 $ 10.46 $ 10.84 $ 10.73 $10.01
======= ======= ======= ====== ======= ======= ======= ======
Total return(b).......... 1.04% 10.22% 16.07% 0.93% 0.78% 9.66% 15.56% 0.79%
======= ======= ======= ====== ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of
period
(000s omitted)....... $28,253 $21,926 $10,004 $2,661 $22,359 $16,787 $ 4,207 $ 362
======= ======= ======= ====== ======= ======= ======= ======
Ratio of expenses to
average net
assets(c)............ 1.25%(d)(e) 1.25% 1.25% 1.25%(f) 1.75%(d)(e) 1.75% 1.74% 1.73%(f)
======= ======= ======= ====== ======= ======= ======= ======
Ratio of net investment
income to average net
assets(c)............ 6.57%(d) 7.27% 7.38% 6.01%(f) 6.07%(d) 6.77% 6.88% 3.59%(f)
======= ======= ======= ====== ======= ======= ======= ======
Portfolio turnover
rate................. 25% 83% 128% 6% 25% 83% 128% 6%
======= ======= ======= ====== ======= ======= ======= ======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses and
net investment income to average net assets prior to fee waivers and/or
expense reimbursements were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------- -------------------------
NET INVESTMENT NET INVESTMENT
EXPENSES INCOME EXPENSES INCOME
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
April 30, 1997 (annualized).................. 1.95% 5.87% 2.44% 5.38%
October 31, 1996............................. 2.02% 6.51% 2.53% 6.00%
October 31, 1995............................. 3.03% 5.59% 3.57% 5.05%
October 31, 1994 (annualized)................ 5.61% 1.65% 22.09% (16.77)%
</TABLE>
(d) Ratios are annualized and based on average net assets of $25,400,530 for
Class A shares and $19,665,182 for Class B shares.
(e) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have remained the same
for both Class A shares and Class B shares.
(f) Annualized.
10
<PAGE> 89
- --------------------------------------------------------------------------------
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. 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. Further information regarding the Funds'
performance is contained in the Funds' annual reports to shareholders, which are
available upon request and without charge.
Standardized total return for Class A shares of a Fund reflects the deduction
of the maximum initial sales charge at the time of purchase. Standardized total
return for Class B shares of a Fund reflects the deduction of the maximum
applicable contingent deferred sales charge on a redemption of shares held for
the period. Standardized total return for Class C shares of a Fund reflects the
deduction of a 1% contingent deferred sales charge, if applicable, 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.
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.
- --------------------------------------------------------------------------------
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
11
<PAGE> 90
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 are listed
on a recognized securities exchange or traded in an over-the-counter market.
Each of these Funds may satisfy the foregoing requirement in part by investing
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. Each of the AGGRESSIVE
GROWTH FUND and the GROWTH FUND may invest up to 20% of its total assets in
securities convertible into or exchangeable for equity securities of foreign and
domestic issuers which (except in the case of ADRs, EDRs and other securities
representing underlying securities of foreign issuers) are listed on a
recognized securities exchange or traded in an over-the-counter market.
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.
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
12
<PAGE> 91
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.
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
non-convertible debt securities of foreign and domestic issuers, it may invest
up to 10% of its total assets in common stocks, preferred stocks and similar
equity securities of foreign and domestic issuers. The INCOME FUND may also
invest up to 10% of its total assets in convertible debt securities of foreign
and domestic issuers.
The INCOME FUND may invest less than 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.)
During the fiscal year ended October 31, 1996, 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......................................................... 40.81%
Aa.......................................................... 13.45%
A........................................................... 10.60%
Baa......................................................... 7.32%
Ba.......................................................... 6.64%
B........................................................... 18.69%
Caa......................................................... 1.43%
Ca.......................................................... 0.00%
C........................................................... 0.00%
D........................................................... 0.00%
Unrated..................................................... 1.06%
------
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.
13
<PAGE> 92
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 the
average portfolio maturity of the Fund will be in the range of 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 strategies 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 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
hedge the value of its portfolio against changes in market conditions or in
exchange rates between currencies (including the U.S. dollar). 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,
14
<PAGE> 93
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 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 a manner
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.
CASH MANAGEMENT AND TEMPORARY DEFENSIVE MEASURES. AIM may invest a portion of
the assets of the Funds in (i) cash or short-term Money Market Obligations, (ii)
U.S. government obligations or investment grade (high quality) corporate bonds
or other debt securities, and (iii) taxable municipal securities, when such
positions are deemed advisable in light of economic or market conditions or for
daily cash management purposes. In addition, AIM may invest, for temporary
defensive purposes, all or substantially all of the assets of the Funds in the
securities described above. 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. Examples of
such obligations include U.S. Treasury obligations and repurchase agreements
secured by such obligations, bankers' acceptances, certificates of deposit,
repurchase agreements, time deposits and commercial paper, and U.S. Government
agencies' securities. Money Market Obligations such as 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.
To the extent that any of the Funds is invested to a significant degree in
cash or cash equivalent Money Market Obligations, U.S. government obligations or
investment grade (high quality) corporate bonds or other debt securities, or
taxable municipal securities, its ability to achieve its investment objective or
objectives may be adversely affected. 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
15
<PAGE> 94
securities, including repurchase agreements. Under normal circumstances, the
INCOME FUND will maintain at least 20% of its total assets in securities of U.S.
issuers.
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 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. 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 com-
16
<PAGE> 95
mitment. 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
transaction. 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.
Reverse repurchase agreement transactions and dollar roll 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.
17
<PAGE> 96
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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.
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 reduc-
18
<PAGE> 97
ing 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,
except that the Fund may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive order.
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 SEC 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 (INCOME FUND only). 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 each Fund may 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 and except that the Fund may purchase
securities of other investment companies to the extent permitted by applicable
law or exemptive order.
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. 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. For additional
information regarding income taxes and brokerage practices, see the Fund's
Statement of Additional Information.
19
<PAGE> 98
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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 agreement with State Street
Bank and Trust Company as custodian, 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.
Information concerning the Board of Directors may be found in the Statement of
Additional Information. 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. AIM Management is an indirect wholly owned
subsidiary of AMVESCAP plc, a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis.
INVESTMENT ADVISOR. A I M Advisors, Inc. ("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 February 28, 1997 (the
"Advisory Agreement"). AIM was organized in 1976 and, together with its
subsidiaries, manages or advises 55 investment company portfolios. As of July 1,
1997, the total assets advised or managed by AIM or its subsidiaries were
approximately $74.3 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.
ADMINISTRATOR. AIM and the Company have entered into an Administrative
Services Agreement dated as of February 28, 1997 (the "Administrative Services
Agreement"), pursuant to which AIM has agreed to provide or arrange for the
provision of certain accounting and other administrative services to the Funds.
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.
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 Funds. AIM's investment staff consists of approximately 125
individuals. While individual members of AIM's investment staff are assigned
primary responsibility for the day-to-day management of each of AIM's accounts,
all accounts are reviewed on a regular basis by AIM's Investment Policy
Committee to ensure that they are being invested in accordance with the
accounts' and AIM's investment policies. The individuals on the investment team
who are primarily responsible for the day-to-day management of each of the Funds
and their titles, if any, with AIM or its affiliates and the Company, the length
of time they have been responsible for the management of the Funds, their years
of experience and prior experience are shown below:
A. Dale Griffin, III, Robert M. Kippes, Clas G. Olsson, Paul A. Rogge and
Barrett K. Sides are responsible for the day-to-day management of the AGGRESSIVE
GROWTH FUND. Mr. Griffin is Vice President of A I M Capital Management, Inc.
("AIM Capital"), a wholly-owned subsidiary of AIM, and has been responsible for
the Fund since its inception in 1994. Mr. Griffin has been associated with AIM
since 1989 and has a total of ten years of experience as an investment
professional. Mr. Kippes is Vice President of AIM Capital and also has been
responsible for the Fund since its inception in 1994. Mr. Kippes has been
associated with AIM since 1989 and has a total of seven years of experience as
an investment professional. Mr. Rogge is Vice President of AIM Capital and also
has been responsible for the Fund since its inception in 1994. Mr. Rogge has
been associated with AIM since 1991 and has a total of six years of experience
as an investment professional. Mr. Sides is Assistant Vice President of AIM
Capital and has been responsible for the Fund since 1995. Mr. Sides has been
associated with AIM since 1990 and has a total of seven years of experience as
an investment professional. Mr. Olsson has been responsible for the Fund since
1997. Mr. Olsson has been associated with AIM since 1994 and has a total of
three years of experience as an investment professional. Prior to joining AIM,
he was a broker assistant with Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
Monika H. Degan, A. Dale Griffin, III, Clas G. Olsson, Paul A. Rogge, Jonathan
C. Schoolar and Barrett K. Sides are responsible for the day-to-day management
of the GROWTH FUND. Background information for Mr. Griffin, Mr. Olsson, Mr.
Rogge and Mr. Sides is discussed above with respect to the management of
AGGRESSIVE GROWTH FUND. Mr. Griffin and Mr. Rogge have been responsible for the
Fund since its inception in 1994. Mr. Olsson has been responsible for the Fund
since 1997. Mr. Sides has been responsible for the Fund since 1995. Ms. Degan
has been responsible for the Fund since 1997. Ms. Degan has been associated with
AIM since 1995 and has six years of experience as an investment professional.
Prior to joining AIM, Ms. Degan was a Senior Financial Analyst for Shell Oil Co.
Pension Trust. Mr. Schoolar is Senior Vice President and Director of AIM
Capital, Vice President of AIM, Vice President of the Company
20
<PAGE> 99
and has been responsible for the Fund since its inception in 1994. Mr. Schoolar
has been associated with AIM since 1986 and has a total of 13 years of
experience as an investment professional.
Robert G. Alley, John L. Pessarra and Carolyn L. Gibbs are responsible for the
day-to-day management of the INCOME FUND. Mr. Alley is Senior Vice President of
AIM Capital, Vice President of AIM, Vice President of the Company and has been
responsible for the Fund since its inception in 1994. Mr. Alley has been
associated with AIM since 1992 and has a total of 24 years of experience as an
investment professional. Prior to joining AIM, he was Senior Fixed Income Money
Manager for Waddell & Reed, Inc. Mr. Pessarra is Vice President of AIM Capital
and also has been responsible for the Fund since its inception in 1994. Mr.
Pessarra has been associated with AIM since 1990 and has a total of 12 years of
experience as an investment professional. Ms. Gibbs is Vice President of AIM
Capital and has been responsible for the Fund since 1995. Ms. Gibbs has been
associated with AIM since 1992 and has over 11 years of experience as an
investment professional. Prior to joining AIM, she was a financial analyst for
Northwest Airlines.
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 those 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.
For the year ended October 31, 1996, each Fund paid the following compensation
to AIM for its advisory services, and the total expenses of each such Class
were, stated as a percentage of the Class' average daily net assets, as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
COMPENSATION EXPENSE EXPENSE
TO AIM RATIO RATIO
------------ ------- -------
<S> <C> <C> <C>
Aggressive Growth Fund..................................... 0.90% 1.83% 2.37%
Growth Fund................................................ 0.85% 1.93% 2.48%
Income Fund................................................ 0.00% 1.25% 1.75%
</TABLE>
For the year ended October 31, 1996, each Fund reimbursed AIM for
administrative services in the following amounts, stated as a percentage of the
Funds' average daily net assets:
<TABLE>
<CAPTION>
REIMBURSEMENT
PAYMENTS
-------------
<S> <C>
Aggressive Growth Fund...................................... 0.01%
Growth Fund................................................. 0.06%
Income Fund................................................. 0.29%
</TABLE>
For the fiscal year ended October 31, 1996, AIM waived advisory fees for
INCOME FUND which represented 0.70% of such Fund's average daily net assets.
21
<PAGE> 100
In addition, the Company and A I M Fund Services, Inc. ("AFS"), P.O. Box 4739,
Houston, TX 77210-4739, a wholly owned subsidiary of AIM and registered transfer
agent, have entered into a Transfer Agency and Service Agreement, pursuant to
which AFS provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Funds.
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 INCOME FUND until such time as in AIM's judgment, the Fund has 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, Class B and Class C
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. Class A and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of each Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of each Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.50% of the average daily net assets of Class A shares of
each Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of each Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of a Fund. Payments can
also be directed by AIM Distributors to selected institutions who have entered
into service agreements with respect to Class A and Class C shares of each Fund
and who provide continuing personal services to their customers who own Class A
and Class C shares of a Fund. The service fees payable to selected institutions
are calculated at the annual rate of 0.25% of the average daily net asset value
of those Fund shares that are held in such institution's customers' accounts
which were purchased on or after a prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of a Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to a
Fund. The Class A and C Plan does not obligate a Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of a Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, a Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
Class B Plan. The 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.
22
<PAGE> 101
Activities that may be financed under the Class A and C 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.
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 SEC as a diversified open-end series management investment company. The
Company currently consists of six investment portfolios: the Funds, AIM
ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, 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 Company's other portfolios are offered to investors pursuant to
separate prospectuses. The authorized capital stock of the Company consists of
4,000,000,000 shares of common stock with a par value of $0.001 per share, of
which 200,000,000 shares are designated Class A shares, 200,000,000 shares are
designated Class B shares and 200,000,000 shares are designated Class C shares
of each investment portfolio of the Company, and the balance of which are
unclassified.
Class A shares, Class B shares and Class C 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 (such as those associated with
the shareholder servicing of their shares) and is subject to differing sales
loads (which may affect performance), 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, Class B
shares and Class C 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. As of July 30, 1997, Merrill Lynch,
Pierce, Fenner & Smith Incorporated was the owner of record of 26.58% of the
outstanding Class B shares of AGGRESSIVE GROWTH FUND. As long as Merrill Lynch,
Pierce, Fenner & Smith Incorporated owns over 25% of such shares, it may be
presumed to be in "control" of the Class B shares of AGGRESSIVE GROWTH FUND, as
defined in the 1940 Act.
23
<PAGE> 102
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR CASH MANAGEMENT FUND(1),(2) AIM GLOBAL INCOME FUND
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INCOME FUND(2) AIM GROWTH FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM HIGH YIELD FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM INCOME FUND
AIM ADVISOR MULTIFLEX FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ADVISOR REAL ESTATE FUND AIM INTERNATIONAL EQUITY FUND
AIM AGGRESSIVE GROWTH FUND AIM LIMITED MATURITY TREASURY SHARES
AIM BALANCED FUND AIM MONEY MARKET FUND(1)
AIM BLUE CHIP FUND AIM MUNICIPAL BOND FUND
AIM CAPITAL DEVELOPMENT FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CHARTER FUND AIM TAX-EXEMPT CASH FUND(1)
AIM CONSTELLATION FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
</TABLE>
(1) Class A shares of AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND, and Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
(2)Fund closed to new investments on August 4, 1997. However, until October 3,
1997 the Fund will continue to accept investments (i) from shareholders of
record on August 4, 1997 of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND or (ii) on behalf of clients of selling group members who were
INVESCO Advisor Funds, Inc. selling group members on August 1, 1997. Please
refer to "Exchange Privilege" herein and the Fund's prospectus dated August
4, 1997.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-A 07/97
A-1
<PAGE> 103
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME
FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND,
AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM AGGRESSIVE GROWTH
FUND, AIM BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM
CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM
GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND
FUND, AIM VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM
AGGRESSIVE GROWTH FUND), the "Multiple Class Funds," may be purchased at their
respective net asset value plus a sales charge as indicated below, except that
Class A shares of AIM TAX-EXEMPT CASH FUND, Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold
without a sales charge and Class B shares (the "Class B shares") and Class C
shares ("Class C shares") of the Multiple Class Funds (except Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND) are sold at net asset value subject to a
contingent deferred sales charge payable upon certain redemptions. These
contingent deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-A 07/97
A-2
<PAGE> 104
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL
DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM ADVISOR INCOME FUND, AIM ADVISOR REAL ESTATE FUND, AIM BALANCED
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL
INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-A 07/97
A-3
<PAGE> 105
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 the Class A shares
of AIM TAX-FREE INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of
the next $1 million of such purchases, plus 0.50% of the next $17 million of
such purchases, plus 0.25% of amounts in excess of $20 million of such
purchases. See "Contingent Deferred Sales Charge Program for Large Purchases."
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), and which are sold at net
asset value and are not subject to a contingent deferred sales charge, in an
amount up to 0.10% of such purchases of shares of AIM LIMITED MATURITY TREASURY
SHARES, and in an amount up to 0.25% of such purchases of shares of AIM TAX-FREE
INTERMEDIATE SHARES.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price (0.60% of the
purchase price of the AIM ADVISOR INCOME FUND) of the Class C shares sold by the
dealer or institution, and will consist of a sales commission of 0.75% of the
purchase price (0.35% of the purchase price of the AIM ADVISOR INCOME FUND) of
the Class C shares sold plus an advance of the first year service fee of 0.25%
with respect to such shares. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. The
portion of the payments to AIM Distributors under the Class C Plan attributable
to Class C shares which constitutes an asset-based sales charge (0.75%) (0.35%
for AIM ADVISOR INCOME FUND) is intended in part to permit AIM Distributors to
recoup a portion of such on-going sales commission plus financing costs, if any.
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TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES (except Class A shares of AIM ADVISOR CASH MANAGEMENT FUND)
are sold subject to the initial sales charges described above and are
subject to the other fees and expenses described herein. Class A shares of
AIM MONEY MARKET FUND are designed to meet the needs of an investor who
wishes to establish a dollar cost averaging program, pursuant to which
Class A shares an investor owns may be exchanged at net asset value for
Class A shares of another Multiple Class Fund or shares of another AIM Fund
which is not a Multiple Class Fund, subject to the terms and conditions
described under the caption "Exchange Privilege -- Terms and Conditions of
Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND)
are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the
average daily net assets of a Multiple Class Fund attributable to Class C
shares. See the discussion under the caption "Management -- Distribution
Plans." In addition, Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) redeemed within one year from the date such shares
were purchased are subject to a 1.00% contingent deferred sales charge. No
contingent deferred sales charge will be imposed if Class C shares are
redeemed after one year from the date such shares were purchased.
Redemptions of Class C shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. (A
contingent deferred sales charge may be imposed upon redemptions of Class A
and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND when such shares
were purchased in an exchange. See "How to Redeem Shares -- Multiple
Distribution System -- Class C Shares" and "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases").
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are, however, subject to
the other fees and expenses described in the prospectus for AIM MONEY
MARKET FUND.
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TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM ADVISOR CASH MANAGEMENT FUND, AIM MONEY
MARKET FUND, AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because
each Money Market Fund uses the amortized cost method of valuing the securities
it holds and rounds its per share net asset value to the nearest whole cent, it
is anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT
FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class B and Class C
shares of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP or
SARSEP accounts should be linked;
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- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds)
within the following 13 consecutive months. By marking the LOI section on the
account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii)
Class B and Class C shares of the Multiple Class Funds) at the time of the
proposed purchase. Rights of Accumulation are also available to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C
shares of AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum
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initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any AIM Limited
Maturity Treasury Shares sold at net asset value to an employee benefit plan in
accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided:
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(a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is effected within 30 days of such redemption or repurchase;
and (b) that the unit holder or his dealer provides AIM Distributors with a
letter which: (i) identifies the name, address and telephone number of the
dealer who sold to the unit holder the units to be redeemed or repurchased; and
(ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is being funded exclusively by the proceeds from the
redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds, AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND), it is disadvantageous to effect such purchases while a
Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or twenty-fifth day of the applicable 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
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may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; SARSEP plans; and SEP
plans (collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF-A 07/97
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds (except AIM
ADVISOR CASH MANAGEMENT FUND), listed below and referred to herein as the "Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 5.50% or 4.75% of the public offering price of such shares; Class A shares
(or shares which normally involve the payment of initial sales charges) of
certain of the AIM Funds, listed below and referred to herein as the "Lower Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 1.00% of the public offering price of such shares; and Class A shares or
shares of certain other funds, listed below and referred to herein as the "No
Load Funds," are sold at net asset value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY SHARE
CLASS A FUND -- CLASS A AIM TAX-FREE INTERMEDIATE
AIM ADVISOR INCOME FUND -- AIM GLOBAL INCOME SHARES -- CLASS A
CLASS A FUND -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR CASH MANAGEMENT FUND
AIM ADVISOR LARGE CAP AIM GROWTH FUND -- CLASS A -- CLASS A
VALUE FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM MONEY MARKET FUND
AIM ADVISOR MULTIFLEX AIM INCOME FUND -- CLASS A -- AIM CASH RESERVE SHARES
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MONEY MARKET
AIM BALANCED FUND -- CLASS A FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A AIM MUNICIPAL BOND
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM CHARTER FUND -- CLASS A OF CONNECTICUT -- CLASS A
AIM CONSTELLATION AIM VALUE FUND -- CLASS A
FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) effective August 4, 1997
(except with respect to shares of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND), no shares of any Load Fund, Class C of a Multiple Class Fund,
Lower Load Fund or No Load Fund may be exchanged for shares of AIM ADVISOR CASH
MANAGEMENT FUND or AIM ADVISOR INCOME FUND; (ii) effective October 3, 1997 no
share of any Load Fund, Class C of a Multiple Class Fund, Lower Load Fund or No
Load Fund may be exchanged for shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM
ADVISOR INCOME FUND; (iii) Load Fund share purchases of $1,000,000 or more which
are subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (iv) LOWER LOAD FUND SHARE PURCHASES
OF $1,000,000 OR MORE AND AIM Cash Reserve Shares of AIM MONEY MARKET FUND and
AIM TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN
AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT
DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT
DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD
SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (v) Class A shares and AIM
LIMITED MATURITY TREASURY SHARES may be exchanged for Class A shares or AIM
LIMITED MATURITY TREASURY SHARES, (vi) Class B shares may be exchanged only for
Class B shares; (vii) Class C shares may only be exchanged for Class C shares;
(viii) Class A shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged for
Class A shares of any Load Fund, Lower Load Fund or No-Load Fund at net asset
value; (ix) Class C shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged
for Class C shares of any Multiple Class Fund at net asset value; and (x) AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged for Class A
shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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Broker-dealers and institutions of record for Class A or Class C shares
purchased pursuant to an exchange from Class A or Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND will be compensated according to the sales commission or
concession that would apply if these Class A or Class C share purchases had been
purchased in a manner other than pursuant to an exchange.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
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<PAGE> 114
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares (except for Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-A 07/97
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<PAGE> 115
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on
April 30, 1995 of these funds. Shareholders whose broker/dealers maintain a
single omnibus account with the Transfer Agent on behalf of those shareholders,
perform sub-accounting functions with respect to those shareholders, and are
unable to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996; or (v) on Class C shares of AIM
ADVISOR CASH MANAGEMENT FUND except in certain cases when the shares were
purchased in an exchange. Redemptions of shares of AIM ADVISOR CASH MANAGEMENT
FUND are generally not subject to a contingent deferred sales charge; however, a
contingent deferred sales charge may be applicable to redemptions of shares of
AIM ADVISOR CASH MANAGEMENT FUND if the redeemed shares were exchanged from
another Class C share fund and the one year holding period in such fund has not
been completed.
Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the fifth paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds.".
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
MCF-A 07/97
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<PAGE> 116
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund, Class A shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM Cash Reserve
Shares of AIM MONEY MARKET FUND which were acquired through an exchange of
shares which previously were subject to the 1% contingent deferred sales charge
will be credited with the period of time such exchanged shares were held, and
(ii) shares of any Load Fund which are subject to the 1% contingent deferred
sales charge and which were acquired through an exchange of shares of a Lower
Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the total amount invested in
a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of
intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the
shares being redeemed were purchased by an employer-sponsored Plan with at least
100 eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above on the basis of the value of each Plan
participant's aggregate investment in the AIM Funds, and not on the aggregate
investment made by the Plan or on the number of eligible employees; (2)
redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within 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
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Distributors has made arrangements with certain dealers and investment advisors
to accept telephone instructions for the redemption of shares. AIM Distributors
reserves the right to impose conditions on these dealers and investment
advisors, including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The Transfer Agent and AIM Distributors will not be liable for any
loss, expense or cost arising out of any telephone redemption request effected
in accordance with the authorization set forth at that item of the account
application if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures may include recordings of
telephone transactions (maintained for six months), requests for confirmation of
the shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT FUND and
the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not
apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as
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certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES AND LIMITED MATURITY TREASURY SHARES
ONLY). Within 90 days of a redemption, a shareholder may invest all or part of
the redemption proceeds in Class A shares of any AIM Fund (except Class A shares
of AIM ADVISOR CASH MANAGEMENT FUND) and AIM Limited Maturity Treasury Shares at
the net asset value next computed after receipt by the Transfer Agent of the
funds to be reinvested; provided, however, if the redemption was made from AIM
Limited Maturity Treasury Shares or Class A shares of AIM TAX-FREE INTERMEDIATE
SHARES, the reinvested proceeds will be subject to the difference in sales
charge between the shares redeemed and the shares the proceeds are reinvested
in. The shareholder must ask the Transfer Agent for such privilege at the time
of reinvestment. A realized gain on the redemption is taxable, and reinvestment
may alter any capital gains payable. If there has been a loss on the redemption
and shares of the same fund are repurchased, all of the loss may not be tax
deductible, depending on the timing and amount reinvested. Under the Code, if
the redemption proceeds of fund shares on which a sales charge was paid are
reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales
charge within 90 days of the payment of the sales charge, the shareholder's
basis in the fund shares redeemed may not include the amount of the sales charge
paid, thereby reducing the loss or increasing the gain recognized from the
redemption; however, the shareholder's basis in the fund shares purchased will
include the sales charge. Each AIM Fund may amend, suspend or cease offering
this privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. This privilege may only be exercised once
each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE SHARES value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR CASH MANAGEMENT FUND.......... declared daily; paid monthly annually annually
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INCOME FUND................... declared and paid monthly monthly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES...... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
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 a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (except Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND) (iii) dividends and distributions attributable to Class A
shares or AIM Limited Maturity Treasury Shares may not be reinvested in Class A
shares of AIM ADVISOR CASH MANAGEMENT FUND or Class B or Class C shares, and
(iv) dividends and distributions attributable to the AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund
or in any Class B or Class C shares. Investors who have not previously selected
such a reinvestment option on the account application form may contact the
Transfer Agent at any time to obtain a form to authorize such reinvestments in
another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND).
Dividends on all shares may also be affected by other class-specific expenses.
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Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE
INTERMEDIATE 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 ADVISOR CASH
MANAGEMENT FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR REAL ESTATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE
INTERMEDIATE SHARES will qualify for this dividends received deduction. Shortly
after the end of each year, shareholders will receive information regarding the
amount and federal income tax treatment of all distributions paid during the
year. Certain dividends declared in October, November or December of a calendar
year are taxable to shareholders as though received on December 31 of that year
if paid to shareholders during January of the following calendar year. No gain
or loss will be recognized by shareholders upon the automatic conversion of
Class B shares of a Multiple Class Fund into Class A shares of such Fund. With
respect to tax-exempt shareholders, distributions from the Funds will not be
subject to federal income taxation to the extent permitted under the applicable
tax-exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of 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
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
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 ADVISOR INTERNATIONAL VALUE FUND, AIM INTERNATIONAL EQUITY FUND, AIM
GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND
AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in
which it is eligible to do so, each of these funds may elect to pass through to
shareholders credits for foreign taxes paid. If the fund makes such an election,
a shareholder who receives a distribution (1) will be required to include in
gross income his proportionate share of foreign taxes allocable to the
distribution and (2) may claim a credit or deduction for such share for his
taxable year in which the distribution is received, subject to the general
limitations imposed on the allowance of foreign tax credits and deductions.
Shareholders should also note that certain gains or losses attributable to
fluctuations in exchange rates or foreign currency forward contracts may
increase or decrease the amount of income of the fund available for distribution
to shareholders, and should note that if such losses exceed other income during
a taxable year, the fund would not be able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND
FUND, AIM LIMITED MATURITY TREASURY SHARES AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE SHARES, for
which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box
2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of
the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
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 (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-A 07/97
A-20
<PAGE> 122
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 RATINGS SERVICES 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.
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<PAGE> 123
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.
A-22
<PAGE> 124
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-23
<PAGE> 125
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.
A-24
<PAGE> 126
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-A 07/97
B-1
<PAGE> 127
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
MCF-A 07/97
B-2
<PAGE> 128
[AIM LOGO APPEARS HERE]
THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, 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--Registered Trademark--, including charges and expenses, please call
(800) 347-4246 or write to A I M Distributors, Inc. and request a free
prospectus. Please read the prospectus carefully before you invest or send
money.
GLO-PRO-1
<PAGE> 129
[AIM LOGO
APPEARS HERE]
THE AIM FAMILY OF FUNDS --REGISTERED TRADEMARK--
AIM INTERNATIONAL EQUITY FUND
(A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
AUGUST 4, 1997
AIM INTERNATIONAL EQUITY FUND (the "Fund") is a diversified, series
investment portfolio of AIM International Funds, Inc. (the
"Company"), an open-end, series, management investment company. The
Fund seeks to provide long-term growth of capital by investing in a
diversified portfolio of international equity securities, the issuers
of which are considered by the Fund's investment advisor to have
strong earnings momentum. There is no assurance that the Fund will
attain its investment objective.
This Prospectus sets forth basic information about the Fund that
prospective investors should know before investing. It should be read
and retained for future reference. A Statement of Additional
Information, dated August 4, 1997, has been filed with the United
States Securities and Exchange Commission (the "SEC") and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the
Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material
incorporated by reference, and other information regarding the Fund.
Additional information about the Fund may also be obtained from
http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 130
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUND................................. 4 FUNDS--Registered Trademark--.......... A-1
Table of Fees and Expenses............. 4 Introduction to The AIM Family of
Financial Highlights................... 6 Funds............................... A-1
Performance............................ 7 How to Purchase Shares................. A-1
Investment Objective and Policies...... 8 Terms and Conditions of Purchase of the
Hedging Strategies and Other Investment AIM Funds........................... A-2
Techniques.......................... 9 Special Plans.......................... A-9
Risk Factors........................... 11 Exchange Privilege..................... A-11
Investment Restrictions................ 12 How to Redeem Shares................... A-13
Management............................. 12 Determination of Net Asset Value....... A-17
Organization of the Company............ 14 Dividends, Distributions and Tax
Matters............................. A-18
General Information.................... A-20
APPLICATION INSTRUCTIONS................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND. AIM International Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end, series, management investment company.
Currently the Company offers six separate series portfolios. This Prospectus
relates to AIM International Equity Fund (the "Fund"). The Company also offers
other classes of shares in five other investment portfolios, AIM ASIAN GROWTH
FUND ("ASIAN FUND"), AIM EUROPEAN DEVELOPMENT FUND ("EUROPEAN FUND"), AIM GLOBAL
AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"), AIM GLOBAL GROWTH FUND
("GROWTH FUND") and AIM GLOBAL INCOME FUND ("INCOME FUND"), (collectively, with
AIM INTERNATIONAL EQUITY FUND, the "Funds") each of which pursues unique
investment objectives. All such other Funds offer multiple classes of shares to
different types of investors. The shares of the other Funds of the Company have
different sales charges and expenses, which may affect performance. To obtain
information about ASIAN FUND, European Fund, AGGRESSIVE GROWTH FUND, GROWTH
FUND, or INCOME FUND, call (800) 347-4246. ASIAN FUND and EUROPEAN FUND are
not available to investors at this time. See "General Information."
The investment objective of the Fund is to provide long-term growth of capital
by investing in a diversified portfolio of international equity securities the
issuers of which are considered by the Fund's investment advisor to have strong
earnings momentum. Any income realized by the Fund will be incidental and will
not be an important criterion in the selection of portfolio securities. Under
normal market conditions, the Fund will invest at least 70% of its total assets
in marketable equity securities (including common and preferred stock,
depositary receipts for stock and other securities having the characteristics of
stock) of companies located outside the United States ("foreign companies")
which are listed on a recognized foreign securities exchange or traded in a
foreign over-the-counter market. The Fund may also invest up to 20% of its total
assets in securities exchangeable for or convertible into equity securities of
foreign companies which are listed on a recognized foreign securities exchange
or traded on a foreign over-the-counter market. Under normal market conditions,
the Fund's assets will be invested in the securities of foreign companies
located in at least four countries outside the United States. The Fund will
emphasize investment in foreign companies in the developed countries of Western
Europe and the Pacific Basin and may also invest to a limited extent in the
securities of companies located in developing countries in various regions of
the world.
Over the past 30 years, securities of foreign companies ("foreign securities")
have offered generally higher levels of capital growth than similar investments
in the United States. The Fund's investment advisor believes that investment in
foreign securities offers significant potential for long-term capital
appreciation. Also, foreign equity markets often do not move in step with each
other or with domestic equity markets. The Fund's investment advisor believes
that a portfolio invested in a number of markets worldwide should thus achieve
better long-term results for investors than one which is subject to the
movements of a single market.
The Fund intends to achieve its investment objective by using a fully managed
investment policy providing for the selection of securities. The Fund will also
seek to spread its investments among countries or regions in accordance with the
investment advisor's assessment of prospects for relative economic growth,
political conditions, currency exchange fluctuations and other relevant factors.
For more complete information on the Fund's investment objective, policies and
strategies, see "Investment Objective and Policies" and "Hedging Strategies and
Other Investment Techniques."
RISK FACTORS. THE FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING
INTERNATIONAL DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH
INVESTMENT IN FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND
ECONOMIC RISK, REGULATORY RISK AND MARKET RISK. IT IS NOT DESIGNED AS A COMPLETE
INVESTMENT PROGRAM. FOR A DISCUSSION OF THESE RISKS, SEE "RISK FACTORS."
2
<PAGE> 131
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM, together with its subsidiaries, manages or advises 55 investment company
portfolios. As of July 1, 1997, the total assets advised or managed by AIM or
its subsidiaries were approximately $74.3 billion. Under the terms of the
Advisory Agreement, AIM supervises all aspects of the Fund's operations and
provides investment advisory services to the Fund. As compensation for these
services, AIM receives a fee based on the Fund's average daily net assets. Under
an Administrative Services Agreement, AIM may be reimbursed by the Fund for its
costs of performing, or arranging for the performance of, certain accounting and
other administrative services for the Fund. Under a Transfer Agency and Service
Agreement, A I M Fund Services, Inc. ("AFS"), AIM's wholly-owned subsidiary and
a registered transfer agent, receives a fee for its provision of transfer
agency, dividend distribution and disbursement and shareholder services for the
Fund.
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C
shares of the Fund which are offered by this Prospectus at an offering price
that reflects differing sales charges and expense levels. See "Terms and
Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions."
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 date
on which a purchase was made. Class B shares automatically convert to Class
A shares of the Fund eight years following the end of the calendar month in
which a purchase was made. Class B shares are subject to higher expenses
than Class A shares.
Class C Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a contingent deferred sales charge
of 1% on certain redemptions made within one year of the date such shares
were purchased.
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 the Fund and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated
distribution fees and any applicable contingent deferred sales charges on Class
B shares prior to conversion or Class C shares 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. ("AIM Distributors") will reject any order for purchase
of more than $250,000 for Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Fund is one of several mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Fund may be exchanged for shares of other funds in The AIM
Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
REDEEMING SHARES. 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 $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 date on which a purchase was
made. Class B shares redeemed after six years following the date of purchase
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Holders of Class C shares of the Fund may redeem all or a portion of their
shares at net asset value on any business day, less a 1% contingent deferred
sales charge for redemptions made within one year from the date such shares were
purchased. See "How to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund declares and pays dividends from net investment
income, if any, and makes distributions of realized capital gains, if any, on an
annual basis. Dividends and distributions of the Fund may be reinvested at net
asset value without payment of a sales charge in the Fund's shares or may be
invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, LA FAMILIA AIM DE
FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED SERVICE MARKS AND
AIMFUNDS.COM AND INVEST WITH DISCIPLINE ARE SERVICE MARKS OF A I M MANAGEMENT
GROUP INC.
3
<PAGE> 132
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Fund understand the
various costs that an investor will bear, both directly and indirectly. The fees
and expenses for Class A and Class B shares set forth in the table are based on
the average net assets of the respective classes of the Fund for the year ended
October 31, 1996. The fees and expenses for Class C shares set forth in the
table are based on the estimated average net assets of Class C shares of the
Fund for the first period of operation. The rules of the SEC require that the
maximum sales charge be reflected in the table, even though certain investors
may qualify for reduced sales charges. See "How to Purchase Shares."
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a %
of offering price)...................................... 5.50% None None
Maximum sales load on reinvested dividends and
distributions........................................... None None None
Deferred sales load (as a % of original purchase price or
redemption proceeds, whichever is lower)................ None* 5.00% 1.00%
Redemption fee............................................ None None None
Exchange fee.............................................. None None None
Annual Fund Operating Expenses (as a % of average net
assets)
Management fees** (after fee waivers)..................... 0.92% 0.92% 0.92%
Rule 12b-1 distribution plan payments..................... 0.30% 1.00% 1.00%
Other expenses............................................ 0.36% 0.43% 0.43%
----- ----- -----
Total fund operating expenses**....................... 1.58% 2.35% 2.35%
===== ===== =====
</TABLE>
- ------------
* Purchases 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 FROM THE DATE SUCH SHARES WERE PURCHASED.
See the Investor's Guide, under the caption "How to Redeem Shares --
Contingent Deferred Sales Charge Program for Large Purchases."
** If management fees had not been waived, the management fees would have been
0.94% and total fund operating expenses would have been 1.60% and 2.37% for
the Class A shares and Class B shares, respectively.
EXAMPLES. An investor in the Fund would pay the following expenses on a $1,000
investment in Class A shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $ 70
3 years................................................... $102
5 years................................................... $136
10 years.................................................. $233
</TABLE>
THE EXAMPLES ABOVE ASSUME PAYMENT OF A SALES CHARGE AT THE TIME OF PURCHASE;
ACTUAL EXPENSES MAY VARY FOR PURCHASES OF $1 MILLION OR MORE, WHICH ARE MADE AT
NET ASSET VALUE AND ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE FOR 18
MONTHS FOLLOWING THE DATE SUCH SHARES WERE PURCHASED.
An investor in the Fund would pay the following expenses on a $1,000
investment in Class B shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year................................................... $ 74
3 years.................................................. $103
5 years.................................................. $146
10 years.................................................. $249*
</TABLE>
An investor in the Fund 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>
<S> <C>
1 year................................................... $ 24
3 years.................................................. $ 73
5 years.................................................. $126
10 years.................................................. $249*
</TABLE>
- ------------
* Reflects the conversion to Class A shares eight years following the end of the
calendar month in which a purchase was made; therefore years nine and ten
reflect Class A expenses.
4
<PAGE> 133
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year................................................... $34
3 years.................................................. $73
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period.
<TABLE>
<S> <C>
1 year................................................... $24
3 years.................................................. $73
</TABLE>
As a result of 12b-1 fees, a long-term shareholder in the Fund 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, Class B shares and Class C 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 THE FUND'S
ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In
addition, while the examples assume a 5% annual return, the 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.
5
<PAGE> 134
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below are per share income and capital changes for a Class A share of
the Fund outstanding during the six months ended April 30, 1997, each of the
years in the four-year period ended October 31, 1996, and the period November 5,
1991 (date operations commenced) through October 31, 1992, and for a Class B
share of the Fund outstanding during the six months ended April 30, 1997, each
of the years in the two-year period ended October 31, 1996 and the period
September 15, 1994 (date sales commenced) through October 31, 1994. The data for
Class A and Class B shares for the six-month period ended April 30, 1997 is
unaudited. The information (other than the data for Class A and Class B shares
for the six months ended April 30, 1997) has been audited by KPMG Peat Marwick
LLP, independent auditors, whose unqualified report on the Fund's financial
statements and the related notes appears in the Statement of Additional
Information. Class C shares of the Fund commenced operations on August 4,
1997.
<TABLE>
<CAPTION>
PERIOD
NOVEMBER 5, 1991,
YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993 1992
---------- ---------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARE:
Net asset value, beginning of period............ $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88 $ 8.61(a)
Income from investment operations:
Net investment income....................... 0.01 0.04(b) 0.01 0.02 0.02 0.03
Net gains on securities (both realized and
unrealized)............................... 0.90 2.07 0.62 1.31 3.29 0.26
---------- ---------- -------- -------- -------- --------
Total from investment operations............ 0.91 2.11 0.63 1.33 3.31 0.29
---------- ---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income........ (0.02) (0.01) (0.04) (0.01) (0.01) (0.02)
Distributions from capital gains............ (0.43) (0.38) (0.44) -- -- --
---------- ---------- -------- -------- -------- --------
Total distributions......................... (0.45) (0.39) (0.48) (0.01) (0.01) (0.02)
---------- ---------- -------- -------- -------- --------
Net asset value, end of period.................. $ 15.83 $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88
========== ========== ======== ======== ======== ========
Total return(c)................................. 6.01% 15.79% 5.24% 10.94% 37.36% 3.36%
========== ========== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted)...... $1,368,063 $1,108,395 $654,764 $708,159 $372,282 $122,663
========== ========== ======== ======== ======== ========
Ratio of expenses to average net assets(d).... 1.50%(e)(f) 1.58% 1.67% 1.64% 1.78% 1.80%(g)
========== ========== ======== ======== ======== ========
Ratio of net investment income to average net
assets(h)................................... 0.13%(e) 0.25% 0.10% 0.22% 0.28% 0.30%(g)
========== ========== ======== ======== ======== ========
Portfolio turnover rate....................... 24% 66% 68% 67% 62% 41%
========== ========== ======== ======== ======== ========
Average brokerage commission rate(i).......... $ 0.0196 $ 0.0192 N/A N/A N/A N/A
========== ========== ======== ======== ======== ========
</TABLE>
- ---------------
(a) Net asset value at beginning of the period has been restated to reflect a
1.1619 for 1 stock split, effected in the form of a dividend, on May 21,
1992.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers and expense reimbursements are 1.53%
(annualized), 1.60%, 1.68% and 1.89% (annualized), respectively for 1997,
1996, 1995 and 1992.
(e) Ratios are annualized and based on average net assets of $1,252,808,764.
(f) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been 1.49%.
(g) Annualized.
(h) After fee waivers and expense reimbursements. Ratios of net investment
income to average net assets before fee waivers and expense reimbursements
are 0.09% (annualized), 0.22%, 0.09% and 0.22% (annualized), respectively
for 1997, 1996, 1995 and 1992.
(i) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
6
<PAGE> 135
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15, 1994
YEAR ENDED OCTOBER 31, THROUGH
APRIL 30, ----------------------- OCTOBER 31,
1997 1996 1995 1994
--------- --------- -------- --------------------
<S> <C> <C> <C> <C>
CLASS B SHARE:
Net asset value, beginning of period........................ $ 15.13 $ 13.54 $ 13.49 $13.42
Income from investment operations:
Net investment income (loss)............................ (0.05) (0.07)(a) (0.09) (0.01)
Net gains on securities (both realized and
unrealized)........................................... 0.89 2.04 0.61 0.08
-------- -------- ------- ------
Total from investment operations........................ 0.84 1.97 0.52 0.07
-------- -------- ------- ------
Less distributions:
Dividends from net investment income.................... -- -- (0.03) --
Distributions from capital gains........................ (0.43) (0.38) (0.44) --
-------- -------- ------- ------
Total distributions..................................... (0.43) (0.38) (0.47) --
-------- -------- ------- ------
Net asset value, end of period.............................. $ 15.54 $ 15.13 $ 13.54 $13.49
======== ======== ======= ======
Total return(b)............................................. 5.65% 14.88% 4.35% 0.52%
======== ======== ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted).................. $529,445 $368,355 $51,964 $4,833
======== ======== ======= ======
Ratio of expenses to average net assets(c)................ 2.27%(d)(e) 2.35% 2.55% 2.53%(f)
======== ======== ======= ======
Ratio of net investment income (loss) to average net
assets(g)............................................... (0.65)%(d) (0.53)% (0.78)% (0.67)%(f)
======== ======== ======= ======
Portfolio turnover rate................................... 24% 66% 68% 67%
======== ======== ======= ======
Average brokerage commission rate(h)...................... $ 0.0196 $ 0.0192 N/A N/A
======== ======== ======= ======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(c) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers are 2.31% (annualized), 2.37% and 2.56%,
respectively for 1997, 1996 and 1995.
(d) Ratios are annualized and based on average net assets of $456,918,626.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets before fee waivers are 0.69%
(annualized), (0.55)% and (0.79)%, respectively for 1997, 1996 and 1995.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
- --------------------------------------------------------------------------------
PERFORMANCE
The Fund's performance may be quoted in advertising in terms of total return.
All advertisements of the Fund will disclose the maximum sales charge (including
deferred sales charge) to which investments in the Fund's shares may be subject.
If any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
Standardized total return for Class A shares reflects the deduction of the
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.
Standardized total return for Class C shares reflects the deduction of a 1%
contingent deferred sales charge, if applicable, on a redemption of shares held
for the period.
The Fund's total return shows its overall change in value, including changes
in share price 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 the Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS
SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR
RESULTS. To illustrate the components of overall performance, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses. The stated period for quotations of average annual
total return will be for periods of one year and the life of the Fund
(commencing as of the effective date of its registration statement).
7
<PAGE> 136
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such a practice will
have the effect of increasing the Fund's total return.
The performance of the Fund will vary from time to time, and past results are
not necessarily representative of future results. The Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund as well
as by general market conditions. A shareholder's investment in the Fund is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Fund.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund, which is a fundamental policy that may
be changed only with the approval of the Fund's shareholders, is to provide
long-term growth of capital by investing in a diversified portfolio of
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum. Any income realized by the Fund will be
incidental and will not be an important criterion in the selection of portfolio
securities. There can be no assurance that the Fund will achieve its objective.
The Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of the Fund, as described below and
elsewhere in this Prospectus and in the Statement of Additional Information,
without approval of the Fund's shareholders, except in those instances in which
shareholder approval is expressly required.
Under normal market conditions the Fund will invest at least 70% of its total
assets in marketable equity securities, including common stock, preferred stock,
depositary receipts for stock and other securities having the characteristics of
stock (such as an equity or ownership interest in a company) of foreign
companies which are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter-market. The Fund may satisfy the foregoing
requirement in part by investing in the securities of foreign issuers which are
in the form of American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs"), or other securities representing underlying securities of
foreign issuers. The Fund may also invest up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of foreign
companies which are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter market.
In managing the Fund, AIM seeks to apply to a diversified portfolio of
international equity securities substantially 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. The 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
the Fund. It is expected that the Fund's portfolio, when fully invested, will
generally be comprised of two basic categories of foreign companies: (1) "core"
companies, which AIM considers to have experienced consistent long-term growth
in earnings and to have strong prospects for outstanding future growth, and (2)
companies that AIM believes are currently experiencing a greater than
anticipated increase in earnings.
If a particular foreign company meets the quantitative standards determined by
AIM, its securities may be acquired by the 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 the Fund, 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.
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 the Fund in
receiving financial information supplied by foreign companies than comparable
information supplied by domestic companies. 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.
AIM may invest a portion of the Fund's assets in (i) cash or high-grade
short-term securities, including repurchase agreements, commercial paper, time
deposits and master notes, denominated either in U.S. dollars or foreign
currencies, (ii) U.S. government obligations or investment grade (high quality)
corporate bonds or other debt securities, and (iii) taxable municipal
securities, when such positions are deemed advisable in light of economic or
market conditions or for daily cash management purposes. In addition, AIM may
invest, for temporary defensive purposes, all or substantially all of the Fund's
assets in the securities described above. To the extent that the Fund is
invested to a significant degree in cash, high-grade short-term securities, U.S.
government obligations, investment grade (high quality) corporate bonds or other
debt securities, or taxable municipal securities, its ability to achieve its
investment objective of growth of capital may be adversely affected. Under
normal circumstances, the Fund will invest no more than 20% of the value of its
total assets in high-grade short-term securities. 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, the 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 (c) expenses of enforcing its rights.
The
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Fund intends to enter into repurchase agreements with sellers believed by AIM to
present minimal credit risk. See "Investment Restrictions."
Under normal market conditions, the Fund intends to invest in the securities
of foreign companies located in at least four countries outside the United
States. The Fund will emphasize investment in foreign companies in the developed
countries of Western Europe (such as Germany, France, Switzerland, the
Netherlands and the United Kingdom) and the Pacific Basin (such as Japan, Hong
Kong and Australia), and the Fund may also invest in the securities of companies
located in developing countries (such as Turkey, Malaysia and Mexico) in various
regions of the world. A "developing country" is a country in the initial stages
of its industrial cycle.
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. At the present time, AIM does not intend to invest more than 20% of
the Fund's total assets in foreign companies located in developing countries.
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HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES
The Fund 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. The Fund 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 the 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. The Fund will not engage in such transactions for
speculative purposes. The Fund does not intend to hedge against currency,
investment and interest rate risks during the coming year. Any change to such
policy must be submitted by AIM to the Company's Board of Directors prior to the
effectiveness of such change.
To a limited extent the Fund may employ certain investment techniques intended
to provide liquidity for temporary or emergency purposes, provide flexibility in
the purchase of new issues of securities, protect the Fund from a decline in the
market value of its securities and permit the Fund to invest all of its assets.
Those techniques include entering into reverse repurchase agreements, lending
portfolio securities, purchasing securities on a "when-issued" basis, short
sales "against the box" and investing in closed-end investment companies.
OPTIONS. The Fund may purchase options issued by the Options Clearing
Corporation. Such options give the 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.
The 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 the Fund owns the underlying
security covered by the call. A put option is "covered" if the 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.
The 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 the Fund's portfolio securities 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.
The Fund will not 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. The Fund will not 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
its total assets.
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FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held
by the Fund may be denominated in foreign currencies, the value of the Fund's
portfolio 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. The 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 hedge the value of its
portfolio against changes in market conditions or in exchange rates between
currencies (including the U.S. dollar). 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, the 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 the Fund's total assets will be committed to initial margin
deposits required pursuant to futures contracts. Percentage investment
limitations on the Fund's investment in options on futures contracts are set
forth above under "Options." Although the 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, the 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). The 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 the 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, the 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." 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. The 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
the 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 the Fund when hedged positions were established.
Successful use of futures and forward contracts and options thereon is 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 Fund may lose the expected benefit of
futures and forward transactions and options thereon if markets move in an
unanticipated manner.
OTHER HEDGING TECHNIQUES. For hedging purposes, the 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.
REPURCHASE AGREEMENTS. The Fund 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. The Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is the same as a repurchase
agreement, except that the Fund acts as the seller and repurchaser of the
subject security. Reverse repurchase agreements are considered to be borrowings
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund
will enter into a reverse repurchase agreement only when the interest income to
be earned from the investment of the proceeds of the transaction is greater than
the interest expense of the transaction. Any investment gains made by the Fund
with monies borrowed through reverse repurchase agreements will cause the net
asset value of the Fund's shares to rise faster than would be the case if
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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. The Fund currently intends to enter into reverse repurchase agreements
only for temporary or emergency purposes and not as a means of increasing
income.
LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio, 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, the 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, the 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.
WHEN-ISSUED SECURITIES. The Fund may sometimes purchase new issues of
securities on a "when-issued" basis. The price of when-issued securities is
established at the time the commitment to purchase is made. Delivery of and
payment for these securities typically occur 15 to 45 days after the commitment
to purchase. The value of securities purchased on a when-issued basis could
decline before the Fund completes the transaction, which could cause a loss to
the Fund. A separate account for the Fund consisting of cash or high-quality
liquid debt securities in an amount at least equal to the when-issued
commitments will be established and maintained with the Fund's custodian for
payment for securities on a when-issued basis.
SHORT SALES. The 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 the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short without payment of any further
consideration. The Fund will enter into such transactions only to the extent the
aggregate value of all securities sold short does not represent more than 10% of
the Fund's assets at any given time.
ILLIQUID SECURITIES AND RULE 144A SECURITIES. The 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 Fund 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, the Fund's
holdings of illiquid securities will be reviewed to determine what, if any,
action is required to assure that the Fund does not invest more than 15% of its
assets in illiquid securities. See the Statement of Additional Information.
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RISK FACTORS
There can be no assurance that the Fund's investment objective will be
attained. The 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. Investors
should consider carefully the following special factors before investing in the
Fund.
CURRENCY RISK. The value of the 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
the 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 the 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 publicly available information about foreign securities than is
available about domestic securities. Foreign companies are not subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by the 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 the 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. In addition, 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.
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INVESTMENT RESTRICTIONS
The following restrictions may not be changed without approval of the Fund's
shareholders. The Fund may not:
1. Purchase a security if, as a result, with respect to 75% 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 (including repurchase agreements
with any one entity), except securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities and except that the
Fund may purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
2. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by the Fund,
except that the Fund may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive order.
3. 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 SEC permits their exclusion.
4. Borrow money, except that the Fund may borrow from banks (including
the Fund's custodian bank) and enter into reverse repurchase agreements as
a temporary defensive measure for extraordinary or emergency purposes, and
then only in amounts not exceeding 10% of its total assets, taken at market
value, and may pledge amounts of up to 20% of its total assets, taken at
market value, to secure such borrowings. Whenever bank borrowings and the
value of the Fund's reverse repurchase agreements exceed 5% of the value of
the Fund's total assets, the Fund will not make any additional purchases of
securities for investment purposes.
A complete listing of investment restrictions applicable to the Fund, some of
which may be changed by the Board of Directors without shareholder approval, is
contained in the Statement of Additional Information.
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MANAGEMENT
The overall management of the business and affairs of the Fund is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Fund and persons or companies furnishing
services to the Fund, including the investment advisory agreement with AIM, the
administrative services agreement with AIM, the agreement with AIM Distributors
regarding distribution of the Fund's shares, the agreement with State Street
Bank and Trust Company as custodian, and the agreement with A I M Fund Services,
Inc. as transfer agent. The day-to-day operations of the Fund are delegated to
the officers of the Company and to AIM, subject always to the objective and
policies of the Fund and to the general supervision of the Board of Directors.
Information concerning the Board of Directors may be found in the Statement of
Additional Information. 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP plc, a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis.
INVESTMENT ADVISOR. A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite
100, Houston, Texas 77046, serves as the investment advisor to the Fund pursuant
to an investment advisory agreement dated as of February 28, 1997 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises 55 investment company portfolios (including the Fund). As of
July 1, 1997, the total assets advised or managed by AIM or its subsidiaries
were approximately $74.3 billion.
Under the terms of the Advisory Agreement, AIM supervises all aspects of the
Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund.
ADMINISTRATOR. AIM and the Company have entered into an Administrative
Services Agreement, dated as of February 28, 1997, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Fund. AIM is entitled to receive from the Fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board of Directors. Currently, AIM is reimbursed for the services of the
Fund's principal financial officer and his staff, and any expenses related to
such services.
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 Board of Directors,
AIM may take into account sales of shares of the Fund and other funds advised by
AIM in selecting broker-dealers to effect portfolio transactions on behalf of
the Fund.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Fund. AIM's investment staff consists of approximately 125
individuals. While individual mem-
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bers of AIM's investment staff are assigned primary responsibility for the
day-to-day management of each of AIM's accounts, all accounts are reviewed on a
regular basis by AIM's Investment Policy Committee to ensure that they are being
invested in accordance with the accounts' and AIM's investment policies. The
individuals on the investment team who are primarily responsible for the day-
to-day management of the Fund are A. Dale Griffin, III, Clas G. Olsson, Paul A.
Rogge and Barrett K. Sides. Mr. Griffin is Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly owned subsidiary of AIM, and has been
responsible for the Fund since its inception in 1992. Mr. Griffin has been
associated with AIM since 1989 and has a total of ten years of experience as an
investment professional. Mr. Olsson has been responsible for the Fund since
1997. Mr. Olsson has been associated with AIM since 1994 and has a total of
three years of experience as an investment professional. Prior to joining AIM,
he was a broker assistant trainee with Merrill Lynch, Pierce, Fenner & Smith
Incorporated. Mr. Rogge is Vice President of AIM Capital and also has been
responsible for the Fund since its inception in 1992. Mr. Rogge has been
associated with AIM since 1991 and has a total of six years of experience as an
investment professional. Mr. Sides is Assistant Vice President of AIM Capital
and has been responsible for the Fund since 1995. Mr. Sides has been associated
with AIM since 1990 and has a total of seven years of experience as an
investment professional.
FEES AND EXPENSES. For the year ended October 31, 1996, the Fund paid AIM an
amount for its advisory services which represented 0.92% of the Fund's average
daily net assets. Although the fee payable to AIM under the Advisory Agreement
is higher than that paid by most mutual funds which invest in domestic
securities, it is competitive with such fees paid by mutual funds which invest
primarily in foreign securities. The Company believes such fee is justified due
to the higher costs and additional expenses associated with managing and
operating a fund holding primarily foreign equity securities. For the year ended
October 31, 1996, the Fund reimbursed AIM for administrative services costs
pursuant to the Administrative Services Agreement an amount which represented
0.01% of the Fund's average daily net assets. The Class A shares' total expenses
for such year were 1.58% of the Class A share's average daily net assets. The
Class B shares' total expenses for such year were 2.35% of the Class B share's
average daily net assets.
In addition, the Company and A I M Fund Services, Inc. ("AFS") P.O. Box 4739,
Houston, TX 77210-4739, a wholly owned subsidiary of AIM and registered transfer
agent, have entered into a Transfer Agency and Service Agreement, pursuant to
which AFS provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Fund.
FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees,
while retaining its ability to be reimbursed for such fees 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 voluntarily agreed to waive its advisory fees under the
Advisory Agreement in order to achieve the following annual fee structure for
the Fund: 0.95% of the first $500 million of the Fund's average daily net
assets; 0.90% of the next $500 million of the Fund's average daily net assets;
and 0.85% of the Fund's average daily net assets exceeding $1 billion. For the
fiscal year ended October 31, 1996, AIM waived advisory fees for the Fund which
represented 0.02% of the Fund's average daily net assets.
DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of the Fund (the "Distribution Agreements") with AIM Distributors ("AIM
Distributors"), a registered broker-dealer and a wholly owned subsidiary of AIM,
to act as the distributor of Class A, Class B and Class C shares of the Fund.
The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77021-4739.
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 Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM Distributors sells Class B shares at net
asset value subject to a contingent deferred sales charge established by AIM
Distributors. AIM Distributors is authorized to advance to institutions through
whom Class B shares are sold a sales commission under schedules established by
AIM Distributors. The Distribution Agreement for the Class B shares provides
that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the
total 1.00% payable under the distribution plan applicable to Class B shares) of
the Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges in respect of the outstanding Class B
shares attributable to AIM Distributors; provided, however, that a complete
termination of the Class B shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay Contingent Deferred Sales Charges.
DISTRIBUTION PLANS. Class A and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of the Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of the Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.30% of the average daily net assets of Class A shares of
the Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of the Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. Payments
can also be directed by AIM Distributors to selected institutions who have
entered into service agreements with respect to Class A and
13
<PAGE> 142
Class C shares of the Fund and who provide continuing personal services to their
customers who own Class A and Class C shares of the Fund. The service fees
payable to selected institutions are calculated at the annual rate of 0.25% of
the average daily net asset value of those Fund shares that are held in such
institution's customers' accounts which were purchased on or after a prescribed
date set forth in the Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of the Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of such amount, the
Fund pays a service fee of 0.25% of the average daily net assets attributable to
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 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 and C 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 the Fund under the Plans need not be directly related
to the expenses actually incurred by AIM Distributors on behalf of the Fund.
Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the 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 the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent, for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one
particular class over another.
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 SEC as an open-end series management investment company. The Company
currently consists of six investment portfolios: the Fund, AIM ASIAN GROWTH
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND and AIM GLOBAL INCOME FUND. The Board of Directors may
authorize additional portfolios in the future. Shares of the Fund are offered to
investors pursuant to this Prospectus, while shares of the Company's other
portfolios are offered to investors pursuant to separate prospectuses. The
authorized capital stock of the Company consists of 4,000,000,000 shares of
common stock with a par value of $0.001 per share, of which 200,000,000 shares
are designated Class A shares, 200,000,000 shares are designated Class B shares
and 200,000,000 shares are designated Class C shares of each investment
portfolio of the Company, and the balance of which are unclassified.
Class A shares, Class B shares and Class C shares of the Fund represent
interests in the 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 ex-
14
<PAGE> 143
penses (such as those associated with the shareholder servicing of their shares)
and is subject to differing sales loads (which may affect performance),
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 the 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, Class B
shares and Class C shares of the 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 the 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. As of July 30, 1997, Merrill Lynch,
Pierce, Fenner & Smith Incorporated was the owner of record of 32.49% and 36.65%
of the outstanding Class A and Class B shares, respectively, of the Fund. As
long as Merrill Lynch, Pierce, Fenner & Smith Incorporated owns over 25% of such
shares, it may be presumed to be in "control" of the Class A and Class B shares
of the Fund, as defined in the 1940 Act.
15
<PAGE> 144
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR CASH MANAGEMENT FUND(1),(2) AIM GLOBAL INCOME FUND
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INCOME FUND(2) AIM GROWTH FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM HIGH YIELD FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM INCOME FUND
AIM ADVISOR MULTIFLEX FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ADVISOR REAL ESTATE FUND AIM INTERNATIONAL EQUITY FUND
AIM AGGRESSIVE GROWTH FUND AIM LIMITED MATURITY TREASURY SHARES
AIM BALANCED FUND AIM MONEY MARKET FUND(1)
AIM BLUE CHIP FUND AIM MUNICIPAL BOND FUND
AIM CAPITAL DEVELOPMENT FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CHARTER FUND AIM TAX-EXEMPT CASH FUND(1)
AIM CONSTELLATION FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
</TABLE>
(1) Class A shares of AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND, and Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
(2)Fund closed to new investments on August 4, 1997. However, until October 3,
1997 the Fund will continue to accept investments (i) from shareholders of
record on August 4, 1997 of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND or (ii) on behalf of clients of selling group members who were
INVESCO Advisor Funds, Inc. selling group members on August 1, 1997. Please
refer to "Exchange Privilege" herein and the Fund's prospectus dated August
4, 1997.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-A 07/97
A-1
<PAGE> 145
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME
FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND,
AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM AGGRESSIVE GROWTH
FUND, AIM BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM
CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM
GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND
FUND, AIM VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM
AGGRESSIVE GROWTH FUND), the "Multiple Class Funds," may be purchased at their
respective net asset value plus a sales charge as indicated below, except that
Class A shares of AIM TAX-EXEMPT CASH FUND, Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold
without a sales charge and Class B shares (the "Class B shares") and Class C
shares ("Class C shares") of the Multiple Class Funds (except Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND) are sold at net asset value subject to a
contingent deferred sales charge payable upon certain redemptions. These
contingent deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-A 07/97
A-2
<PAGE> 146
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL
DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM ADVISOR INCOME FUND, AIM ADVISOR REAL ESTATE FUND, AIM BALANCED
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL
INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-A 07/97
A-3
<PAGE> 147
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 the Class A shares
of AIM TAX-FREE INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of
the next $1 million of such purchases, plus 0.50% of the next $17 million of
such purchases, plus 0.25% of amounts in excess of $20 million of such
purchases. See "Contingent Deferred Sales Charge Program for Large Purchases."
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), and which are sold at net
asset value and are not subject to a contingent deferred sales charge, in an
amount up to 0.10% of such purchases of shares of AIM LIMITED MATURITY TREASURY
SHARES, and in an amount up to 0.25% of such purchases of shares of AIM TAX-FREE
INTERMEDIATE SHARES.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price (0.60% of the
purchase price of the AIM ADVISOR INCOME FUND) of the Class C shares sold by the
dealer or institution, and will consist of a sales commission of 0.75% of the
purchase price (0.35% of the purchase price of the AIM ADVISOR INCOME FUND) of
the Class C shares sold plus an advance of the first year service fee of 0.25%
with respect to such shares. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. The
portion of the payments to AIM Distributors under the Class C Plan attributable
to Class C shares which constitutes an asset-based sales charge (0.75%) (0.35%
for AIM ADVISOR INCOME FUND) is intended in part to permit AIM Distributors to
recoup a portion of such on-going sales commission plus financing costs, if any.
MCF-A 07/97
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<PAGE> 148
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES (except Class A shares of AIM ADVISOR CASH MANAGEMENT FUND)
are sold subject to the initial sales charges described above and are
subject to the other fees and expenses described herein. Class A shares of
AIM MONEY MARKET FUND are designed to meet the needs of an investor who
wishes to establish a dollar cost averaging program, pursuant to which
Class A shares an investor owns may be exchanged at net asset value for
Class A shares of another Multiple Class Fund or shares of another AIM Fund
which is not a Multiple Class Fund, subject to the terms and conditions
described under the caption "Exchange Privilege -- Terms and Conditions of
Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND)
are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the
average daily net assets of a Multiple Class Fund attributable to Class C
shares. See the discussion under the caption "Management -- Distribution
Plans." In addition, Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) redeemed within one year from the date such shares
were purchased are subject to a 1.00% contingent deferred sales charge. No
contingent deferred sales charge will be imposed if Class C shares are
redeemed after one year from the date such shares were purchased.
Redemptions of Class C shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. (A
contingent deferred sales charge may be imposed upon redemptions of Class A
and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND when such shares
were purchased in an exchange. See "How to Redeem Shares -- Multiple
Distribution System -- Class C Shares" and "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases").
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are, however, subject to
the other fees and expenses described in the prospectus for AIM MONEY
MARKET FUND.
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TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM ADVISOR CASH MANAGEMENT FUND, AIM MONEY
MARKET FUND, AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because
each Money Market Fund uses the amortized cost method of valuing the securities
it holds and rounds its per share net asset value to the nearest whole cent, it
is anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT
FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class B and Class C
shares of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP or
SARSEP accounts should be linked;
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- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds)
within the following 13 consecutive months. By marking the LOI section on the
account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii)
Class B and Class C shares of the Multiple Class Funds) at the time of the
proposed purchase. Rights of Accumulation are also available to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C
shares of AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum
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initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any AIM Limited
Maturity Treasury Shares sold at net asset value to an employee benefit plan in
accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided:
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(a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is effected within 30 days of such redemption or repurchase;
and (b) that the unit holder or his dealer provides AIM Distributors with a
letter which: (i) identifies the name, address and telephone number of the
dealer who sold to the unit holder the units to be redeemed or repurchased; and
(ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is being funded exclusively by the proceeds from the
redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds, AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND), it is disadvantageous to effect such purchases while a
Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or twenty-fifth day of the applicable 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
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may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; SARSEP plans; and SEP
plans (collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF-A 07/97
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<PAGE> 154
- --------------------------------------------------------------------------------
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 (except AIM
ADVISOR CASH MANAGEMENT FUND), listed below and referred to herein as the "Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 5.50% or 4.75% of the public offering price of such shares; Class A shares
(or shares which normally involve the payment of initial sales charges) of
certain of the AIM Funds, listed below and referred to herein as the "Lower Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 1.00% of the public offering price of such shares; and Class A shares or
shares of certain other funds, listed below and referred to herein as the "No
Load Funds," are sold at net asset value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY SHARE
CLASS A FUND -- CLASS A AIM TAX-FREE INTERMEDIATE
AIM ADVISOR INCOME FUND -- AIM GLOBAL INCOME SHARES -- CLASS A
CLASS A FUND -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR CASH MANAGEMENT FUND
AIM ADVISOR LARGE CAP AIM GROWTH FUND -- CLASS A -- CLASS A
VALUE FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM MONEY MARKET FUND
AIM ADVISOR MULTIFLEX AIM INCOME FUND -- CLASS A -- AIM CASH RESERVE SHARES
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MONEY MARKET
AIM BALANCED FUND -- CLASS A FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A AIM MUNICIPAL BOND
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM CHARTER FUND -- CLASS A OF CONNECTICUT -- CLASS A
AIM CONSTELLATION AIM VALUE FUND -- CLASS A
FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) effective August 4, 1997
(except with respect to shares of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND), no shares of any Load Fund, Class C of a Multiple Class Fund,
Lower Load Fund or No Load Fund may be exchanged for shares of AIM ADVISOR CASH
MANAGEMENT FUND or AIM ADVISOR INCOME FUND; (ii) effective October 3, 1997 no
share of any Load Fund, Class C of a Multiple Class Fund, Lower Load Fund or No
Load Fund may be exchanged for shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM
ADVISOR INCOME FUND; (iii) Load Fund share purchases of $1,000,000 or more which
are subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (iv) LOWER LOAD FUND SHARE PURCHASES
OF $1,000,000 OR MORE AND AIM Cash Reserve Shares of AIM MONEY MARKET FUND and
AIM TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN
AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT
DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT
DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD
SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (v) Class A shares and AIM
LIMITED MATURITY TREASURY SHARES may be exchanged for Class A shares or AIM
LIMITED MATURITY TREASURY SHARES, (vi) Class B shares may be exchanged only for
Class B shares; (vii) Class C shares may only be exchanged for Class C shares;
(viii) Class A shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged for
Class A shares of any Load Fund, Lower Load Fund or No-Load Fund at net asset
value; (ix) Class C shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged
for Class C shares of any Multiple Class Fund at net asset value; and (x) AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged for Class A
shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
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<PAGE> 155
Broker-dealers and institutions of record for Class A or Class C shares
purchased pursuant to an exchange from Class A or Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND will be compensated according to the sales commission or
concession that would apply if these Class A or Class C share purchases had been
purchased in a manner other than pursuant to an exchange.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load
Funds.......... Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
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<PAGE> 156
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares (except for Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-A 07/97
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<PAGE> 157
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on
April 30, 1995 of these funds. Shareholders whose broker/dealers maintain a
single omnibus account with the Transfer Agent on behalf of those shareholders,
perform sub-accounting functions with respect to those shareholders, and are
unable to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996; or (v) on Class C shares of AIM
ADVISOR CASH MANAGEMENT FUND except in certain cases when the shares were
purchased in an exchange. Redemptions of shares of AIM ADVISOR CASH MANAGEMENT
FUND are generally not subject to a contingent deferred sales charge; however, a
contingent deferred sales charge may be applicable to redemptions of shares of
AIM ADVISOR CASH MANAGEMENT FUND if the redeemed shares were exchanged from
another Class C share fund and the one year holding period in such fund has not
been completed.
Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the fifth paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds.".
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
MCF-A 07/97
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<PAGE> 158
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund, Class A shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM Cash Reserve
Shares of AIM MONEY MARKET FUND which were acquired through an exchange of
shares which previously were subject to the 1% contingent deferred sales charge
will be credited with the period of time such exchanged shares were held, and
(ii) shares of any Load Fund which are subject to the 1% contingent deferred
sales charge and which were acquired through an exchange of shares of a Lower
Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the total amount invested in
a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of
intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the
shares being redeemed were purchased by an employer-sponsored Plan with at least
100 eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above on the basis of the value of each Plan
participant's aggregate investment in the AIM Funds, and not on the aggregate
investment made by the Plan or on the number of eligible employees; (2)
redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within 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
MCF-A 07/97
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<PAGE> 159
Distributors has made arrangements with certain dealers and investment advisors
to accept telephone instructions for the redemption of shares. AIM Distributors
reserves the right to impose conditions on these dealers and investment
advisors, including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The Transfer Agent and AIM Distributors will not be liable for any
loss, expense or cost arising out of any telephone redemption request effected
in accordance with the authorization set forth at that item of the account
application if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures may include recordings of
telephone transactions (maintained for six months), requests for confirmation of
the shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT FUND and
the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not
apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as
MCF-A 07/97
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certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES AND LIMITED MATURITY TREASURY SHARES
ONLY). Within 90 days of a redemption, a shareholder may invest all or part of
the redemption proceeds in Class A shares of any AIM Fund (except Class A shares
of AIM ADVISOR CASH MANAGEMENT FUND) and AIM Limited Maturity Treasury Shares at
the net asset value next computed after receipt by the Transfer Agent of the
funds to be reinvested; provided, however, if the redemption was made from AIM
Limited Maturity Treasury Shares or Class A shares of AIM TAX-FREE INTERMEDIATE
SHARES, the reinvested proceeds will be subject to the difference in sales
charge between the shares redeemed and the shares the proceeds are reinvested
in. The shareholder must ask the Transfer Agent for such privilege at the time
of reinvestment. A realized gain on the redemption is taxable, and reinvestment
may alter any capital gains payable. If there has been a loss on the redemption
and shares of the same fund are repurchased, all of the loss may not be tax
deductible, depending on the timing and amount reinvested. Under the Code, if
the redemption proceeds of fund shares on which a sales charge was paid are
reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales
charge within 90 days of the payment of the sales charge, the shareholder's
basis in the fund shares redeemed may not include the amount of the sales charge
paid, thereby reducing the loss or increasing the gain recognized from the
redemption; however, the shareholder's basis in the fund shares purchased will
include the sales charge. Each AIM Fund may amend, suspend or cease offering
this privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. This privilege may only be exercised once
each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE SHARES value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
MCF-A 07/97
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- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR CASH MANAGEMENT FUND.......... declared daily; paid monthly annually annually
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INCOME FUND................... declared and paid monthly monthly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES...... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
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 a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (except Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND) (iii) dividends and distributions attributable to Class A
shares or AIM Limited Maturity Treasury Shares may not be reinvested in Class A
shares of AIM ADVISOR CASH MANAGEMENT FUND or Class B or Class C shares, and
(iv) dividends and distributions attributable to the AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund
or in any Class B or Class C shares. Investors who have not previously selected
such a reinvestment option on the account application form may contact the
Transfer Agent at any time to obtain a form to authorize such reinvestments in
another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND).
Dividends on all shares may also be affected by other class-specific expenses.
MCF-A 07/97
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Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE
INTERMEDIATE 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 ADVISOR CASH
MANAGEMENT FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR REAL ESTATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE
INTERMEDIATE SHARES will qualify for this dividends received deduction. Shortly
after the end of each year, shareholders will receive information regarding the
amount and federal income tax treatment of all distributions paid during the
year. Certain dividends declared in October, November or December of a calendar
year are taxable to shareholders as though received on December 31 of that year
if paid to shareholders during January of the following calendar year. No gain
or loss will be recognized by shareholders upon the automatic conversion of
Class B shares of a Multiple Class Fund into Class A shares of such Fund. With
respect to tax-exempt shareholders, distributions from the Funds will not be
subject to federal income taxation to the extent permitted under the applicable
tax-exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of 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
MCF-A 07/97
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
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 ADVISOR INTERNATIONAL VALUE FUND, AIM INTERNATIONAL EQUITY FUND, AIM
GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND
AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in
which it is eligible to do so, each of these funds may elect to pass through to
shareholders credits for foreign taxes paid. If the fund makes such an election,
a shareholder who receives a distribution (1) will be required to include in
gross income his proportionate share of foreign taxes allocable to the
distribution and (2) may claim a credit or deduction for such share for his
taxable year in which the distribution is received, subject to the general
limitations imposed on the allowance of foreign tax credits and deductions.
Shareholders should also note that certain gains or losses attributable to
fluctuations in exchange rates or foreign currency forward contracts may
increase or decrease the amount of income of the fund available for distribution
to shareholders, and should note that if such losses exceed other income during
a taxable year, the fund would not be able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND
FUND, AIM LIMITED MATURITY TREASURY SHARES AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE SHARES, for
which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box
2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of
the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
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 (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-A 07/97
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APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-A 07/97
B-1
<PAGE> 165
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
MCF-A 07/97
B-2
<PAGE> 166
[AIM LOGO APPEARS HERE]
THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston TX 77210-4739
Custodian
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 Bldg.
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
INT-PRO-1
<PAGE> 167
STATEMENT OF
ADDITIONAL INFORMATION
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
AIM INTERNATIONAL EQUITY FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(713) 626-1919
-------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS,
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED 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 (800) 347-4246
-------------------------
Statement of Additional Information dated: August 4, 1997
Relating to the AIM International Equity Fund Prospectus dated August 4, 1997,
the AIM Global Aggressive Growth Fund, AIM Global Growth Fund and
AIM Global Income Fund Prospectus dated August 4, 1997,
the AIM Asian Growth Fund Prospectus dated August 4, 1997
and the AIM European Development Fund Prospectus dated August 4, 1997.
AIM Asian Growth Fund and AIM European Development Fund are not
available at this time.
<PAGE> 168
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 . . . . . . . . . . . . . . . . . . . . 5
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . 5
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . 7
Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . 8
HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES . . . . . . . . . . . . . . 9
Privatized Enterprises . . . . . . . . . . . . . . . . . . . . . . . 9
Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . 10
Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . 11
Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . 11
Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . 11
Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . 11
Combined Option Positions . . . . . . . . . . . . . . . . . . . . . 12
Stock Index Options and Futures and Financial Futures . . . . . . . 12
Restrictions on the Use of Futures Transactions . . . . . . . . . . 13
Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . 14
Asset Coverage for Futures and Options Positions . . . . . . . . . . 14
Risk Factors in Options, Futures, Forward and Currency Transactions 15
Repurchase Agreements and Reverse Repurchase Agreements . . . . . . 15
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . 16
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . 17
Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . 17
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Aggressive Growth Fund, Growth Fund, and Income Fund . . . . . . . . 17
Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Asia-Pacific Fund and European Fund . . . . . . . . . . . . . . . . 21
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . 24
Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . 28
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . 29
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . 30
Investment Advisory, Sub-Advisory and Administrative Services
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 31
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
i
<PAGE> 169
<TABLE>
<S> <C>
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . 40
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 41
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . 42
Reinvestment of Dividends and Distributions . . . . . . . . . . . . 42
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . 47
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . 47
Principal Holders of Securities . . . . . . . . . . . . . . . . . . 47
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 50
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 170
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 is included in the AIM Asian Growth Fund Prospectus dated August 4,
1997; the AIM European Development Fund Prospectus dated August 4, 1997; the
AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income
Fund Prospectus, dated August 4, 1997 and the AIM International Equity Fund
Prospectus dated August 4, 1997, (individually, a "Prospectus" and collectively,
the "Prospectuses"). Copies of each 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 (800)
347-4246. Investors must receive a Prospectus before they invest in the Funds.
AIM Asian Growth Fund and AIM European Development Fund are not available to
investors at this time.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds
(hereinafter defined). Some of the information required to be in this
Statement of Additional Information is also included in each Fund's current
Prospectus, and in order to avoid repetition, reference will be made herein to
sections of the applicable Prospectus. Additionally, each 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 each 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 six separate portfolios: AIM Asian Growth Fund
(the "Asian Fund"), AIM European Development Fund ( the "European Fund"), AIM
Global Aggressive Growth Fund (the "Aggressive Growth Fund"), AIM Global Growth
Fund (the "Growth Fund") and AIM Global Income Fund ( the "Income Fund") and AIM
International Equity Fund (the "Equity Fund") (individually, a "Fund" and
collectively, the "Funds"). Each portfolio of the Company offers Class A, Class
B and Class C shares. This Statement of Additional Information relates solely to
the Funds.
As used in each 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.
1
<PAGE> 171
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:
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper Analytical Services
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 returns may be broken down into their
components of income and capital (including capital gains and changes in
2
<PAGE> 172
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. For
Asian Fund and European Fund total returns may be quoted with or without
taking the Class A shares' 5.50% maximum sales charge, the Class B shares' 5%
maximum contingent deferred sales charge ("CDSC") or the Class C shares' 1%
maximum CDSC into account. For Aggressive Growth Fund, Growth Fund and Income
Fund total returns may be quoted with or without taking the Class A shares'
4.75% maximum sales charge, the Class B shares' 5% maximum CDSC or the Class C
shares' 1% maximum CDSC into account. For Equity Fund total returns may be
quoted with or without taking the Class A shares' 5.50% maximum sales charge,
the Class B shares' 5% maximum CDSC or the Class C shares' 1% maximum 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:
6
YIELD = 2[((a-b)/(c x d) + 1) -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, 1996 were as follows:
<TABLE>
<S> <C>
Class A . . . . . . . . . . . 6.09%
Class B . . . . . . . . . . . 5.90%
</TABLE>
Yield is not available for the Class C shares of the Income Fund as
the effective date of the Class C shares of all Funds was August 4, 1997.
HISTORICAL PORTFOLIO RESULTS
Total returns for Class A shares of Aggressive Growth Fund, Growth
Fund and Income Fund for the one-year period ended October 31, 1996 and the
period September 15, 1994 (inception date) through October 31, 1996 (which
include the maximum sales charge of 4.75% and reinvestment of all dividends and
distributions), and total returns for Class A shares of Equity Fund for the
one-year period ended October 31, 1996 and the period April 7, 1992 (date of
effectiveness of Equity Fund's registration statement) through October 31,
1996 (which include the maximum sales charge of 5.50% and reinvestment of all
dividends and distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1996 Periods ended October 31, 1996
------------------------------ -------------------------------
One Since One Since
Class A Shares: Year Inception Year Inception
- --------------- -------- --------- -------- ---------
<S> <C> <C> <C> <C>
Aggressive
Growth Fund 15.09% 21.24% 15.09% 50.65%
Equity Fund 9.42% 13.51% 9.42% 78.36%
Growth Fund 11.69% 16.21% 11.69% 37.66%
Income Fund 4.99% 10.22% 4.99% 23.00%
</TABLE>
3
<PAGE> 173
Total returns for Class B shares of the Aggressive Growth Fund, Equity
Fund, Growth Fund and Income Fund for the one-year period ended October 31,
1996 and the period September 15, 1994 (inception date) through October 31,
1996 (which include the maximum contingent deferred sales charge of 5% and
reinvestment of all dividends and distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1996 Periods ended October 31, 1996
------------------------------ -------------------------------
One Since One Since
Class B Shares: Year Inception Year Inception
- --------------- -------- --------- -------- ---------
<S> <C> <C> <C> <C>
Aggressive
Growth Fund 15.09% 22.26% 15.09% 53.36%
Equity Fund 9.88% 7.88% 9.88% 17.51%
Growth Fund 11.60% 17.12% 11.60% 39.95%
Income Fund 4.66% 10.93% 4.66% 24.72%
</TABLE>
Average annual total return is not available for Class A and B shares
of Asian Fund or European Fund as the effective date of the Class A and
B shares of such Funds was August 1, 1997.
Average annual total return is not available for Class C shares of
Aggresive Growth Fund, Asian Fund, Equity Fund, European Fund, Growth
Fund or Income Fund as the effective date of the Class C shares of all Funds
was August 4, 1997.
During the one-year period ended October 31, 1996, a hypothetical
$1,000 investment in the Class A shares of the Aggressive Growth Fund, Equity
Fund, Growth Fund and Income Fund at the beginning of such period would have
been worth $1,150.90, $1,094.20, $1,116.90 and $1,049.90, respectively,
assuming the maximum sales charge was paid and all distributions were
reinvested. For the period September 15, 1994 (inception date for Aggressive
Growth Fund, Growth Fund and Income Fund) through October 31, 1996, and the
period April 7, 1992 (date of effectiveness of Equity Fund's registration
statement) through October 31, 1996, a hypothetical $1,000 investment in the
Class A shares of the Aggressive Growth Fund, Equity Fund, Growth Fund and
Income Fund at the beginning of such period would have been worth $1,506.50,
$1,783.60, $1,376.60 and $1,230.00, respectively, assuming the maximum sales
charge was paid and all distributions were reinvested.
During the one-year period ended October 31, 1996, a hypothetical
$1,000 investment in the Class B shares of the Aggressive Growth Fund, Equity
Fund, Growth Fund and Income Fund at the beginning of such period would have
been worth $1,150.90, $1,098.80, $1,116.00 and $1,046.60, respectively,
assuming the maximum contingent deferred sales charge was paid and all
distributions were reinvested. For the period September 15, 1994 (inception
date) through October 31, 1996, a hypothetical $1,000 investment in the Class B
shares of the Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund
at the beginning of such period would have been worth $1,533.60, $1,175.10,
$1,399.50 and $1,247.20, respectively, assuming the maximum contingent deferred
sales charge was paid and all distributions were reinvested.
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 and other materials to the performance of comparative benchmarks
such as indices of stocks comparable to those in which the Funds invest, as
well as the following:
4
<PAGE> 174
Standard & Poor's 500 Stock Index Dow Jones Industrial Average
Consumer Price Index Morgan Stanley Capital Inter-
Bond Buyer Index national Indices, including:
NASDAQ EAFE Index
COFI Pacific Basin Index
First Boston High Yield Index Pacific Ex Japan Index (a widely
The Financial Times - Actuaries World Indices recognized series of
(a wide range of comprehensive measures of indices in international
stock price performance for the world's market
major stock markets and regional areas) performance)
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, 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. Also from time
to time, sales literature and/or advertisements for the Funds may disclose (i)
the largest holdings in the Funds' portfolios, (ii) certain selling group
members and/or (iii) certain institutional shareholders.
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 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 a mark up or mark down.
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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; (3) certain products and/or services provided to the Funds, the cost of
which will be included in Fund expenses reported to shareholders; and (4) 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. In such cases, Fund trades may be
executed directly by selling dealers or by other broker-dealers with which
selling dealers have clearing arrangements.
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 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 Investment Company Act of 1940, as amended (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.
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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 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.
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
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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, purchases 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.
As of October 31, 1996, Aggressive Growth Fund had entered into
repurchase agreements with Dresdner Securities, Inc. and Daiwa Securities
America, Inc. having a market value of $54,000,000 and $631,659, respectively.
As of October 31, 1996, Equity Fund had entered into a repurchase agreement
with Daiwa Securities, Inc. having a market value of $121,642. Daiwa
Securities, Inc. is a regular broker of the Company, as defined in Rule 10b-1.
As of October 31, 1996, Growth Fund held an amount of common stock issued by
PaineWebber, Inc. and had entered into a repurchase agreement with Daiwa
Securities America, Inc. having a market value of $105,750 and $6,000,000,
respectively. As of October 31, 1996, Income Fund had entered into a
repurchase agreement with Daiwa Securities, Inc. having a market value of
$400,640. PaineWebber, Inc., Daiwa Securities America, Inc. and Dresdner
Securities, Inc. are regular brokers of the Company, as defined in Rule 10b-1.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 1996 and 1995 and the period
September 15, 1994 (inception date) through October 31, 1994, Aggressive Growth
Fund paid brokerage commissions of $5,169,447, $1,409,761 and $59,076,
respectively. The increase in brokerage commissions from October 31, 1994
through October 31, 1996 was due to the increase in Aggressive Growth Fund's
net assets during such period. For the fiscal year ended October 31, 1996, AIM
allocated certain of Aggressive Growth Fund's brokerage transactions to certain
broker-dealers that provided AIM with certain research, statistical and other
information. Such transactions amounted to $56,670,088 and the related
brokerage commissions were $90,264.
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For the years ended October 31, 1996, 1995 and 1994 Equity Fund paid
brokerage commissions of $5,666,504, $3,169,134 and $3,253,649, respectively.
The increase in brokerage commissions from October 31, 1994 through October 31,
1996 was due to the increase in Equity Fund's net assets during such period.
For the fiscal year ended October 31, 1996, AIM allocated certain of Equity
Fund's brokerage transactions to certain broker-dealers that provided AIM with
certain research, statistical and other information. Such transactions
amounted to $5,703,215 and the related brokerage commissions were $5,452.
For the fiscal years ended October 31, 1996 and 1995 and the period
September 15, 1994 (inception date) through October 31, 1994, Growth Fund paid
brokerage commissions of $826,284, $161,100 and $9,933, respectively. The
increase in brokerage commissions from October 31, 1994 through October 31,
1996 was due to the increase in Growth Fund's net assets during such period.
For the fiscal year ended October 31, 1996, AIM allocated certain of Growth
Fund's brokerage transactions to certain broker-dealers that provided AIM with
certain research, statistical and other information. Such transactions
amounted to $13,226,137 and the related brokerage commissions were $14,715.
For the fiscal years ended October 31, 1996 and 1995 and the period
September 15, 1994 (inception date) through October 31, 1994, Income Fund paid
brokerage commissions of $1,570, $6,939 and $0, respectively. For the fiscal
year ended October 31, 1996, none of Income Fund's brokerage transactions were
allocated to broker-dealers that provided AIM with certain research,
statistical and other information.
HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES
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.
PRIVATIZED ENTERPRISES
The governments of certain foreign countries have, to varying degrees,
embarked on privatization programs contemplating the sale of all or part of
their interests in state enterprises. European Fund's investments in the
securities of privatized enterprises include privately negotiated investments
in a government- or state-owned or controlled company or enterprise that has
not yet conducted an initial equity offering, investments in the initial
offering of equity securities of a state enterprise or former state enterprise
and investments in the securities of a state enterprise following its initial
equity offering.
In certain jurisdictions, the ability of foreign entities, such as
European Fund, to participate in privatizations may be limited by local law, or
the price or terms on which European Fund may be able to participate may be
less advantageous than for local investors. Moreover, there can be no
assurance that
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governments that have embarked on privatization programs will continue to
divest their ownership of state enterprises, that proposed privatizations will
be successful or that governments will not re-nationalize enterprises that have
been privatized.
In the case of the enterprises in which European Fund may invest,
large blocks of the stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those enterprises.
The sale of some portion or all of those blocks could have an adverse effect on
the price of the stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or
former state enterprises go through an internal reorganization or management.
Such reorganizations are made in an attempt to better enable these enterprises
to compete in the private sector. However, certain reorganizations could
result in a management team that does not function as well as the enterprise's
prior management and may have a negative effect on such enterprise. In
addition, the privatization of an enterprise by its government may occur over a
number of years, with the government continuing to hold a controlling position
in the enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which
European Fund may invest enjoy the protection of and receive preferential
treatment from the respective sovereigns that own or control them. After
making an initial equity offering these enterprises may no longer have such
protection or receive such preferential treatment and may become subject to
market competition from which they were previously protected. Some of these
enterprises may not be able to effectively operate in a competitive market and
may suffer losses or experience bankruptcy due to such competition.
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, Asian Fund, Equity Fund, European Fund or 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.
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
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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 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
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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.
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
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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 Aggressive Growth Fund,
Growth Fund and Income Fund, and 15% of the net assets of Equity Fund, European
Fund and Asian 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.
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 segregated
securities will not be sold while the futures or option strategy is
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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 accounts 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.
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
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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, Asian Fund, Equity Fund, European Fund and
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.
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.
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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.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with
foreign currencies, and consequently the Funds may from time to time hold cash
balances in the form of foreign currencies and multinational currency units.
Such foreign currencies and multinational currency units will usually be
acquired on a spot (i.e. cash) basis at the spot rate prevailing in foreign
exchange markets and will result in currency conversion costs to the Funds.
The Funds attempt to purchase and sell foreign currencies on as favorable a
basis as practicable; however, some price spread on foreign exchange
transactions (to cover service charges) may be incurred, particularly when the
Funds change investments from one country to another, or when U.S. dollars are
used to purchase foreign securities. Certain countries could adopt policies
which would prevent the Funds from transferring cash out of such countries, and
the Funds may be affected either favorably or unfavorably by fluctuations in
relative exchange rates while the Funds hold foreign currencies.
INVESTMENT RESTRICTIONS
AGGRESSIVE GROWTH FUND, GROWTH FUND, AND INCOME FUND
The following fundamental policies and investment restrictions have
been adopted by Aggressive Growth Fund, Growth Fund and Income Fund 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
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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 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 and except that a
Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order. 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 and except that a
Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order. 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, except that a Fund may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order.
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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. Make investments for the purpose of exercising control
or management.
13. 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."
14. 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.
15. 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.
EQUITY FUND
The following fundamental policies and investment restrictions have been
adopted by Equity Fund and, except as noted, such policies cannot be changed
without approval by the vote of a majority of the outstanding voting securities
of the Fund, as defined in the 1940 Act.
The Fund 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 Fund may purchase and sell stock index
and currency options, stock index futures, financial
futures and currency futures contracts and related
options on such futures.
3. Purchase any security on margin, except that the Fund
may obtain such short-term credits as may be necessary
for the clearance of purchases and sales 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 Fund 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. Borrow money, except that the Fund may borrow from
banks (including the Fund's custodian bank) and enter
into reverse repurchase agreements as a temporary
defensive measure for extraordinary or emergency
purposes, and then only in amounts not exceeding 10%
of its total assets, taken at market value, and may
pledge amounts of up to 20% of its total assets, taken
at market value, to secure such borrowings. For
purposes of this restriction, collateral arrangements
with
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respect to the writing of options, futures contracts,
options on futures contracts, and collateral
arrangements with respect to initial and variation
margin are not deemed to be a pledge of assets, and
neither such arrangements nor the purchase and sale of
options, futures or related options shall be deemed to
be the issuance of a senior security. Whenever bank
borrowings and the value of the Fund's reverse
repurchase agreements exceed 5% of the value of the
Fund's total assets, the Fund will not make any
additional purchases of securities for investment
purposes.
6. Underwrite securities of other persons, except to the
extent that the 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 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.
9. Purchase a security if, as a result, with respect to
75% of the value of the Fund's total assets, taken at
market value, more than 5% of the 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, except that the
Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order.
10. Purchase a security if, as a result, more than 10% of
the outstanding voting securities of any issuer would
be held by the Fund, except that the Fund may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order.
11. Issue senior securities, except as provided in
restriction number 5 above.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Fund will not:
12. Make investments for the purpose of exercising control
or management.
13. Lend its portfolio securities in excess of 33-1/3% of
its 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."
14. Invest in securities which cannot be readily resold
because of legal or contractual restrictions or which
are not otherwise readily marketable if, regarding all
such securities, more than 15% of the Fund's total
assets, taken at market value, would be invested in
such securities.
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15. Effect short sales of securities, except that the 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.
ASIAN FUND AND EUROPEAN FUND
The following fundamental policies and investment restrictions have been
adopted by Asian Fund and European Fund 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 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 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.
8. 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
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<PAGE> 191
value, would be invested in the securities of any one
issuer, except securities issued or guaranteed by the
U.S. Government or any of its agencies or
instrumentalities and except that a Fund may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order.
9. Purchase a security if, as a result, more than 10% of
the outstanding voting securities of any issuer would
be held by a Fund, except that a Fund may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, each of the Funds
will not:
10. Make investments for the purpose of exercising control
or management.
11. Lend its portfolio securities in excess of 33-1/3% of
its 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."
12. 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.
13. Effect short sales of securities, except that the 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.
14. Purchase or sell interests in oil, gas or other
mineral exploration or development programs.
The following non-fundamental policies apply to all Funds. Subject to
the investment restriction on lending portfolio securities, number 13 for
Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund and number 11
for Asian Fund and European Fund, 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 of 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, except Asian Fund and European
Fund, 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, Aggressive Growth
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<PAGE> 192
Fund, Growth Fund and Income Fund 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). As of the date of this Statement of Additional Information,
Equity Fund has undertaken (1) that it will not invest more than 15% of its
average net assets at the time of purchase in investments which are not readily
marketable (Texas) and (2) that it will not 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). 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
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.
23
<PAGE> 193
MANAGEMENT
Directors and Officers
The directors and officers of the Company and their principal
occupations during the last five years are set forth below.
<TABLE>
<CAPTION>
=====================================================================================================
POSITIONS HELD PRINCIPAL OCCUPATION DURING PAST 5
NAME, ADDRESS AND AGE WITH REGISTRANT YEARS
--------------------- --------------- -----
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (78) Director and Chairman of the Board of Directors,
11 Greenway Plaza, Suite 100 Chairman A I M Management Group Inc.,
Houston, TX 77046 A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc.
and Fund Management Company; and Vice
Chairman and Director, AMVESCAP plc.
- -----------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance
906 Frome Lane company).
McLean, VA 22102 Formerly, Director, President and Chief
Executive Officer, COMSAT Corporation;
and Chairman, Board of Governors of
INTELSAT (international communications
company).
- -----------------------------------------------------------------------------------------------------
OWEN DALY II (72) Director Director, Cortland Trust Inc.
Six Blythewood Road (investment company). Formerly,
Baltimore, MD 21210 Director, CF & I Steel Corp., Monumental
Life Insurance Company and Monumental
General Insurance Company; and Chairman
of the Board of Equitable
Bancorporation.
- -----------------------------------------------------------------------------------------------------
JACK FIELDS (45) Director Formerly, Member of the U. S. House of
2607 Old Humble Road Representatives.
Humble, TX 77396
- -----------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
* A director who is an interested person of A I M Advisors,
Inc. and the Company as defined in the 1940 Act.
24
<PAGE> 194
<TABLE>
<CAPTION>
=====================================================================================================
POSITIONS HELD PRINCIPAL OCCUPATION DURING PAST 5
NAME, ADDRESS AND AGE WITH REGISTRANT YEARS
--------------------- --------------- -----
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
**CARL FRISCHLING (60) Director Partner, Kramer, Levin, Naftalis &
919 Third Avenue Frankel (law firm). Director, ERD
New York, NY 10022 Waste, Inc. (waste management company),
Aegis Consumer Finance (auto leasing
company) and Lazard Funds, Inc.
(investment companies). Formerly,
Partner, Reid & Priest (law firm); and,
prior thereto, Partner, Spengler Carlson
Gubar Brodsky & Frischling (law firm).
- -----------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (50) Director and Director, President and Chief Executive
11 Greenway Plaza, Suite 100 President Officer, A I M Management Group Inc.;
Houston, TX 77046 Director and President, A I M Advisors,
Inc.; Director and Senior Vice
President, A I M Capital Management,
Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc.
and Fund Management Company; and
Director, AMVESCAP plc.
- -----------------------------------------------------------------------------------------------------
JOHN F. KROEGER (72) Director Director, Flag Investors International
37 Pippins Way Fund, Inc., Flag Investors Emerging
Morristown, NJ 07960 Growth Fund, Inc., Flag Investors
Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc.,
Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income
Fund, Inc., Managed Municipal Fund,
Inc., Flag Investors Value Builder Fund,
Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc.,
Flag Investors Real Estate Securities
Fund, Inc., Alex. Brown Cash Reserve
Fund, Inc. and North American Government
Bond Fund, Inc. (investment companies).
Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm).
- -----------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
** 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.
25
<PAGE> 195
<TABLE>
<CAPTION>
=====================================================================================================
POSITIONS HELD PRINCIPAL OCCUPATION DURING PAST 5
NAME, ADDRESS AND AGE WITH REGISTRANT YEARS
--------------------- --------------- -----
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
LEWIS F. PENNOCK (54) Director Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------
IAN W. ROBINSON (74) Director Formerly, Executive Vice President and
183 River Drive Chief Financial Officer, Bell Atlantic
Tequesta, FL 33469 Management Services, Inc. (provider of
centralized management services to
telephone companies); Executive Vice
President, Bell Atlantic Corporation
(parent of seven telephone companies);
and Vice President and Chief Financial
Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
- -----------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (57) Director Executive Vice President, Development
Transco Tower, 50th Floor and Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (real estate development).
Houston, TX 77056
- -----------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (52) Senior Vice Senior Vice President and Treasurer,
11 Greenway Plaza, Suite President and A I M Advisors, Inc.; and Vice President
100 Treasurer and Treasurer, A I M Management Group
Houston, TX 77046 Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management
Company.
- -----------------------------------------------------------------------------------------------------
GARY T. CRUM (49) Senior Vice Director and President, A I M Capital
11 Greenway Plaza, Suite 100 President Management, Inc.; Director and Senior
Houston, TX 77046 Vice President, A I M Management Group
Inc. and A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and
AMVESCAP plc.
- -----------------------------------------------------------------------------------------------------
SCOTT G. LUCAS (38) Senior Vice Director and Senior Vice President,
11 Greenway Plaza, Suite 100 President A I M Capital Management, Inc.; and Vice
Houston, TX 77046 President, A I M Management Group Inc.
and A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
26
<PAGE> 196
<TABLE>
<CAPTION>
=====================================================================================================
POSITIONS HELD PRINCIPAL OCCUPATION DURING PAST 5
NAME, ADDRESS AND AGE WITH REGISTRANT YEARS
--------------------- --------------- -----
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
***CAROL F. RELIHAN (42) Senior Vice Senior Vice President, General Counsel
11 Greenway Plaza, Suite President and and Secretary, A I M Advisors, Inc.;
100 Secretary Vice President, General Counsel and
Houston, TX 77046 Secretary, A I M Management Group Inc.;
Vice President and General Counsel, Fund
Management Company; and Vice President,
A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc. and A I M Institutional
Fund Services, Inc.
- -----------------------------------------------------------------------------------------------------
DANA R. SUTTON (38) Vice President Vice President and Fund Controller,
11 Greenway Plaza, Suite 100 and Assistant A I M Advisors, Inc.; and Assistant Vice
Houston, TX 77046 Treasurer President and Assistant Treasurer, Fund
Management Company.
- -----------------------------------------------------------------------------------------------------
ROBERT G. ALLEY (48) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President,
Houston, TX 77046 A I M Advisors, Inc. Formerly, Senior
Fixed Income Money Manager, Waddell and
Reed, Inc.
- -----------------------------------------------------------------------------------------------------
MELVILLE B. COX (53) Vice President Vice President and Chief Compliance
11 Greenway Plaza, Suite 100 Officer, A I M Advisors, Inc.,
Houston, TX 77046 A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management
Company.
- -----------------------------------------------------------------------------------------------------
JONATHAN C. SCHOOLAR (36) Vice President Director and Senior Vice President,
11 Greenway Plaza, Suite 100 A I M Capital Management, Inc.; and Vice
Houston, TX 77046 President, A I M Advisors, Inc.
=====================================================================================================
</TABLE>
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. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. 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
- ------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
27
<PAGE> 197
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), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Fields, Kroeger, Pennock (Chairman), Robinson and Sklar. The
Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as 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 services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. Each such director
receives a fee, allocated among the AIM Funds for which he serves as a director
or trustee, which consists of an annual retainer component and a meeting fee
component.
28
<PAGE> 198
Set forth below is information regarding compensation paid or accrued
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 5,036 38,621 68,000
- ------------------------------------------------------------------------------------------------
Owen Daly II 4,967 82,607 68,000
- ------------------------------------------------------------------------------------------------
Jack Fields(4) 0 0 0
- ------------------------------------------------------------------------------------------------
Carl Frischling(5) 5,002 56,683 68,000
- ------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- ------------------------------------------------------------------------------------------------
John F. Kroeger 4,825 83,654 66,000
- ------------------------------------------------------------------------------------------------
Lewis F. Pennock 4,896 33,702 67,000
- ------------------------------------------------------------------------------------------------
Ian W. Robinson 5,002 64,973 68,000
- ------------------------------------------------------------------------------------------------
Louis S. Sklar 4,998 47,593 66,500
================================================================================================
</TABLE>
- -----------------
(1) The total amount of compensation deferred by all directors of the
Company during the fiscal year ended October 31, 1996, including interest
earned thereon, was $19,045.
(2) During the fiscal year ended October 31, 1996, the total amount of
expenses allocated to the Company in respect of such retirement benefits was
$16,282. Data reflect compensation earned for the calendar year ended December
31, 1996.
(3) Each Director serves as director or trustee of eleven registered
investment companies advised by AIM (comprised of 55 portfolios). Data reflect
total compensation earned during the calendar year ended December 31, 1996.
(4) Mr. Fields was not serving as a Director during the fiscal year ended
December 31, 1996.
(5) See page 31 regarding fees earned by Mr. Frischling's law firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each 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 "Applicable
AIM Funds"). Each eligible director is entitled to receive an annual benefit
from the Applicable AIM Funds commencing on the first day
29
<PAGE> 199
of the calendar quarter coincident with or following his date of retirement
equal to 75% of the retainer paid or accrued by the Applicable AIM Funds for
such director during the twelve-month period immediately preceding the
director's retirement (including amounts deferred under a separate agreement
between the Applicable AIM Funds and the director) for the number of such
director's years of service (not in excess of 10 years of service) completed
with respect to any of the Applicable AIM Funds. Such benefit is payable to
each eligible director in quarterly installments. If an eligible director dies
after 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 ten 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 the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger, Pennock,
Robinson and Sklar are 10,10, 0, 20, 19, 15, 10 and 7 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
=========================================================
Number of Years Annual Retainer
of Service with Paid By All AIM Funds
the AIM Funds
====================================
$80,000
=========================================================
<S> <C>
10 $60,000
---------------------------------------------------------
9 $54,000
---------------------------------------------------------
8 $48,000
---------------------------------------------------------
7 $42,000
---------------------------------------------------------
6 $36,000
---------------------------------------------------------
5 $30,000
=========================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring 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 their deferral accounts 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 (5) or ten (10) years (depending on the Agreement) 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
30
<PAGE> 200
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.
The Company paid the law firm of Kramer, Levin, Naftalis & Frankel ,
counsel to the Board of Directors, $4,726, $5,247, $3,146 and $3,047 in legal
fees for services provided to the Aggressive Growth Fund, Equity Fund, Growth
Fund and Income Fund, respectively, during the fiscal year ended October 31,
1996. Mr. Frischling, a Director of the Company, is a partner in such firm.
INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"), a holding company that has been engaged in the financial services
business since 1976. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP plc, 11 Devonshire Square, London EC2M 4YR, United Kingdom.
AIM and the Company have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions, (c) to refrain from
personally engaging in (i) short-term trading of a security, (ii) transactions
involving a security within seven days of an AIM Fund transaction involving the
same security, and (iii) transactions involving securities being considered for
investment by an AIM Fund and (d) to abide by certain other provisions under
the Code of Ethics. The Code of Ethics also prohibits investment personnel and
all other AIM employees from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by AIM, and the
Board of Directors reviews quarterly and annual reports (including information
on any substantial violations of the Code of Ethics). Sanctions for violations
of the Code of Ethics may include censure, monetary penalties, suspension or
termination of employment.
The Company, on behalf of the Funds, has entered into a Master
Investment Advisory Agreement ("Investment Advisory Agreement") and a Master
Administrative Services Agreement ("Administrative Services Agreement"), both
dated February 28, 1997, with AIM. In addition, AIM has entered into a Master
Sub-Advisory Agreement (the "Sub-Advisory Agreement") with INVESCO Global Asset
Management Limited ("IGAM") with respect to the Asian Fund and the European
Fund. See "Management" in the Prospectus.
The Investment Advisory Agreement and, with respect to the Asian Fund
and the European Fund, the Sub-Advisory Agreement provide that each Fund will
pay or cause to be paid all expenses of the Fund not assumed by AIM (or IGAM),
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 and Sub-Advisory Agreement (as
applicable) provide 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,
31
<PAGE> 201
AIM and/or IGAM 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 and the Sub-Advisory
Agreement for the Asian Fund and the European Fund, each provide that such
agreement will continue in effect for two years, 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 approved
by the Funds' shareholders on February 7, 1997 and was continued by the
Company's Board of Directors (including the affirmative vote of all of the
Non-Interested Directors) on May 13, 1997. The Investment Advisory Agreement
became effective as of February 28, 1997. The Sub-Advisory Agreement was
approved by the Company's Board of Directors on June 11, 1997. The Investment
Advisory Agreement and the Sub-Advisory Agreement each provides that the Funds
or AIM may terminate such agreement on sixty (60) days' written notice without
penalty. The Investment Advisory Agreement and Sub- Advisory Agreement each
terminate automatically in the event of its assignment. Under the Investment
Advisory Agreement, AIM is entitled to receive from each Fund a fee calculated
at the following annual rates based on the average daily net assets of
the Fund:
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.95%
Over $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.90%
</TABLE>
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>
32
<PAGE> 202
AIM INTERNATIONAL EQUITY FUND
<TABLE>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.95%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.90%
</TABLE>
AIM has voluntarily agreed to waive advisory fees under the Investment
Advisory Agreement in order to achieve the following annual fee structure for
Equity Fund: 0.95% of the first $500 million of Equity Fund's average daily net
assets; 0.90% of the next $500 million of Equity Fund's average daily net
assets; and 0.85% of Equity Fund's average daily net assets exceeding $1
billion. AIM may terminate such fee waiver at any time without notice to
Shareholders.
AIM may from time to time voluntarily waive or reduce its fees, while
retaining its ability to be reimbursed for such fee prior to the end of each
fiscal year. Any fee waivers will be shared proportionately by the
sub-advisor. Fee waivers or reductions other than those contained in the
Advisory Agreement or Sub-Advisory Agreement, may be modified or terminated at
any time and without notice to investors.
For the fiscal years ended October 31, 1996, 1995 and 1994, AIM
received advisory fees from each Fund as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 8,571,918 $ 1,106,108 $ -0- *
Equity Fund $10,384,642 $ 6,225,765 $ 5,526,858
Growth Fund $ 1,163,814 $ 125,323 $ -0- *
Income Fund $ -0- $ -0- $ -0- *
</TABLE>
* For the period September 15, 1994 (inception date) through October
31, 1994.
Under the Sub-Advisory Agreement, IGAM is entitled to receive from AIM
with respect to each of the Asian Fund and the European Fund, a fee calculated
at the following annual rates based on the average daily net assets of the Fund:
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.20%
Over $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.175%
</TABLE>
Pursuant to a sub-advisory agreement which has since been terminated,
AIM paid to Nationale-Nederlanden International Investment Advisors B.V.
sub-advisory fees for the Equity Fund during the year ended October 31, 1994 of
$429,520.
For the fiscal years ended October 31, 1996, 1995 and 1994, AIM waived
advisory fees for each Fund as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ -0- $ -0- $ 13,551*
Equity Fund $ 299,147 $ 77,672 $ 43,159
Growth Fund $ -0- $ 19,558 $ 2,816*
Income Fund $ 182,596 $ 55,087 $ 2,099*
</TABLE>
* For the period September 15, 1994 (inception date) through October
31, 1994.
33
<PAGE> 203
The Administrative Services Agreement for the Funds provides that AIM
may perform, or arrange for the performance of, certain accounting 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, 1997, 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 December 11, 1996. The agreement became
effective as of February 28, 1997.
For the fiscal years ended October 31, 1996, 1995 and 1994, AIM
received reimbursement of administrative services costs from each Fund as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 86,330 $ 25,218 $ 3,939*
Equity Fund $ 94,250 $ 29,858 $ 381,864
Growth Fund $ 78,151 $ 21,984 $ 2,686*
Income Fund $ 74,433 $ 29,858 $ 2,508*
</TABLE>
* For the period September 15, 1994 (inception date) through
October 31, 1994.
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.
For the fiscal years ended October 31, 1996 and 1995, AFS received
transfer agency and shareholder services fees with respect to each fund as
follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Aggressive Growth Fund $1,474,675 $ 258,683
Equity Fund $1,170,699 $ 757,067
Growth Fund $ 216,804 $ 33,579
Income Fund $ 40,282 $ 9,321
</TABLE>
AIM reimbursed AFS pursuant to a services agreement which was
terminated during the fourth quarter of 1994 for providing shareholder
servicing for Aggressive Growth Fund, Growth Fund and Income Fund for the
period September 15, 1994 (inception date) through October 31, 1994 in the
amounts of $1,439, $186 and $24, respectively, and for Equity Fund for the
fiscal year ended October 31, 1994 the amount of $351,680.
34
<PAGE> 204
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN. The Company has adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and
Class C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan
provides that for Aggressive Growth Fund, Growth Fund and Income Fund the Class
A shares pay 0.50% per annum of their average daily net assets, for Equity Fund
the Class A shares pay 0.30% per annum of their average daily net assets and
for Asian Fund and European Fund the Class A shares pay 0.35% per annum
of their average daily net assets as compensation to AIM Distributors for the
purpose of financing any activity which is primarily intended to result in the
sale of Class A shares. Under the Class A and C Plan, Class C shares of each
Fund pay compensation to AIM Distributors at an annual rate of 1.00% of the
average daily net assets attributable to Class C shares. Of such amount, each
Fund pays a service fee of 0.25% of the average daily net assets attributable
to Class A and Class C shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who
purchase and own Class A and Class C shares. Activities appropriate for
financing under the Class A and C Plan include, but are not limited to, the
following: printing of prospectuses and statements of additional information
and reports for other than existing shareholders; overhead; preparation and
distribution of advertising material and sales literature; expenses of
organizing and conducting sales seminars; supplemental payments to dealers and
other institutions such as asset-based sales charges or as payments of service
fees under shareholder service arrangements; and costs of administering the
Class A and C Plan.
THE CLASS B PLAN. The 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 and C 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 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
35
<PAGE> 205
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 fiscal year ended October 31, 1996, the Funds paid the
following amounts under the Class A and C Plan and the Class B Plan:
<TABLE>
<CAPTION>
% of Class'
average daily
net assets*
Class A and C Plan* Class B Plan Class A Class B
------------------- ------------ ------- -------
<S> <C> <C> <C> <C>
Aggressive Growth Fund $2,653,374 $4,217,606 0.50% 1.00%
Equity Fund 2,684,486 2,034,652 0.30% 1.00%
Growth Fund 352,082 663,802 0.50% 1.00%
Income Fund 78,792 103,129 0.50% 1.00%
</TABLE>
- ------------------------
* The effective date of Class C shares of all Funds was August 4, 1997.
36
<PAGE> 206
An estimate by category of actual fees paid by the Funds under the Class A Plan
during the year ended October 31, 1996 follows:
<TABLE>
<CAPTION>
Aggressive Equity Growth Income
Growth Fund Fund Fund Fund
----------- --------- --------- -------
<S> <C> <C> <C> <C>
CLASS A
Advertising . . . . . . . . . . . . $ 73,660 $ 201,447 $ 13,817 $ 4,712
Printing and mailing prospectuses
semi-annual reports and annual reports
(other than to current shareholders) $ 10,949 $ 31,069 $ 1,974 $ 943
Seminars . . . . . . . . . . . . . . $ 25,880 $ 69,154 $ 4,935 $ 943
Compensation to Underwriters to partially
offset other marketing expenses . . . $ -0- $ -0- $ -0- $ -0-
Compensation to Dealers including
finder's fees . . . . . . . . . . . $ 2,542,885 $ 2,382,816 $ 331,356 $ 72,194
Compensation to Sales Personnel . . . $ -0- $ -0- $ -0- $ -0-
</TABLE>
An estimate by category of actual fees paid by the Funds under the Class B
Plan during the year ended October 31, 1996 as follows:
<TABLE>
<CAPTION>
Aggressive Equity Growth Income
Growth Fund Fund Fund Fund
----------- --------- -------- ----
<S> <C> <C> <C> <C>
CLASS B
Advertising . . . . . . . . . . . . $ 597,500 $ 288,966 $ 93,804 $ 13,528
Printing and mailing prospectuses
semi-annual reports and annual reports
(other than to current shareholders) $ 89,775 $ 43,995 $ 13,971 $ 1,933
Seminars . . . . . . . . . . . . . . $ 209,474 $ 100,988 $ 33,929 $ 4,832
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs . . . . . . . $ 3,167,402 $ 1,527,909 $ 498,480 $ 77,423
Compensation to Dealers . . . . . . $ 153,455 $ 72,794 $ 23,618 $ 5,412
Compensation to Sales Personnel . . $ -0- $ -0- $ -0- $ -0-
</TABLE>
No fees were paid by the Funds for Class C shares during the fiscal
year ended October 31, 1996, as the effective date of Class C shares was August
4, 1997.
37
<PAGE> 207
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 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, 1998 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 and C Plan is
amended in a manner which the Board of Directors determines would materially
increase the charges paid under the Class A and C 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 and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of up
to 0.50% of average daily net assets of the Class A shares of Aggressive Growth
Fund, Income Fund, and Growth Fund, of up to 0.35% of average daily net assets
of the Class A shares of Asian Fund and European Fund, and of up to 0.30% of
average daily net assets of the Class A shares of Equity Fund, as compared to
1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan
obligates the Class B shares to continue to make payments to AIM Distributors
following termination of the Class B 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.
38
<PAGE> 208
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement with AIM Distributors relating to the Class A
and Class C shares of the Funds was approved by the Board of Directors on June
11, 1997. 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
December 11, 1996. 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.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares of
the Funds at the time of such sales. Payments with respect to Class B shares
will equal 4.0% of the purchase price of the Class B shares sold by the dealer
or institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. The portion of the payments
to AIM Distributors under the Class B Plan which constitutes an asset-based
sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it will require a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve a
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares.
After the first full year, AIM Distributors will make such payments quarterly
to dealers and institutions based on the average net asset value of Class C
shares which are attributable to shareholders for whom the dealers and
institutions are designated as dealers of record. The portion of the payments
to AIM Distributors under the Class C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of such on-going sales commission plus
financing costs, if any.
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.
The following chart reflects the total sales charges paid in
connection with the sale of Class A shares of each Fund and the amount retained
by AIM Distributors for the fiscal years ended October 31, 1996, 1995 and 1994:
39
<PAGE> 209
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- -----
Sales Amount Sales Amount Sales Amount
Charges Retained Charges Retained Charges Retained
------------ ---------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund $17,453,757 $3,270,278 $4,770,524 $779,090 $436,203 $43,586*
Equity Fund 8,663,571 1,489,975 3,662,531 565,101 8,535,232 1,177,691
Growth Fund 2,044,462 388,799 473,172 82,337 46,883 5,382*
Income Fund 325,210 57,096 156,910 27,115 13,085 2,102*
</TABLE>
* For the period September 15, 1994 (inception date) through October 31,
1994.
The following chart reflects the contingent deferred sales charges
paid by Class A and Class B shareholders for the fiscal years ended October
31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 84,130 $ 68,427 $ 79*
Equity Fund 39,753 106,168 336*
Growth Fund 14,106 25,155 80*
Income Fund 4,924 3,877 -0-*
</TABLE>
* For the period September 15, 1994 (inception date) through October 31,
1994.
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."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "How to Redeem Shares." AIM intends to redeem
all shares of Aggressive Growth Fund and Growth Fund in cash. 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
40
<PAGE> 210
(Telephone: (800) 959-4246) and guarantee delivery of all required documents in
good order. A repurchase is effected at the net asset value per share of 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 ("NYSE ") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposition of portfolio securities or the
valuation of the net assets of a Fund not reasonably practicable.
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 the close of trading
of the NYSE (generally 4:00 p.m. Eastern Time) on each business day of the
Fund. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of a Fund share is determined as of
the close of the NYSE on such day. For purposes of determining net asset value
per share, futures and options contract closing prices which are available
fifteen (15) minutes after the close of trading of the NYSE will generally be
used. Each Class' net asset value per share is determined by subtracting the
Class' liabilities (e.g., the expenses) from the Class' assets, and dividing
the result by the total number of Class shares outstanding. Determination of
the Class' net asset value per share is made in accordance with generally
accepted accounting principles.
Equity 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.
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
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<PAGE> 211
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 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.
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<PAGE> 212
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 (but not below the net capital gain) 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.
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 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
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exchange contracts, the net gain or loss is separately determined and (as
discussed above) generally 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 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 (and, if they are conversion transactions, the amount of
ordinary income) 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.
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
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<PAGE> 214
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. Unless the shares are disposed of as part of a
conversion transaction, 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, Class B
shares or Class C 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 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
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<PAGE> 215
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 and distributions constituting returns of capital 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 or
redemption 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 July 1, 1997.
Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such changes or
decisions may have a retroactive effect with respect to the transactions
contemplated herein.
Rules of state and local taxation of 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.
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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, 700 Louisiana, NationsBank Building, Houston, Texas 77002,
currently 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, Class B and Class C 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, 712 Main, Houston, Texas
77002, 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 July 30, 1997, and the amount of outstanding shares
held by such holders are set forth below:
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<TABLE>
<CAPTION>
Percent
Name and Address Owned of
Fund of Record Owner Record Only*
- ---- --------------- -----------
<S> <C> <C>
AIM International Equity Fund - Merrill Lynch, Pierce, 32.49%**
Class A shares Fenner & Smith
FBO The Sole Benefit of Customers
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 36.65%**
Fenner & Smith
FBO The Sole Benefit of Customers
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
AIM Global Aggressive Growth Fund - Merrill Lynch, Pierce, 16.72%
Class A shares Fenner & Smith
FBO The Sole Benefit of Customers
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Merrill Lynch, Pierce, 26.58%**
Class B shares Fenner & Smith
FBO The Sole Benefit of Customers
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
AIM Global Growth Fund Merrill Lynch, Pierce, 13.77%
Class A shares Fenner & Smith
FBO The Sole Benefit of Customers
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------------------------
* 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.
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<PAGE> 218
<TABLE>
<CAPTION>
Percent
Name and Address Owned of
Fund of Record Owner Record Only*
- ---- --------------- -----------
<S> <C> <C>
Class B Shares Merrill Lynch, Pierce 23.94%
Fenner & Smith
FBO The Sole Benefit of Customers
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
AIM Global Income Fund - Merrill Lynch, Pierce, 11.27%
Class B shares Fenner & Smith
FBO The Sole Benefit of Customers
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
As of July 30, 1997, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of the Funds.
- ----------------------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
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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.
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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.
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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.
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APPENDIX B
________________________________________________________________________________
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. These are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
*A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium- grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment 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 both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
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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 the Aa and A
groups when assigning ratings to industrial development bonds and bonds secured
by either a letter of credit or bond insurance. 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 RATINGS SERVICES 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 a 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' 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.
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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.
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DUFF & PHELPS FIXED-INCOME RATINGS ARE AS FOLLOWS:
*AAA
Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
*AA+, AA AND 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 AND A-
Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
*BBB+, BBB AND BBB-
Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.
BB+, BB AND 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 AND 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.
DD
Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP
Preferred stock with dividend arrearages.
56
<PAGE> 226
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 of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
*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
57
<PAGE> 227
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.
58
<PAGE> 228
FINANCIAL STATEMENTS
FS
<PAGE> 229
AIM GLOBAL AGGRESSIVE GROWTH FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-35.06%
ADVERTISING/BROADCASTING-0.90%
CKS Group, Inc.(a) 100,000 $ 2,112,500
- -------------------------------------------------------------------
Clear Channel Communications, Inc.(a) 124,600 6,043,100
- -------------------------------------------------------------------
Heftel Broadcasting Corp.(a) 133,800 6,690,000
- -------------------------------------------------------------------
Jacor Communications, Inc.(a) 65,500 1,842,188
- -------------------------------------------------------------------
Telemundo Group, Inc.-Class A(a) 100,000 2,625,000
- -------------------------------------------------------------------
19,312,788
- -------------------------------------------------------------------
AEROSPACE/DEFENSE-0.21%
BE Aerospace, Inc.(a) 137,500 3,385,938
- -------------------------------------------------------------------
REMEC, Inc.(a) 50,000 1,150,000
- -------------------------------------------------------------------
4,535,938
- -------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.03%
Borg-Warner Automotive, Inc. 8,000 336,000
- -------------------------------------------------------------------
Mark IV Industries, Inc. 16,538 384,497
- -------------------------------------------------------------------
720,497
- -------------------------------------------------------------------
BANKING-0.42%
Bank of Boston Corp. 45,000 3,273,750
- -------------------------------------------------------------------
Bank United Corp.-Class A(a) 150,000 4,575,000
- -------------------------------------------------------------------
First Savings Bank of Washington
Bancorp, Inc. 50,000 1,050,000
- -------------------------------------------------------------------
8,898,750
- -------------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.15%
Cerner Corp.(a) 202,000 3,257,250
- -------------------------------------------------------------------
BIOTECHNOLOGY-0.10%
Biogen, Inc.(a) 63,900 2,044,800
- -------------------------------------------------------------------
BUSINESS SERVICES-0.90%
AccuStaff, Inc.(a) 120,000 2,190,000
- -------------------------------------------------------------------
Caribiner International, Inc.(a) 50,000 2,650,000
- -------------------------------------------------------------------
Claremont Technology Group, Inc.(a) 38,400 518,400
- -------------------------------------------------------------------
CUC International, Inc.(a) 56,550 1,194,618
- -------------------------------------------------------------------
Data Processing Resources Corp.(a) 13,500 248,063
- -------------------------------------------------------------------
Equifax, Inc. 5,200 149,500
- -------------------------------------------------------------------
IntelliQuest Information Group,
Inc.(a) 70,000 1,137,500
- -------------------------------------------------------------------
NOVA Corp.(a) 150,000 2,700,000
- -------------------------------------------------------------------
Pharmaceutical Product Development,
Inc.(a) 100,000 1,675,000
- -------------------------------------------------------------------
RemedyTemp, Inc.-Class A(a) 38,000 579,500
- -------------------------------------------------------------------
Robert Half International, Inc.(a) 65,000 2,551,250
- -------------------------------------------------------------------
Romac International, Inc.(a) 50,000 975,000
- -------------------------------------------------------------------
Superior Consultant Holdings Corp.(a) 32,300 742,900
- -------------------------------------------------------------------
Vincam Group, Inc. (The)(a) 49,500 1,608,750
- -------------------------------------------------------------------
Whittman-Hart, Inc.(a) 21,600 410,400
- -------------------------------------------------------------------
19,330,881
- -------------------------------------------------------------------
COMPUTER MINI/PCS-0.82%
Dell Computer Corp.(a) 100,000 8,368,750
- -------------------------------------------------------------------
Stratus Computer, Inc.(a) 100,000 3,887,500
- -------------------------------------------------------------------
Sun Microsystems, Inc.(a) 183,300 5,281,331
- -------------------------------------------------------------------
17,537,581
- -------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER NETWORKING-0.31%
ACT Networks, Inc.(a) 83,400 $ 1,125,900
- -------------------------------------------------------------------
Coherent Communications Systems
Corp.(a) 150,000 2,456,250
- -------------------------------------------------------------------
Network Appliance, Inc.(a) 50,000 1,456,250
- -------------------------------------------------------------------
VideoServer, Inc.(a) 100,000 1,687,500
- -------------------------------------------------------------------
6,725,900
- -------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-3.59%
Affiliated Computer Services, Inc.(a) 128,400 3,338,400
- -------------------------------------------------------------------
BDM International Inc.(a) 140,000 3,255,000
- -------------------------------------------------------------------
BISYS Group, Inc. (The)(a) 81,900 2,620,800
- -------------------------------------------------------------------
Computer Data Systems, Inc. 110,400 2,401,200
- -------------------------------------------------------------------
Computer Task Group, Inc. 53,700 2,315,813
- -------------------------------------------------------------------
CSG Systems International, Inc.(a) 85,000 1,508,750
- -------------------------------------------------------------------
Documentum, Inc.(a) 40,000 740,000
- -------------------------------------------------------------------
DST Systems, Inc.(a) 34,200 970,425
- -------------------------------------------------------------------
Electronic Arts, Inc.(a) 77,200 1,862,450
- -------------------------------------------------------------------
Engineering Animation, Inc.(a) 126,800 2,916,400
- -------------------------------------------------------------------
HBO & Co. 36,500 1,952,750
- -------------------------------------------------------------------
HPR, Inc.(a) 150,000 2,118,750
- -------------------------------------------------------------------
Imnet Systems, Inc.(a) 125,000 2,296,875
- -------------------------------------------------------------------
Indus Group, Inc.(a) 137,500 2,079,688
- -------------------------------------------------------------------
Integrated Measurement Systems,
Inc.(a) 100,000 1,325,000
- -------------------------------------------------------------------
JDA Software Group, Inc.(a) 50,000 1,262,500
- -------------------------------------------------------------------
Keane, Inc.(a) 35,600 1,650,950
- -------------------------------------------------------------------
McAfee Associates, Inc.(a) 100,000 5,575,000
- -------------------------------------------------------------------
National Data Corp. 75,000 2,812,500
- -------------------------------------------------------------------
Network General Corp.(a) 50,000 687,500
- -------------------------------------------------------------------
Parametric Technology Co.(a) 30,200 1,366,550
- -------------------------------------------------------------------
Physician Computer Network, Inc.(a) 170,500 905,781
- -------------------------------------------------------------------
Raptor Systems, Inc.(a) 75,000 862,500
- -------------------------------------------------------------------
Renaissance Solutions, Inc.(a) 65,000 1,413,750
- -------------------------------------------------------------------
Rogue Wave Software(a) 41,500 399,437
- -------------------------------------------------------------------
Scopus Technology, Inc.(a) 21,500 575,125
- -------------------------------------------------------------------
Security Dynamics Technologies,
Inc.(a) 125,000 3,156,250
- -------------------------------------------------------------------
Simulation Sciences, Inc.(a) 272,500 2,776,094
- -------------------------------------------------------------------
SPSS, Inc.(a) 65,000 1,722,500
- -------------------------------------------------------------------
Sterling Commerce, Inc.(a) 104,200 2,696,175
- -------------------------------------------------------------------
SunGard Data Systems Inc.(a) 40,100 1,779,437
- -------------------------------------------------------------------
Sykes Enterprises, Inc.(a) 10,200 290,700
- -------------------------------------------------------------------
Synopsys, Inc.(a) 174,043 5,547,621
- -------------------------------------------------------------------
Transition Systems, Inc.(a) 14,700 176,400
- -------------------------------------------------------------------
Vantive Corp.(a) 50,000 993,750
- -------------------------------------------------------------------
Veritas Software Corp.(a) 75,000 2,521,875
- -------------------------------------------------------------------
Viasoft, Inc.(a) 75,000 3,187,500
- -------------------------------------------------------------------
Wind River Systems(a) 114,750 2,639,250
- -------------------------------------------------------------------
76,701,446
- -------------------------------------------------------------------
CONSUMER NON-DURABLES-0.14%
Central Garden and Pet Co.(a) 75,000 1,495,313
- -------------------------------------------------------------------
</TABLE>
FS-1
<PAGE> 230
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER NON-DURABLES-(CONTINUED)
Herbalife International, Inc. 91,700 $ 1,478,662
- -------------------------------------------------------------------
2,973,975
- -------------------------------------------------------------------
COSMETICS & TOILETRIES-0.73%
General Nutrition Companies, Inc.(a) 150,000 3,225,000
- -------------------------------------------------------------------
Helen of Troy Ltd.(a) 250,000 5,812,500
- -------------------------------------------------------------------
NBTY, Inc.(a) 175,000 3,325,000
- -------------------------------------------------------------------
Rexall Sundown, Inc.(a) 160,500 3,189,938
- -------------------------------------------------------------------
15,552,438
- -------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-1.73%
ANADIGICS, Inc.(a) 133,600 3,774,200
- -------------------------------------------------------------------
ASE Test Ltd.(a) 49,100 1,822,838
- -------------------------------------------------------------------
Benchmarq Microelectronics, Inc.(a) 250,000 4,375,000
- -------------------------------------------------------------------
Berg Electronics Corp.(a) 76,400 2,292,000
- -------------------------------------------------------------------
BMC Industries, Inc. 110,000 3,190,000
- -------------------------------------------------------------------
Micron Electronics, Inc.(a) 300,000 6,112,500
- -------------------------------------------------------------------
Sawtek Inc.(a) 150,000 4,443,750
- -------------------------------------------------------------------
Sipex Corp.(a) 150,000 3,600,000
- -------------------------------------------------------------------
Teradyne, Inc.(a) 189,500 6,206,125
- -------------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 20,000 627,500
- -------------------------------------------------------------------
ThermoQuest Corp.(a) 45,000 585,000
- -------------------------------------------------------------------
37,028,913
- -------------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.09%
Halter Marine Group, Inc.(a) 100,000 1,962,500
- -------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.07%
Imperial Credit Industries, Inc.(a) 100,000 1,456,250
- -------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.46%
AmeriCredit Corp.(a) 132,200 1,900,375
- -------------------------------------------------------------------
Amresco, Inc.(a) 120,000 1,747,500
- -------------------------------------------------------------------
Cityscape Financial Corp.(a) 100,000 1,337,500
- -------------------------------------------------------------------
CMAC Investment Corp. 24,400 927,200
- -------------------------------------------------------------------
Concord EFS, Inc.(a) 199,737 3,944,806
- -------------------------------------------------------------------
Delta Financial Corp.(a) 183,700 2,479,950
- -------------------------------------------------------------------
FIRSTPLUS Financial Group, Inc.(a) 200,100 4,427,212
- -------------------------------------------------------------------
Green Tree Financial Corp. 38,500 1,140,563
- -------------------------------------------------------------------
IMC Mortgage Co.(a) 200,000 2,250,000
- -------------------------------------------------------------------
Money Store, Inc. (The) 128,900 2,787,462
- -------------------------------------------------------------------
PMT Services, Inc.(a) 100,000 1,187,500
- -------------------------------------------------------------------
Student Loan Marketing Association 25,000 2,956,250
- -------------------------------------------------------------------
SunAmerica, Inc. 70,000 3,220,000
- -------------------------------------------------------------------
Union Acceptance Corp.(a) 75,000 787,500
- -------------------------------------------------------------------
31,093,818
- -------------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.16%
Washington Mutual, Inc. 70,800 3,495,750
- -------------------------------------------------------------------
FUNERAL SERVICES-0.26%
Equity Corp. International(a) 255,000 5,482,500
- -------------------------------------------------------------------
FURNITURE-0.32%
Ethan Allen Interiors, Inc. 80,000 3,540,000
- -------------------------------------------------------------------
Herman Miller, Inc. 100,000 3,237,500
- -------------------------------------------------------------------
6,777,500
- -------------------------------------------------------------------
GAMING-0.18%
GTECH Holdings Corp.(a) 47,600 1,463,700
- -------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GAMING-(CONTINUED)
Primadonna Resorts, Inc.(a) 125,000 $ 2,343,750
- -------------------------------------------------------------------
3,807,450
- -------------------------------------------------------------------
HOME BUILDING-0.10%
Southern Energy Homes, Inc.(a) 202,500 2,100,938
- -------------------------------------------------------------------
HOTELS/MOTELS-0.06%
Prime Hospitality Corp.(a) 30,000 498,750
- -------------------------------------------------------------------
Suburban Lodges of America, Inc.(a) 20,000 322,500
- -------------------------------------------------------------------
Wyndham Hotel Corp.(a) 16,700 461,338
- -------------------------------------------------------------------
1,282,588
- -------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.08%
CRA Managed Care, Inc.(a) 30,300 1,068,075
- -------------------------------------------------------------------
First Commonwealth, Inc.(a) 45,000 551,250
- -------------------------------------------------------------------
1,619,325
- -------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.20%
CapMAC Holdings, Inc. 70,000 1,820,000
- -------------------------------------------------------------------
HCC Insurance Holdings, Inc.(a) 77,250 1,940,906
- -------------------------------------------------------------------
Vesta Insurance Group, Inc. 12,000 501,000
- -------------------------------------------------------------------
4,261,906
- -------------------------------------------------------------------
LEISURE & RECREATION-0.64%
Callaway Golf Co. 60,000 1,792,500
- -------------------------------------------------------------------
Cannondale Corp.(a) 75,000 1,462,500
- -------------------------------------------------------------------
Harley-Davidson, Inc. 60,000 2,370,000
- -------------------------------------------------------------------
Regal Cinemas, Inc.(a) 50,000 1,362,500
- -------------------------------------------------------------------
Royal Caribbean Cruises Ltd.(a) 150,000 4,781,250
- -------------------------------------------------------------------
West Marine, Inc.(a) 70,600 1,835,600
- -------------------------------------------------------------------
13,604,350
- -------------------------------------------------------------------
MACHINE TOOLS-0.13%%
Precision Castparts Corp. 50,000 2,675,000
- -------------------------------------------------------------------
MACHINERY (HEAVY)-0.04%
Rental Service Corp. 41,400 765,900
- -------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.27%
Kulicke & Soffa Industries, Inc.(a) 125,000 3,492,188
- -------------------------------------------------------------------
Prime Service, Inc.(a) 100,000 2,237,500
- -------------------------------------------------------------------
5,729,688
- -------------------------------------------------------------------
MEDICAL (DRUGS)-0.76%
Arbor Drugs, Inc. 166,350 3,056,681
- -------------------------------------------------------------------
Cardinal Health, Inc. 55,500 2,955,375
- -------------------------------------------------------------------
Curative Technologies, Inc.(a) 75,000 1,771,875
- -------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 57,900 1,679,100
- -------------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 40,000 1,470,000
- -------------------------------------------------------------------
Forest Laboratories, Inc.(a) 45,300 1,545,863
- -------------------------------------------------------------------
Medicis Pharmaceutical Corp.(a) 150,000 3,675,000
- -------------------------------------------------------------------
16,153,894
- -------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-3.31%
ABR Information Services, Inc.(a) 70,000 1,408,750
- -------------------------------------------------------------------
American HomePatient, Inc.(a) 100,000 1,925,000
- -------------------------------------------------------------------
American Medserve Corp.(a) 136,300 1,482,263
- -------------------------------------------------------------------
Arbor Health Care Co.(a) 60,100 1,472,450
- -------------------------------------------------------------------
EmCare Holdings, Inc.(a) 61,500 1,729,687
- -------------------------------------------------------------------
Envoy Corp.(a) 100,000 2,087,500
- -------------------------------------------------------------------
FPA Medical Management, Inc.(a) 111,507 1,811,988
- -------------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 231
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES)-(CONTINUED)
Health Management Associates,
Inc.-Class A(a) 223,800 $ 5,986,650
- -------------------------------------------------------------------
HEALTHSOUTH Corp.(a) 150,000 2,962,500
- -------------------------------------------------------------------
Hologic, Inc.(a) 100,000 2,075,000
- -------------------------------------------------------------------
Humana, Inc.(a) 100,000 2,175,000
- -------------------------------------------------------------------
Integrated Health Services, Inc.(a) 100,000 3,212,500
- -------------------------------------------------------------------
MedPartners, Inc.(a) 38,500 702,625
- -------------------------------------------------------------------
Multicare Companies, Inc.(a) 82,950 1,544,944
- -------------------------------------------------------------------
NCS HealthCare, Inc.-Class A(a) 110,000 2,502,500
- -------------------------------------------------------------------
NovaCare, Inc.(a) 125,000 1,421,875
- -------------------------------------------------------------------
OccuSystems, Inc.(a) 45,000 928,125
- -------------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 123,000 1,476,000
- -------------------------------------------------------------------
Oxford Health Plans, Inc.(a) 90,000 5,928,750
- -------------------------------------------------------------------
PacifiCare Health Systems, Inc.-Class
B(a) 25,000 2,006,250
- -------------------------------------------------------------------
Pediatrix Medical Group, Inc.(a) 15,200 501,600
- -------------------------------------------------------------------
PhyCor, Inc.(a) 49,950 1,329,919
- -------------------------------------------------------------------
Renal Care Group, Inc.(a) 90,400 2,712,000
- -------------------------------------------------------------------
Renal Treatment Centers, Inc.(a) 50,000 1,081,250
- -------------------------------------------------------------------
RoTech Medical Corp.(a) 77,200 1,215,900
- -------------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 63,200 1,524,700
- -------------------------------------------------------------------
Tenet Healthcare Corp.(a) 80,000 2,080,000
- -------------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 37,600 1,207,900
- -------------------------------------------------------------------
United Healthcare Corp.(a) 100,000 4,862,500
- -------------------------------------------------------------------
Universal Health Services, Inc.-Class
B(a) 89,800 3,401,175
- -------------------------------------------------------------------
Vencor, Inc.(a) 66,000 2,747,250
- -------------------------------------------------------------------
Wellpoint Health Networks, Inc.(a) 75,000 3,168,750
- -------------------------------------------------------------------
70,673,301
- -------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.02%
Acuson Corp.(a) 100,000 2,425,000
- -------------------------------------------------------------------
Capstone Pharmacy Services, Inc.(a) 45,000 379,688
- -------------------------------------------------------------------
Dentsply International, Inc. 37,400 1,851,300
- -------------------------------------------------------------------
Gulf South Medical Supply, Inc.(a) 83,100 1,184,175
- -------------------------------------------------------------------
Omnicare, Inc. 173,300 4,224,187
- -------------------------------------------------------------------
Patterson Dental Co.(a) 120,000 4,020,000
- -------------------------------------------------------------------
Physician Sales & Service, Inc.(a) 50,000 725,000
- -------------------------------------------------------------------
Quintiles Transnational Corp.(a) 85,000 4,324,375
- -------------------------------------------------------------------
ResMed, Inc.(a) 40,000 700,000
- -------------------------------------------------------------------
Suburban Ostomy Supply Co., Inc.(a) 92,800 835,200
- -------------------------------------------------------------------
Sybron International Corp.(a) 32,800 1,090,600
- -------------------------------------------------------------------
21,759,525
- -------------------------------------------------------------------
METALS-0.01%
Shaw Group, Inc.(a) 23,300 314,550
- -------------------------------------------------------------------
OFFICE PRODUCTS-0.29%
Daisytek International Corp.(a) 100,000 2,725,000
- -------------------------------------------------------------------
Reynolds & Reynolds Co.-Class A 163,600 3,394,700
- -------------------------------------------------------------------
6,119,700
- -------------------------------------------------------------------
OIL & GAS (DRILLING)-0.20%
Cliffs Drilling Co.(a) 70,000 4,270,000
- -------------------------------------------------------------------
OIL & GAS (SERVICES)-1.07%
Camco International, Inc. 100,000 4,437,500
- -------------------------------------------------------------------
Energy Ventures, Inc.(a) 100,000 6,687,500
- -------------------------------------------------------------------
Global Industries Ltd.(a) 125,000 2,625,000
- -------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (SERVICES)-(CONTINUED)
Global Marine, Inc.(a) 150,000 $ 3,018,750
- -------------------------------------------------------------------
Newpark Resources, Inc.(a) 50,000 2,243,750
- -------------------------------------------------------------------
Veritas DGC, Inc.(a) 200,000 3,850,000
- -------------------------------------------------------------------
22,862,500
- -------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-1.39%
Cooper Cameron Corp.(a) 50,000 3,562,500
- -------------------------------------------------------------------
Diamond Offshore Drilling, Inc.(a) 77,400 4,982,625
- -------------------------------------------------------------------
ENSCO International, Inc.(a) 75,900 3,605,250
- -------------------------------------------------------------------
Falcon Drilling Co., Inc.(a) 75,000 2,868,750
- -------------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 146,500 2,307,375
- -------------------------------------------------------------------
National-Oilwell, Inc.(a) 150,000 5,831,250
- -------------------------------------------------------------------
Pride Petroleum Services, Inc.(a) 133,800 2,308,050
- -------------------------------------------------------------------
Rowan Companies, Inc.(a) 100,000 1,800,000
- -------------------------------------------------------------------
Varco International, Inc.(a) 107,500 2,472,500
- -------------------------------------------------------------------
29,738,300
- -------------------------------------------------------------------
POLLUTION CONTROL-0.59%
Tetra Technologies, Inc.(a) 100,000 2,325,000
- -------------------------------------------------------------------
US Filter Corp.(a) 120,150 3,649,556
- -------------------------------------------------------------------
USA Waste Services, Inc.(a) 200,000 6,550,000
- -------------------------------------------------------------------
12,524,556
- -------------------------------------------------------------------
RESTAURANTS-0.45%
Apple South, Inc. 50,800 660,400
- -------------------------------------------------------------------
Foodmaker, Inc.(a) 335,000 3,643,125
- -------------------------------------------------------------------
Landry's Seafood Restaurants, Inc.(a) 72,100 1,012,780
- -------------------------------------------------------------------
Outback Steakhouse, Inc.(a) 13,400 262,975
- -------------------------------------------------------------------
Papa John's International, Inc.(a) 22,500 579,375
- -------------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 96,600 1,859,550
- -------------------------------------------------------------------
Starbucks Corp.(a) 50,000 1,493,750
- -------------------------------------------------------------------
9,511,955
- -------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.14%
Kroger Co.(a) 36,000 990,000
- -------------------------------------------------------------------
Quality Food Centers, Inc.(a) 50,000 2,006,250
- -------------------------------------------------------------------
2,996,250
- -------------------------------------------------------------------
RETAIL (STORES)-4.51%
Bed Bath & Beyond, Inc.(a) 40,400 1,105,950
- -------------------------------------------------------------------
Blyth Industries, Inc.(a) 150,000 5,925,000
- -------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 78,700 3,777,600
- -------------------------------------------------------------------
CompUSA, Inc.(a) 172,000 3,311,000
- -------------------------------------------------------------------
Dayton Hudson Corp. 75,000 3,375,000
- -------------------------------------------------------------------
Dollar General Corp. 56,562 1,788,773
- -------------------------------------------------------------------
Duty Free International, Inc. 19,900 281,088
- -------------------------------------------------------------------
Eagle Hardware & Garden, Inc.(a) 130,200 2,441,250
- -------------------------------------------------------------------
Footstar, Inc.(a) 100,000 2,075,000
- -------------------------------------------------------------------
Gadzooks, Inc.(a) 50,000 1,393,750
- -------------------------------------------------------------------
Gap, Inc. 58,400 1,861,500
- -------------------------------------------------------------------
Global DirectMail Corp.(a) 21,800 384,225
- -------------------------------------------------------------------
Hollywood Entertainment Corp.(a) 200,000 4,275,000
- -------------------------------------------------------------------
Inacom Corp.(a) 50,000 1,106,250
- -------------------------------------------------------------------
Insight Enterprises, Inc.(a) 100,000 2,375,000
- -------------------------------------------------------------------
Jones Apparel Group, Inc.(a) 100,000 4,175,000
- -------------------------------------------------------------------
Just for Feet, Inc.(a) 225,000 3,571,875
- -------------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 232
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (STORES)-(CONTINUED)
Loehmann's Holdings, Inc.(a) 159,500 $ 1,096,562
- -------------------------------------------------------------------
Marks Bros. Jewelers, Inc.(a) 152,400 1,695,450
- -------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 87,400 2,174,075
- -------------------------------------------------------------------
Michaels Stores, Inc.(a) 100,000 1,925,000
- -------------------------------------------------------------------
Micro Warehouse, Inc.(a) 97,100 1,674,975
- -------------------------------------------------------------------
MicroAge, Inc.(a) 250,000 3,156,250
- -------------------------------------------------------------------
MSC Industrial Direct Co., Inc.-Class
A(a) 40,000 1,230,000
- -------------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 150,000 5,250,000
- -------------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 67,000 1,432,125
- -------------------------------------------------------------------
PETsMART, Inc.(a) 92,200 1,550,113
- -------------------------------------------------------------------
Pier 1 Imports, Inc. 265,000 5,233,750
- -------------------------------------------------------------------
Ross Stores, Inc. 80,000 2,250,000
- -------------------------------------------------------------------
Sports Authority, Inc. (The)(a) 110,400 1,959,600
- -------------------------------------------------------------------
Staples, Inc.(a) 235,800 4,244,400
- -------------------------------------------------------------------
Tech Data Corp.(a) 85,700 2,099,650
- -------------------------------------------------------------------
Tiffany & Co. 82,500 3,269,062
- -------------------------------------------------------------------
TJX Companies, Inc. 64,600 3,052,350
- -------------------------------------------------------------------
Toys "R" Us, Inc.(a) 100,000 2,850,000
- -------------------------------------------------------------------
Viking Office Products, Inc.(a) 106,100 1,445,613
- -------------------------------------------------------------------
Wet Seal, Inc.-Class A(a) 55,000 1,361,250
- -------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 75,000 2,325,000
- -------------------------------------------------------------------
Zale Corp.(a) 100,000 1,850,000
- -------------------------------------------------------------------
96,348,486
- -------------------------------------------------------------------
SCHOOLS-0.10%
Children's Comprehensive Services,
Inc.(a) 186,200 2,187,850
- -------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.34%
Datum, Inc.(a) 66,700 1,550,775
- -------------------------------------------------------------------
Dynatech Corp.(a) 50,000 1,737,500
- -------------------------------------------------------------------
Perkin-Elmer Corp. 55,500 4,030,688
- -------------------------------------------------------------------
7,318,963
- -------------------------------------------------------------------
SECURITY & SAFETY SERVICES-0.03%
Rural/Metro Corp.(a) 25,000 718,750
- -------------------------------------------------------------------
SEMICONDUCTORS-3.83%
Actel Corp.(a) 50,000 893,750
- -------------------------------------------------------------------
Advanced Micro Devices, Inc.(a) 100,000 4,250,000
- -------------------------------------------------------------------
Altera Corp.(a) 152,800 7,573,150
- -------------------------------------------------------------------
Burr-Brown Corp.(a) 50,000 1,475,000
- -------------------------------------------------------------------
Computer Products, Inc.(a) 200,000 3,425,000
- -------------------------------------------------------------------
Cymer, Inc.(a) 100,000 4,112,500
- -------------------------------------------------------------------
Dallas Semiconductor Corp.(a) 100,000 3,650,000
- -------------------------------------------------------------------
DuPont Photomasks, Inc.(a) 100,000 4,787,500
- -------------------------------------------------------------------
GaSonics International Corp.(a) 105,600 897,600
- -------------------------------------------------------------------
HADCO Corp.(a) 76,700 3,278,925
- -------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 200,000 2,350,000
- -------------------------------------------------------------------
Kemet Corp.(a) 100,000 1,950,000
- -------------------------------------------------------------------
Lattice Semiconductor Corp.(a) 112,900 6,308,288
- -------------------------------------------------------------------
Linear Technology Corp.(a) 126,000 6,331,500
- -------------------------------------------------------------------
MEMC Electronic Materials, Inc.(a) 94,300 2,581,462
- -------------------------------------------------------------------
Micron Technology, Inc. 61,300 2,160,825
- -------------------------------------------------------------------
National Semiconductor Corp.(a) 157,700 3,942,500
- -------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SEMICONDUCTORS-(CONTINUED)
Photronics, Inc.(a) 125,000 $ 4,328,125
- -------------------------------------------------------------------
Sanmina Corp.(a) 111,000 5,550,000
- -------------------------------------------------------------------
Sierra Semiconductor Corp.(a) 175,000 2,953,125
- -------------------------------------------------------------------
Silicon Valley Group, Inc.(a) 175,000 3,598,438
- -------------------------------------------------------------------
Solectron Corp.(a) 25,500 1,463,062
- -------------------------------------------------------------------
Triquint Semiconductor, Inc.(a) 92,200 2,742,950
- -------------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 37,500 1,181,250
- -------------------------------------------------------------------
81,784,950
- -------------------------------------------------------------------
SHOES & RELATED APPAREL-0.40%
Converse, Inc.(a) 100,000 1,500,000
- -------------------------------------------------------------------
Genesco Inc.(a) 150,000 1,743,750
- -------------------------------------------------------------------
Nine West Group, Inc.(a) 14,200 562,675
- -------------------------------------------------------------------
Pacific Sunwear of California(a) 100,000 3,125,000
- -------------------------------------------------------------------
Wolverine World Wide, Inc. 39,950 1,607,988
- -------------------------------------------------------------------
8,539,413
- -------------------------------------------------------------------
STEEL-0.04%
Maverick Tube Corp.(a) 38,600 844,375
- -------------------------------------------------------------------
TELECOMMUNICATIONS-1.46%
ACC Corp. 13,500 214,313
- -------------------------------------------------------------------
ADC Telecommunications, Inc.(a) 130,000 3,396,250
- -------------------------------------------------------------------
Advanced Fibre Communications,
Inc.(a) 100,000 3,987,500
- -------------------------------------------------------------------
Andrew Corp.(a) 95,325 2,359,294
- -------------------------------------------------------------------
Billing Information Concepts(a) 79,600 1,900,450
- -------------------------------------------------------------------
Brightpoint, Inc.(a) 218,750 4,785,156
- -------------------------------------------------------------------
CellStar Corp.(a) 150,000 3,600,000
- -------------------------------------------------------------------
P-COM, Inc.(a) 50,000 1,431,250
- -------------------------------------------------------------------
PairGain Technologies, Inc.(a) 52,800 1,372,800
- -------------------------------------------------------------------
Premiere Technologies, Inc.(a) 100,000 2,387,500
- -------------------------------------------------------------------
Proxim, Inc.(a) 70,000 1,408,750
- -------------------------------------------------------------------
Tellabs, Inc.(a) 89,800 3,580,775
- -------------------------------------------------------------------
U.S. Long Distance Corp.(a) 64,200 778,425
- -------------------------------------------------------------------
31,202,463
- -------------------------------------------------------------------
TEXTILES-0.78%
Liz Claiborne, Inc. 69,000 3,122,250
- -------------------------------------------------------------------
Mohawk Industries, Inc.(a) 75,000 1,678,125
- -------------------------------------------------------------------
Nautica Enterprises, Inc.(a) 125,000 2,765,625
- -------------------------------------------------------------------
Quicksilver, Inc.(a) 50,000 1,087,500
- -------------------------------------------------------------------
St. John Knits, Inc. 50,000 1,918,750
- -------------------------------------------------------------------
Tommy Hilfiger Corp.(a) 103,800 4,126,050
- -------------------------------------------------------------------
WestPoint Stevens, Inc.(a) 50,000 1,956,250
- -------------------------------------------------------------------
16,654,550
- -------------------------------------------------------------------
TRANSPORTATION-0.12%
Hub Group, Inc.(a) 100,000 2,650,000
- -------------------------------------------------------------------
TRUCKING-0.13%
Swift Transportation Co., Inc.(a) 50,000 1,425,000
- -------------------------------------------------------------------
USFreightways Corp. 50,000 1,350,000
- -------------------------------------------------------------------
2,775,000
- -------------------------------------------------------------------
Total Domestic Common Stocks 748,685,951
- -------------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 233
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS-62.41%
ARGENTINA-1.83%
Banco de Galicia y Buenos Aires S.A. de
C.V.-ADR (Banking)(a) 500,439 $ 12,174,743
- ----------------------------------------------------------------------
Perez Companc S.A.-Class B
(Oil & Gas-Services) 1,679,000 13,618,052
- ----------------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil & Gas-Services) 479,600 13,248,950
- ----------------------------------------------------------------------
39,041,745
- ----------------------------------------------------------------------
AUSTRALIA-0.55%
QBE Insurance Group Ltd.
(Insurance-Multi-Line Property) 2,055,929 11,752,289
- ----------------------------------------------------------------------
AUSTRIA-0.39%
VA Technologie A.G.
(Engineering & Construction) 53,200 8,267,016
- ----------------------------------------------------------------------
BELGIUM-0.71%
Barco Industries (Electronic
Components/Miscellaneous) 41,000 6,984,336
- ----------------------------------------------------------------------
COLRUYT S.A. (Retail-Food & Drug) 8,800 3,643,077
- ----------------------------------------------------------------------
UCB S.A. (Medical-Drugs) 1,650 4,527,692
- ----------------------------------------------------------------------
15,155,105
- ----------------------------------------------------------------------
BRAZIL-2.70%
Banco Bradesco S.A. (Banking) 1,316,000 10,889,328
- ----------------------------------------------------------------------
CESP-Companhia Energetica de Sao Paulo
(Electric Power)(a) 65,000 3,453,221
- ----------------------------------------------------------------------
Cia. Riograndense de Telecomunicacoes
(Telecommunications)(a) 40,000 5,263,752
- ----------------------------------------------------------------------
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar (Retail-Food &
Drug) 326,500 6,450,179
- ----------------------------------------------------------------------
Companhia Paranaense de Energia-Copel
(Electric Power)(a) 240,000 3,734,838
- ----------------------------------------------------------------------
Eletricidade de Sao Paulo S.A.
(Electric Power)(a) 24,000 4,818,054
- ----------------------------------------------------------------------
Multicanal Participacoes S.A.-ADR
(Cable Television)(a) 415,000 6,017,500
- ----------------------------------------------------------------------
Saneamiento Basico de Sao Paulo
(Water Supply)(a) 7,000 1,382,228
- ----------------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-Telebras-ADR (Telecommunications) 136,700 15,686,325
- ----------------------------------------------------------------------
57,695,425
- ----------------------------------------------------------------------
CANADA-3.15%
Biovail Corporation International
(Medical-Drugs)(a) 110,000 2,750,000
- ----------------------------------------------------------------------
Canadian Natural Resources Ltd.
(Oil & Gas-Exploration & Production)(a) 345,000 8,223,694
- ----------------------------------------------------------------------
CanWest Global Communications Corp.
(Electronic Components/Miscellaneous) 355,998 4,778,069
- ----------------------------------------------------------------------
Cognos, Inc. (Computer
Software/Services)(a) 300,000 7,612,500
- ----------------------------------------------------------------------
Ensign Resource Service Group, Inc.
(Oil & Gas-Drilling) 100,000 1,753,758
- ----------------------------------------------------------------------
Extendicare, Inc.-Class A
(Insurance-Life & Health)(a) 350,000 4,346,815
- ----------------------------------------------------------------------
Four Seasons Hotels, Inc. (Hotels/Motels) 85,000 1,886,185
- ----------------------------------------------------------------------
Gulf Canada Resources, Ltd. (Oil & Gas-
Exploration & Production)(a) 250,000 2,031,250
- ----------------------------------------------------------------------
Imax Corp. (Leisure & Recreation)(a) 75,000 2,681,250
- ----------------------------------------------------------------------
JDS Fitel Inc. (Telecommunications)(a) 95,000 2,023,085
- ----------------------------------------------------------------------
MDS Inc.-Class B
(Medical Instruments/Products) 218,000 4,260,129
- ----------------------------------------------------------------------
Newbridge Networks Corp. (Computer
Networking)(a) 67,600 2,146,300
- ----------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Newcourt Credit Group, Inc.
(Finance-Consumer Credit) 120,000 $ 2,216,178
- ----------------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 50,000 3,631,250
- ----------------------------------------------------------------------
Philip Environmental, Inc.
(Pollution Control)(a) 375,000 5,906,250
- ----------------------------------------------------------------------
Precision Drilling Corp. (Oil &
Gas-Drilling)(a) 125,000 4,343,750
- ----------------------------------------------------------------------
Sears Canada, Inc. (Retail-Stores) 166,500 1,757,963
- ----------------------------------------------------------------------
Suncor, Inc.
(Oil & Gas-Exploration & Production) 105,000 4,810,308
- ----------------------------------------------------------------------
67,158,734
- ----------------------------------------------------------------------
CHILE-0.44%
Cia. de Telecomunicaciones de Chile
S.A.-ADR (Telephone) 287,300 9,301,338
- ----------------------------------------------------------------------
DENMARK-0.73%
Bang & Olufsen Holding A/S-Class B
(Electronic Components/Miscellaneous)(a) 90,000 5,189,130
- ----------------------------------------------------------------------
Coloplast A/S-Class B
(Medical Instruments/Products) 25,000 1,813,161
- ----------------------------------------------------------------------
Falck A/S (Security & Safety Services) 20,000 5,082,920
- ----------------------------------------------------------------------
Kobenhavns Lufthavne A/S (Transportation) 35,000 3,542,112
- ----------------------------------------------------------------------
15,627,323
- ----------------------------------------------------------------------
FINLAND-1.35%
Cultor Oy (Food/Processing)(a) 30,000 1,661,411
- ----------------------------------------------------------------------
Hartwall OY A.B. (Beverages-Alcoholic)(a) 80,000 3,615,107
- ----------------------------------------------------------------------
Huhtamaki Group (Conglomerates)(a) 100,000 4,365,049
- ----------------------------------------------------------------------
KCI Konecranes (Machinery-Heavy)(a) 76,750 2,951,696
- ----------------------------------------------------------------------
Orion-yhtyma OY (Medical-Drugs)(a) 120,000 4,499,654
- ----------------------------------------------------------------------
Raision Tehtaat Oy (Food/Processing)(a) 44,500 3,688,082
- ----------------------------------------------------------------------
Tamro OY A.B. (Medical-Drugs)(a) 400,000 2,461,349
- ----------------------------------------------------------------------
TT Tieto OY-Class B
(Computer Software/Services)(a) 74,000 5,620,721
- ----------------------------------------------------------------------
28,863,069
- ----------------------------------------------------------------------
FRANCE-2.89%
Altran Technologies, S.A.
(Telecommunications) 15,000 5,217,168
- ----------------------------------------------------------------------
BERTRAND FAURE
(Automobile/Truck Parts & Tires) 110,000 5,267,712
- ----------------------------------------------------------------------
Christian Dalloz (Textiles)(a) 3,800 1,445,387
- ----------------------------------------------------------------------
CIPE (Security & Safety Services) 16,000 2,247,923
- ----------------------------------------------------------------------
Coflexip S.A. (Oil & Gas-Specialty)(a) 35,000 1,901,568
- ----------------------------------------------------------------------
Compagnie Generale de Geophysique S.A.
(Oil & Gas-Drilling)(a) 26,000 2,200,634
- ----------------------------------------------------------------------
Dassault Electronique
(Electronic/Defense) 30,000 3,274,223
- ----------------------------------------------------------------------
Dassault Systemes S.A.-ADR
(Computer Software/Services)(a) 100,000 6,162,500
- ----------------------------------------------------------------------
Galeries Lafayette (Retail-Stores)(a) 5,600 2,245,181
- ----------------------------------------------------------------------
Grand Optical Photoservice
(Retail-Stores) 26,400 3,930,712
- ----------------------------------------------------------------------
Labinal S.A. (Aerospace/Defense) 8,300 2,118,907
- ----------------------------------------------------------------------
LDC S.A. (Food/Processing) 7,500 1,323,567
- ----------------------------------------------------------------------
Le Carbone-Lorraine
(Electronic Components/Miscellaneous) 9,100 2,159,428
- ----------------------------------------------------------------------
Mecatherm S.A.
(Machinery-Miscellaneous)(a) 3,000 818,298
- ----------------------------------------------------------------------
Penauille Polyservices
(Security & Safety Services)(a) 5,300 1,363,934
- ----------------------------------------------------------------------
Scor S.A.(Insurance-Multi-line Property) 130,000 5,078,386
- ----------------------------------------------------------------------
Sidel, S.A. (Machinery-Miscellaneous) 70,000 5,027,671
- ----------------------------------------------------------------------
Sommer Allibert
(Automobile/Truck Parts & Tires) 70,000 2,518,633
- ----------------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 234
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Strafor Facom S.A. (Office Products) 40,000 $ 3,022,359
- ----------------------------------------------------------------------
Vallourec S.A. (Metals) 73,000 4,277,564
- ----------------------------------------------------------------------
61,601,755
- ----------------------------------------------------------------------
GERMANY-1.71%
Continental A.G.
(Automobile/Truck Parts & Tires) 185,000 4,070,043
- ----------------------------------------------------------------------
Fresenius A.G.-Preferred
(Medical Instruments/Products) 26,000 5,847,673
- ----------------------------------------------------------------------
Fresenius A.G.-Rts., expiring 05/13/97
(Medical Instruments/Products) 26,000 115,936
- ----------------------------------------------------------------------
Hugo Boss A.G.-Preferred (Textiles) 1,750 2,233,226
- ----------------------------------------------------------------------
IWKA A.G. (Machine Tools) 8,100 2,135,148
- ----------------------------------------------------------------------
Plettac A.G. (Machinery-Miscellaneous) 10,000 2,205,797
- ----------------------------------------------------------------------
Porsche A.G.
(Automobile/Truck Parts & Tires) 6,300 8,185,125
- ----------------------------------------------------------------------
Puma A.G. (Shoes & Related Apparel)(a) 35,000 1,182,296
- ----------------------------------------------------------------------
Puma A.G. Rudolph Dassler Sport (Shoes &
Related Apparel) (Acquired 06/10/96;
cost $2,280,576)(a)(b) 70,000 2,364,592
- ----------------------------------------------------------------------
SCHMALBACH LUBECA A.G. (Containers)(a) 20,000 4,388,498
- ----------------------------------------------------------------------
SGL Carbon A.G. (Metals-Miscellaneous) 27,500 3,834,883
- ----------------------------------------------------------------------
36,563,217
- ----------------------------------------------------------------------
GREECE-0.11%
Titan Cement Co. S.A. (Building
Materials) 30,000 2,404,580
- ----------------------------------------------------------------------
HONG KONG-7.07%
Asia Satellite Telecommunications
Holdings Ltd. (Telecommunications) 1,530,000 3,881,043
- ----------------------------------------------------------------------
Asia Satellite Telecommunications
Holdings Ltd.-ADR (Telecommunications) 177,300 4,565,475
- ----------------------------------------------------------------------
China Resources Enterprise Ltd. (Real
Estate) 5,414,000 14,956,380
- ----------------------------------------------------------------------
Cosco Pacific Ltd. (Transportation) 11,318,000 15,852,359
- ----------------------------------------------------------------------
Dao Heng Bank Group Ltd. (Banking) 2,479,200 11,777,520
- ----------------------------------------------------------------------
Esprit Asia Holdings Ltd. (Retail-Stores) 10,520,000 4,821,016
- ----------------------------------------------------------------------
First Pacific Company Ltd.
(Conglomerates) 13,326,033 15,912,451
- ----------------------------------------------------------------------
Hang Seng Bank Ltd. (Banking) 888,400 10,006,183
- ----------------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Electric Power) 4,443,840 7,055,991
- ----------------------------------------------------------------------
Hutchison Whampoa Ltd. (Conglomerates)(a) 1,800,000 13,360,873
- ----------------------------------------------------------------------
Johnson Electric Holdings Ltd.
(Electronic Components/Miscellaneous) 4,140,000 11,223,133
- ----------------------------------------------------------------------
New World Infrastructure Ltd.
(Building Materials)(a) 3,446,400 9,743,260
- ----------------------------------------------------------------------
Shanghai Industrial Holdings Ltd.
(Conglomerates)(a) 2,532,000 14,250,978
- ----------------------------------------------------------------------
Sun Hung Kai Properties Ltd. (Real
Estate) 1,250,000 13,554,508
- ----------------------------------------------------------------------
150,961,170
- ----------------------------------------------------------------------
HUNGARY-0.18%
Richter Gedeon Rt.-GDR (Medical-Drugs) 50,000 3,775,000
- ----------------------------------------------------------------------
INDONESIA-1.19%
PT Bank Dagang Nasional (Banking) 1,083,500 1,081,271
- ----------------------------------------------------------------------
PT Bank Internasional Indonesia
(Banking) 19,605,682 14,119,318
- ----------------------------------------------------------------------
PT Indosat (Telecommunications) 808,000 2,227,819
- ----------------------------------------------------------------------
PT Indosat-ADR (Telecommunications) 87,500 2,406,250
- ----------------------------------------------------------------------
PT Ramayana Lestari Sentosa
(Retail-Stores)(a) 2,324,000 5,642,634
- ----------------------------------------------------------------------
25,477,292
- ----------------------------------------------------------------------
IRELAND-0.69%
CBT Group PLC-ADR
(Computer Software/Services)(a) 7,600 369,550
- ----------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
IRELAND-(CONTINUED)
Elan Corp. PLC-ADR (Medical-Drugs)(a) 200,000 $ 6,800,000
- ----------------------------------------------------------------------
Greencore Group PLC (Food/Processing) 462,000 2,357,851
- ----------------------------------------------------------------------
Saville Systems Ireland PLC-ADR(a) 125,000 5,140,625
- ----------------------------------------------------------------------
14,668,026
- ----------------------------------------------------------------------
ISRAEL-1.57%
Blue Square-Israel Ltd.-ADR
(Retail-Stores)(a) 550,000 10,243,750
- ----------------------------------------------------------------------
ESC Medical Systems Ltd.
(Medical Instruments/Products)(a) 300,000 8,062,500
- ----------------------------------------------------------------------
Tecnomatix Technologies Ltd.
(Computer Software/Services)(a) 27,500 704,688
- ----------------------------------------------------------------------
Teledata Communication Ltd.
(Telecommunications)(a) 150,000 3,300,000
- ----------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Medical-Drugs) 198,500 10,073,875
- ----------------------------------------------------------------------
Tower Semiconductor Ltd.
(Semiconductors)(a) 100,000 1,250,000
- ----------------------------------------------------------------------
33,634,813
- ----------------------------------------------------------------------
ITALY-0.41%
Azienda Mediterranea Gas e Acqua S.p.A.
(Gas Distribution)(a) 2,500,000 1,981,398
- ----------------------------------------------------------------------
Bulgari S.p.A. (Retail-Stores)(a) 263,000 4,754,560
- ----------------------------------------------------------------------
Gewiss S.p.A. (Electronic
Components/Miscellaneous)(a) 150,000 2,014,981
- ----------------------------------------------------------------------
8,750,939
- ----------------------------------------------------------------------
JAPAN-4.15%
Aderans Co. Ltd. (Retail-Stores) 394,000 8,877,299
- ----------------------------------------------------------------------
Bellsystem 24, Inc. (Telephone) 48,000 5,899,082
- ----------------------------------------------------------------------
Capcom Co., Ltd. (Computer
Software/Services) 201,000 3,531,177
- ----------------------------------------------------------------------
Circle K Japan Co. Ltd.
(Retail-Food & Drug)(a) 222,000 10,196,242
- ----------------------------------------------------------------------
FCC Co. Ltd.
(Automobile/Truck Parts & Tires) 143,110 3,923,447
- ----------------------------------------------------------------------
Fujitsu Denso Ltd. (Electric Power) 340,000 10,285,579
- ----------------------------------------------------------------------
Hokuto Corp. (Advertising/Broadcasting) 185,250 6,421,397
- ----------------------------------------------------------------------
Laox (Electronic
Components/Miscellaneous) 460,000 5,472,092
- ----------------------------------------------------------------------
Nippon Thompson Co. (Machine Tools) 710,000 4,782,369
- ----------------------------------------------------------------------
Noritsu Koki Co. Ltd.
(Electronic Components/Miscellaneous) 315,600 13,450,947
- ----------------------------------------------------------------------
77 Bank (Banking) 770,000 6,308,741
- ----------------------------------------------------------------------
Shohkoh Fund & Co.
(Finance-Consumer Credit) 20,600 4,836,176
- ----------------------------------------------------------------------
Yamato Kogyo Co. (Building Materials) 537,000 4,653,563
- ----------------------------------------------------------------------
88,638,111
- ----------------------------------------------------------------------
MALAYSIA-3.10%
Arab Malaysian Finance Berhad
(Finance-Asset Management) 1,310,000 2,869,603
- ----------------------------------------------------------------------
Commerce Asset Holding Berhad
(Finance-Asset Management) 574,000 3,429,186
- ----------------------------------------------------------------------
Gamuda Berhad (Engineering &
Construction) 2,286,699 8,242,244
- ----------------------------------------------------------------------
Gamuda Berhad-Wts., expiring 12/28/01
(Engineering & Construction) 66 81
- ----------------------------------------------------------------------
Malayan Banking Berhad (Banking) 1,112,000 11,072,168
- ----------------------------------------------------------------------
Sungei Way Holdings Berhad
(Building Materials) 4,991,800 11,431,755
- ----------------------------------------------------------------------
Sunway City Berhad Group (Real Estate) 4,000,000 8,682,492
- ----------------------------------------------------------------------
Tan Chong Motor Holdings Berhad
(Automobile-Manufacturers) 5,040,000 9,354,150
- ----------------------------------------------------------------------
UMW Holdings Berhad
(Finance-Asset Management) 2,125,000 11,171,738
- ----------------------------------------------------------------------
66,253,417
- ----------------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 235
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-2.59%
Coca-Cola Femsa S.A.-ADR
(Beverages-Non-Alcoholic) 170,400 $ 5,942,700
- ----------------------------------------------------------------------
Fomento Economico Mexicano, S.A. de C.V.
(Beverages-Alcoholic)(a) 1,804,900 8,472,003
- ----------------------------------------------------------------------
Grupo Financiero Banamex Accival, S.A. de
C.V. (Banacci) (Banking)(a) 4,350,000 9,316,932
- ----------------------------------------------------------------------
Grupo Industrial Maseca S.A. de
C.V.-Class B (Food/Processing) 5,844,600 5,722,140
- ----------------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Advertising/Broadcasting)(a) 310,800 7,187,250
- ----------------------------------------------------------------------
Panamerican Beverages, Inc.-Class A
(Beverages-Soft Drinks) 502,000 14,558,000
- ----------------------------------------------------------------------
Tubos de Acero de Mexico S.A. (Steel)(a) 250,000 4,093,750
- ----------------------------------------------------------------------
55,292,775
- ----------------------------------------------------------------------
NETHERLANDS-3.74%
Aalberts Industries N.V. (Metals) 115,000 2,638,454
- ----------------------------------------------------------------------
Ahrend Groep N.V. (Furniture) 105,000 6,359,390
- ----------------------------------------------------------------------
Baan Co. N.V.-ADR
(Computer Software/Services)(a) 75,000 4,031,250
- ----------------------------------------------------------------------
Beter Bed Holding N.V. (Furniture)(a) 115,000 2,012,780
- ----------------------------------------------------------------------
Cap Gemini N.V.
(Computer Software/Services)(a) 160,000 5,223,015
- ----------------------------------------------------------------------
CMG PLC (Computer Software/Services) 340,000 6,352,204
- ----------------------------------------------------------------------
Content Beheer N.V. (Business Services) 70,000 2,529,385
- ----------------------------------------------------------------------
De Boer Winkelbedrijven N.V.
(Retail-Food & Drug) 25,000 1,924,755
- ----------------------------------------------------------------------
Getronics N.V. (Computer
Software/Services) 300,000 9,084,843
- ----------------------------------------------------------------------
IHC Caland N.V. (Trucking) 114,000 5,628,907
- ----------------------------------------------------------------------
Internatio-Muller N.V. (Conglomerates) 288,000 8,351,897
- ----------------------------------------------------------------------
Koninklijke Van Ommeren N.V.
(Transportation)(a) 122,000 4,752,759
- ----------------------------------------------------------------------
NORIT N.V. (Cosmetics & Toiletries) 200,000 3,449,161
- ----------------------------------------------------------------------
Oce-Van Der Grinten N.V.
(Office Automation) 67,000 8,105,477
- ----------------------------------------------------------------------
Ordina Beheer N.V. (Computer
Software/Services)(a) 80,000 5,358,518
- ----------------------------------------------------------------------
Randstad Holdings N.V. (Business
Services) 46,400 4,167,736
- ----------------------------------------------------------------------
79,970,531
- ----------------------------------------------------------------------
NORWAY-1.23%
Ekornes A.S.A. (Furniture) 300,000 2,211,706
- ----------------------------------------------------------------------
Merkantildata A.S.A.
(Computer Software/Services) 50,000 912,768
- ----------------------------------------------------------------------
Saevik Supply A.S.A. (Oil &
Gas-Services)(a) 160,000 1,864,854
- ----------------------------------------------------------------------
Smedvig A.S.A.-Class A (Oil &
Gas-Services) 160,000 3,819,581
- ----------------------------------------------------------------------
Smedvig A.S.A.-Class B (Oil &
Gas-Services) 140,000 3,292,984
- ----------------------------------------------------------------------
Tandberg A.S.A. (Telecommunications)(a) 110,000 1,228,023
- ----------------------------------------------------------------------
Tandberg Television A.S.A.
(Telecommunications)(a) 440,000 3,521,878
- ----------------------------------------------------------------------
Tomra Systems A.S.A.
(Machinery-Miscellaneous) 486,000 9,418,076
- ----------------------------------------------------------------------
26,269,870
- ----------------------------------------------------------------------
PERU-0.66%
Telefonica del Peru S.A.-Class B
(Telecommunications) 1,026,000 2,471,640
- ----------------------------------------------------------------------
Telefonica del Peru S.A.-ADR
(Telecommunications)(a) 486,500 11,676,000
- ----------------------------------------------------------------------
14,147,640
- ----------------------------------------------------------------------
PHILIPPINES-2.88%
C & P Homes, Inc. (Home Building) 14,800,000 5,612,438
- ----------------------------------------------------------------------
DMCI Holdings Inc.
(Engineering & Construction)(a) 11,700,000 5,989,761
- ----------------------------------------------------------------------
Equitable Banking Corp. (Banking)(a) 150,000 585,893
- ----------------------------------------------------------------------
Filinvest Land Inc. (Real Estate)(a) 27,213,175 6,398,244
- ----------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PHILIPPINES-(CONTINUED)
International Container Terminal
Services, Inc. (Containers)(a) 8,150,000 $ 4,790,482
- ----------------------------------------------------------------------
Ionics Circuit Inc.
(Electronic
Components/Miscellaneous)(a) 4,832,000 2,931,816
- ----------------------------------------------------------------------
Marsman & Co., Inc.-Class B
(Medical-Drugs)(a) 6,330,000 1,440,273
- ----------------------------------------------------------------------
Metro Pacific Corp. (Conglomerates) 27,254,000 6,304,490
- ----------------------------------------------------------------------
Metropolitan Bank & Trust Co. (Banking) 424,072 8,684,068
- ----------------------------------------------------------------------
Philippine Long Distance Telephone Co.
(Telecommunications) 97,460 5,562,279
- ----------------------------------------------------------------------
Philippine Long Distance Telephone
Co.-ADR (Telecommunications) 79,700 4,443,275
- ----------------------------------------------------------------------
SM Prime Holdings Inc. (Real Estate)(a) 32,000,000 8,373,151
- ----------------------------------------------------------------------
Southeast Asia Cement Holdings, Inc.
(Building Materials)(a) 8,771,000 405,788
- ----------------------------------------------------------------------
61,521,958
- ----------------------------------------------------------------------
PORTUGAL-1.36%
Cimpor-Cimentos de Portugal S.A.
(Building Materials)(a) 250,000 5,378,200
- ----------------------------------------------------------------------
Jeronimo Martins & Filho, S.A.
(Retail-Stores)(a) 56,000 3,350,014
- ----------------------------------------------------------------------
Portugal Telecom S.A.
(Telecommunications)(a) 265,000 9,763,158
- ----------------------------------------------------------------------
Semapa (Building Materials)(a) 110,000 2,353,753
- ----------------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications)(a) 60,000 5,166,523
- ----------------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.-ADR
(Telecommunications)(a) 34,900 3,010,125
- ----------------------------------------------------------------------
29,021,773
- ----------------------------------------------------------------------
SINGAPORE-1.51%
City Developments Ltd. (Real Estate) 789,000 6,377,409
- ----------------------------------------------------------------------
DBS Land Ltd. (Real Estate) 3,030,000 9,796,477
- ----------------------------------------------------------------------
Overseas Union Bank Ltd. (Banking) 1,030,000 6,759,931
- ----------------------------------------------------------------------
Wing Tai Holdings Ltd. (Real Estate) 3,600,000 9,301,554
- ----------------------------------------------------------------------
32,235,371
- ----------------------------------------------------------------------
SOUTH AFRICA-0.42%
Dimension Data Holdings Ltd.
(Computer Peripherals)(a) 1,008,000 3,400,427
- ----------------------------------------------------------------------
Sasol Ltd.
(Oil & Gas-Exploration & Production) 438,850 5,625,649
- ----------------------------------------------------------------------
9,026,076
- ----------------------------------------------------------------------
SPAIN-0.83%
Azkoyen S.A. (Machinery-Miscellaneous) 17,000 2,546,425
- ----------------------------------------------------------------------
Mapfre Vida (Insurance-Life & Health)(a) 54,000 3,475,531
- ----------------------------------------------------------------------
Prosegur, CIA de Seguridad S.A.
(Business Services) 400,000 4,336,377
- ----------------------------------------------------------------------
Tele Pizza, S.A. (Restaurants)(a) 100,000 4,582,607
- ----------------------------------------------------------------------
Vidrala S.A. (Containers) 40,000 2,886,358
- ----------------------------------------------------------------------
17,827,298
- ----------------------------------------------------------------------
SWEDEN-1.77%
AB Lindex (Retail-Stores)(a) 130,000 2,792,331
- ----------------------------------------------------------------------
Allgon A.B.-Class B (Electronic
Components/Miscellaneous) 270,000 7,399,901
- ----------------------------------------------------------------------
Assa Abloy A.B.-Class B
(Machinery-Miscellaneous)(a) 230,000 4,500,491
- ----------------------------------------------------------------------
Esselte A.B.-Class B (Office Products)(a) 200,000 4,563,591
- ----------------------------------------------------------------------
Scandic Hotels A.B. (Hotels/Motels)(a) 230,000 3,840,810
- ----------------------------------------------------------------------
Securitas A.B.-Class B
(Security & Safety Services) 126,300 3,042,908
- ----------------------------------------------------------------------
Spectra-Physics A.B. (Electronic
Components/Miscellaneous) 120,000 2,080,385
- ----------------------------------------------------------------------
</TABLE>
FS-7
<PAGE> 236
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWEDEN-(CONTINUED)
Telefonaktiebolaget LM Ericsson-ADR
(Telecommunications) 152,160 $ 5,116,380
- ----------------------------------------------------------------------
WM-Data A.B.-Class B
(Computer Software/Services)(a) 60,000 4,359,631
- ----------------------------------------------------------------------
37,696,428
- ----------------------------------------------------------------------
SWITZERLAND-2.07%
Ares-Serono Group-Class B (Medical-Drugs) 2,000 2,683,671
- ----------------------------------------------------------------------
Disetronic Holding A.G.
(Medical-Drugs)(a) 2,000 4,389,119
- ----------------------------------------------------------------------
Gurit-Heberlein A.G. (Textiles)(a) 900 2,304,796
- ----------------------------------------------------------------------
Kuoni Reisen A.G. (Leisure &
Recreation)(a) 1,600 4,602,130
- ----------------------------------------------------------------------
Logitech International S.A.
(Computer Peripherals) 30,000 5,494,878
- ----------------------------------------------------------------------
Logitech International S.A.-ADR
(Computer Peripherals)(a) 100,000 1,837,500
- ----------------------------------------------------------------------
Mikron Holding A.G. (Machinery-Heavy)(a) 17,000 2,537,141
- ----------------------------------------------------------------------
Rieter Holdings Ltd.
(Machinery-Miscellaneous)(a) 18,500 5,873,414
- ----------------------------------------------------------------------
Saurer A.G. (Machinery-Miscellaneous)(a) 9,500 4,975,239
- ----------------------------------------------------------------------
Stratec Holding A.G.
(Medical Instruments/Products)(a) 2,600 3,950,885
- ----------------------------------------------------------------------
TAG Heuer International S.A.
(Consumer Non-Durables)(a) 40,000 5,616,987
- ----------------------------------------------------------------------
44,265,760
- ----------------------------------------------------------------------
THAILAND-0.36%
Bank of Ayudhya Public Co., Ltd.
(Banking) 87,475 224,359
- ----------------------------------------------------------------------
Hana Microelectronics Public Co., Ltd.
(Electronic Components/Miscellaneous) 452,400 2,441,895
- ----------------------------------------------------------------------
Krung Thai Bank Public Co. Ltd. (Banking) 1,687,670 2,115,846
- ----------------------------------------------------------------------
Siam Commercial Bank PLC (Banking) 377,100 2,208,682
- ----------------------------------------------------------------------
Thai Theparos Food Product Public Co.
Ltd. (Food/Processing)(a) 215,500 676,467
- ----------------------------------------------------------------------
7,667,249
- ----------------------------------------------------------------------
UNITED KINGDOM-8.07%
Aegis Group PLC
(Advertising/Broadcasting) 6,000,000 5,980,550
- ----------------------------------------------------------------------
Airtours PLC (Leisure & Recreation) 815,000 12,112,723
- ----------------------------------------------------------------------
Alexon Group PLC (Retail-Stores)(a) 555,000 1,781,036
- ----------------------------------------------------------------------
Astec (BSR) PLC (Electronic
Components/Miscellaneous) 1,300,000 3,170,989
- ----------------------------------------------------------------------
Avis Europe PLC (Transportation)
(Acquired 03/26/97; cost
$2,977,263)(a)(b) 1,484,550 3,248,205
- ----------------------------------------------------------------------
Blacks Leisure Group PLC (Retail-Stores) 200,000 1,552,674
- ----------------------------------------------------------------------
British-Borneo Petroleum Syndicate PLC
(Oil & Gas-Exploration & Production) 360,000 7,410,049
- ----------------------------------------------------------------------
Capita Group PLC
(Computer Software/Services) 570,000 2,203,322
- ----------------------------------------------------------------------
Capital Radio PLC
(Advertising/Broadcasting) 250,000 2,196,110
- ----------------------------------------------------------------------
Caradon PLC (Building Materials) 1,000,000 4,027,552
- ----------------------------------------------------------------------
Carpetright PLC (Retail-Stores) 142,000 1,088,590
- ----------------------------------------------------------------------
Compass Group PLC (Restaurants) 335,000 3,676,801
- ----------------------------------------------------------------------
Danka Business Systems PLC-ADR
(Office Automation) 114,700 3,505,519
- ----------------------------------------------------------------------
Dewhirst Group PLC (Textiles) 404,000 1,289,918
- ----------------------------------------------------------------------
D.F.S. Furniture Co. PLC (Retail-Stores) 660,000 5,947,488
- ----------------------------------------------------------------------
Dr. Solomon's Group PLC-ADR
(Computer Software/Services)(a) 109,600 2,534,500
- ----------------------------------------------------------------------
FKI PLC (Conglomerates) 1,125,000 3,318,476
- ----------------------------------------------------------------------
Games Workshop Group PLC
(Leisure & Recreation) 165,000 1,743,598
- ----------------------------------------------------------------------
Go-Ahead Group PLC (The) (Transportation) 230,000 1,763,209
- ----------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Goode Durrant PLC (Business Services) 214,000 $ 1,607,601
- ----------------------------------------------------------------------
Graseby PLC (Medical
Instruments/Products) 425,000 985,008
- ----------------------------------------------------------------------
Harvey Nichols PLC (Retail-Stores)(a) 330,000 1,658,023
- ----------------------------------------------------------------------
Holliday Chemical Holdings PLC
(Chemicals) 675,000 1,651,945
- ----------------------------------------------------------------------
J.D. Wetherspoon PLC (Restaurants) 105,000 1,991,086
- ----------------------------------------------------------------------
Jarvis Hotels PLC (Hotels/Motels)(a) 675,000 1,695,705
- ----------------------------------------------------------------------
JBA Holdings PLC
(Computer Software/Services) 150,000 1,993,517
- ----------------------------------------------------------------------
JJB Sports PLC (Retail-Stores) 215,000 1,573,298
- ----------------------------------------------------------------------
Logica PLC (Computer Software/Services) 300,000 4,190,032
- ----------------------------------------------------------------------
London Forfaiting Co. PLC
(Finance-Asset Management) 340,000 2,220,746
- ----------------------------------------------------------------------
London International Group PLC
(Cosmetics & Toiletries)(a) 2,000,000 5,850,890
- ----------------------------------------------------------------------
Manchester United PLC (Leisure &
Recreation) 500,000 5,324,148
- ----------------------------------------------------------------------
Mayflower Corp. PLC (The)
(Automobile/Trucks Parts & Tires) 890,000 2,149,271
- ----------------------------------------------------------------------
Medeva PLC (Medical-Drugs) 325,000 1,580,227
- ----------------------------------------------------------------------
Millennium & Copthorne Hotels PLC
(Hotels/Motels) 350,000 2,138,574
- ----------------------------------------------------------------------
Misys PLC (Computer Software/Services) 500,000 10,028,363
- ----------------------------------------------------------------------
P&P PLC (Computer Mini/PCs) 471,000 1,687,050
- ----------------------------------------------------------------------
Parity PLC (Computer Software/Services) 350,000 2,779,578
- ----------------------------------------------------------------------
PizzaExpress PLC (Restaurants) 387,000 4,334,149
- ----------------------------------------------------------------------
Powerscreen International PLC
(Machinery-Heavy) 515,000 5,070,705
- ----------------------------------------------------------------------
Provident Financial PLC
(Finance-Consumer Credit) 1,000,000 9,254,456
- ----------------------------------------------------------------------
Sage Group PLC (The)
(Computer Software/Services) 300,000 3,119,125
- ----------------------------------------------------------------------
Scholl PLC (Cosmetics & Toiletries) 200,000 975,688
- ----------------------------------------------------------------------
SEMA Group PLC (Computer
Software/Services) 500,000 9,704,214
- ----------------------------------------------------------------------
SIG PLC (Building Materials) 420,000 2,232,739
- ----------------------------------------------------------------------
Spirax-Sarco Engineering PLC
(Machinery-Miscellaneous) 130,000 1,493,840
- ----------------------------------------------------------------------
St. Ives PLC (Containers) 201,000 1,723,323
- ----------------------------------------------------------------------
Stagecoach Holdings PLC (Transportation) 790,000 7,611,912
- ----------------------------------------------------------------------
Stanley Leisure PLC (Gaming) 425,000 1,901,135
- ----------------------------------------------------------------------
Taylor Woodrow PLC (Engineering &
Construction) 1,450,000 4,512,155
- ----------------------------------------------------------------------
TBI PLC (Real Estate) 500,000 652,350
- ----------------------------------------------------------------------
172,242,162
- ----------------------------------------------------------------------
Total Foreign Stocks & Other Equity
Interests 1,332,775,255
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC CONVERTIBLE CORPORATE BONDS-0.09%
ADVERTISING/BROADCASTING-0.05%
Jacor Communications Inc.,
Conv. Sr. LYON 5.50%; 06/12/11 $2,350,000 1,086,875
- ------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.02%
Cityscape Financial Corp.,
Conv. Sub. Deb., 6.00%; 05/01/06
(Acquired 08/06/96; cost
$718,588)(b) 520,000 344,911
- ------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.02%
Multicare Companies Inc.,
Conv. Sub. Deb., 7.00%; 03/15/03
(Acquired 01/13/97; cost
$480,000)(b) 400,000 458,000
- ------------------------------------------------------------------
Total Domestic Convertible
Corporate Bonds 1,889,786
- ------------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 237
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FOREIGN CONVERTIBLE CORPORATE BONDS-0.36%
HONG KONG-0.11%
New World Infrastructure Ltd.
(Banking), Conv. Bonds,
5.00%, 07/15/01
(Acquired 04/10/97-04/11/97; cost
$2,172,563)(b) $1,850,000 $ 2,104,375
- ------------------------------------------------------------------
New World Infrastructure Ltd.
(Banking), Conv. Bonds,
5.00%, 07/15/01 250,000 284,375
- ------------------------------------------------------------------
2,388,750
- ------------------------------------------------------------------
NETHERLANDS-0.14%
Baan Co., N.V. (Computer
Software/Services), Conv. Sub.
Notes, 4.50%, 12/15/01
(Acquired 01/13/97-01/24/97; cost
$2,585,688)(b) 2,245,000 3,048,283
- ------------------------------------------------------------------
- ------------------------------------------------------------------
PHILIPPINES-0.11%
Metropolitan Bank & Trust
International Finance Ltd.
(Banking),
Conv. Deb., 2.75%, 09/10/00 $1,815,000 $ 2,323,200
- ------------------------------------------------------------------
Total Foreign Convertible
Corporate Bonds 7,760,233
- ------------------------------------------------------------------
REPURCHASE AGREEMENT(d)-0.38%
HSBC Securities, Inc.,
5.05%, 05/01/97(e) 8,219,390 8,219,390
- ------------------------------------------------------------------
TOTAL INVESTMENTS-98.30% 2,099,330,615
- ------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.70% 36,300,665
- ------------------------------------------------------------------
NET ASSETS-100.00% $2,135,631,280
==================================================================
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
Conv. -- Convertible
Deb. -- Debentures
GDR -- Global Depository Receipt
LYON -- Liquid Yield Option Notes
Rts. -- Rights
Sr. -- Senior
Sub. -- Subordinated
Wts. -- Warrants
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 04/30/97 were $11,568,366,
which represented 0.54% of the Fund's net assets.
(c) Zero coupon bond. 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% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts, private accounts and certain
non-registered investment companies managed by the investment advisor or its
affiliates.
(e) Joint repurchase agreement entered into 04/30/97 with a maturing value of
$100,014,028. Collateralized by $96,950,000 U.S. Government obligations,
7.50% to 7.875% due 10/31/99 to 12/31/99 with an aggregate market value at
04/30/97 of $102,002,050.
See Notes to Financial Statements.
FS-9
<PAGE> 238
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,871,399,840) $2,099,330,615
- ------------------------------------------------------------
Foreign currencies, at market value (cost
$27,777,977) 27,678,737
- ------------------------------------------------------------
Receivables for:
Investments sold 26,417,685
- ------------------------------------------------------------
Capital stock sold 7,157,174
- ------------------------------------------------------------
Dividends and interest 3,055,831
- ------------------------------------------------------------
Investment for deferred compensation plan 10,249
- ------------------------------------------------------------
Other assets 277,050
- ------------------------------------------------------------
Total assets 2,163,927,341
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 19,547,514
- ------------------------------------------------------------
Capital stock reacquired 4,748,214
- ------------------------------------------------------------
Deferred compensation 10,249
- ------------------------------------------------------------
Accrued advisory fees 1,513,497
- ------------------------------------------------------------
Accrued administrative services fees 8,967
- ------------------------------------------------------------
Accrued directors' fees 4,061
- ------------------------------------------------------------
Accrued distribution fees 1,549,165
- ------------------------------------------------------------
Accrued transfer agent fees 458,679
- ------------------------------------------------------------
Accrued operating expenses 455,715
- ------------------------------------------------------------
Total liabilities 28,296,061
- ------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $2,135,631,280
============================================================
NET ASSETS:
Class A $1,098,005,480
============================================================
Class B $1,037,625,800
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
CLASS A:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 70,728,784
============================================================
CLASS B:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 67,771,687
============================================================
CLASS A:
Net asset value and redemption price per
share $ 15.52
============================================================
Offering price per share:
(Net asset value $15.52 divided by 95.25%)$ 16.29
============================================================
CLASS B:
Net asset value and offering price per
share $ 15.31
============================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $833,354 foreign withholding
tax) $ 7,676,217
- -------------------------------------------------------------
Interest 903,931
- -------------------------------------------------------------
Total investment income 8,580,148
- -------------------------------------------------------------
EXPENSES:
Advisory fees 8,808,576
- -------------------------------------------------------------
Administrative services fees 54,405
- -------------------------------------------------------------
Directors' fees 6,626
- -------------------------------------------------------------
Distribution fees-Class A 2,631,007
- -------------------------------------------------------------
Distribution fees-Class B 4,809,316
- -------------------------------------------------------------
Custodian fees 680,546
- -------------------------------------------------------------
Transfer agent fees-Class A 1,237,431
- -------------------------------------------------------------
Transfer agent fees-Class B 1,365,858
- -------------------------------------------------------------
Other 526,876
- -------------------------------------------------------------
Total expenses 20,120,641
- -------------------------------------------------------------
Less: Expenses paid indirectly (16,745)
- -------------------------------------------------------------
Net expenses 20,103,896
- -------------------------------------------------------------
Net investment income (loss) (11,523,748)
- -------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities (64,423,236)
- -------------------------------------------------------------
Foreign currencies (618,506)
- -------------------------------------------------------------
(65,041,742)
- -------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 26,301,048
- -------------------------------------------------------------
Foreign currencies (188,075)
- -------------------------------------------------------------
26,112,973
- -------------------------------------------------------------
Net gain (loss) on investment securities
and foreign
currencies (38,928,769)
- -------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $(50,452,517)
==============================================================
</TABLE>
See Notes to Financial Statements.
FS-10
<PAGE> 239
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1997 and the year ended October 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (11,523,748) $ (8,221,031)
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities
and foreign currencies (65,041,742) (32,408,407)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 26,112,973 171,434,202
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (50,452,517) 130,804,764
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized capital gains:
Class A -- (766,625)
- -----------------------------------------------------------------------------------------------
Class B -- (520,242)
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 202,334,036 657,118,189
- -----------------------------------------------------------------------------------------------
Class B 257,215,785 635,669,948
- -----------------------------------------------------------------------------------------------
Net increase in net assets 409,097,304 1,422,306,034
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,726,533,976 304,227,942
- -----------------------------------------------------------------------------------------------
End of period $2,135,631,280 $1,726,533,976
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,016,588,400 $1,557,038,579
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (11,537,802) (14,054)
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities and
foreign currencies (97,223,213) (32,181,471)
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 227,803,895 201,690,922
- -----------------------------------------------------------------------------------------------
$2,135,631,280 $1,726,533,976
===============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Aggressive Growth Fund (the "Fund") is a series 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: Class A shares and 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 Fund's investment objective 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 following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at the last sales price on the exchange where
the security is principally traded or, lacking any sales, at the mean between
the closing bid and asked prices on the day of valuation. If a mean is not
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Securities traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) are valued at the mean
FS-11
<PAGE> 240
between the closing bid and asked prices on valuation date. Securities
reported on the NASDAQ National Market System are valued at the last sales
price on the valuation date or, absent a last sales price, at the mean of the
closing bid and asked prices. Debt obligations (including convertible bonds)
are valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as yield,
type of issue, coupon rate and maturity date. Securities for which market
quotations are either not readily available or are questionable 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 would 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 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 forward 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.
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. The Fund has a capital loss
carryforward of $32,147,412 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2004.
F. Expenses -- Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for administrative costs incurred in providing
accounting services to the Fund. During the six months ended April 30, 1997, AIM
was reimbursed $54,405 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the six months ended April 30, 1997, AFS was paid
$1,554,464 for such services.
The Fund received reductions in transfer agency fees of $15,802 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $943 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $16,745 during the six months ended
April 30, 1997.
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
distribution 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, pays 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. Of the total compensation payable, the Fund pays a service fee of
0.25% to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class A
shares of the Fund. The Fund, pursuant to the Class B Plan, will pay AIM
Distributors an annual rate of 1.00% of the average daily net assets
attributable to the Class B
FS-12
<PAGE> 241
shares. Of this amount, the Fund pays 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the six months ended April 30, 1997, the Class A shares
and the Class B shares paid AIM Distributors $2,631,007 and $4,809,316,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,429,678 from the sales of the
Class A shares of the Fund during the six months ended April 30, 1997. 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 six months
ended April 30, 1997, AIM Distributors received commissions of $82,914 in
contingent deferred sales charges imposed on redemptions of Fund shares. Certain
officers and directors of the Company are officers and directors of AIM, AFS and
AIM Distributors.
During the six months ended April 30, 1997, the Fund incurred legal fees of
$8,781 for services rendered by the law firm of Kramer, Levin, Naftalis &
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 AIM. 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-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended April 30, 1997, the Fund did not borrow under the
line of credit agreement. The funds which are party to the line of credit are
charged a commitment fee of 0.08% on the unused balance of the committed line.
The commitment fee is allocated among the funds based on their respective
average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1997, on a
tax basis, was $981,957,969 and $527,989,778, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1997, on a tax basis, is as follows.
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 346,645,643
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (118,714,868)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 227,930,775
=========================================================
Investments have the same cost for tax and financial
statement purposes.
</TABLE>
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1997 and the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1997 OCTOBER 31, 1996
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Sold:
Class A 21,617,741 $ 351,813,876 50,205,954 $ 748,519,743
- --------------------- ---------- -------------- ---------- --------------
Class B 20,324,555 326,605,732 45,280,451 673,914,740
- --------------------- ---------- -------------- ---------- --------------
Issued as
reinvestment of
dividends:
Class A -- -- 56,549 727,221
- --------------------- ---------- -------------- ---------- --------------
Class B -- -- 38,442 491,285
- --------------------- ---------- -------------- ---------- --------------
Reacquired:
Class A (9,236,278) (149,479,840) (6,124,044) (92,128,775)
- --------------------- ---------- -------------- ---------- --------------
Class B (4,362,967) (69,389,947) (2,588,161) (38,736,077)
- --------------------- ---------- -------------- ---------- --------------
28,343,051 $ 459,549,821 86,869,191 $1,292,788,137
===================== ========== ============== ========== ==============
</TABLE>
FS-13
<PAGE> 242
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share and Class B share
outstanding during the six months ended April 30, 1997, each of the years in the
two-year period ended October 31, 1996 and the period September 15, 1994 (date
operations commenced) through October 31, 1994.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ------------------------------------------
1997 1996 1995 1994
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 15.76 $ 13.09 $ 10.22 $ 10.00
- ------------------------------------------------------------ ---------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.07) (0.09)(a) (0.09)(a) --
- ------------------------------------------------------------ ---------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.17) 2.81 2.96 0.22
- ------------------------------------------------------------ ---------- -------- -------- --------
Total from investment operations (0.24) 2.72 2.87 0.22
- ------------------------------------------------------------ ---------- -------- -------- --------
Less distributions:
Distributions from capital gains -- (0.05) -- --
- ------------------------------------------------------------ ---------- -------- -------- --------
Net asset value, end of period $ 15.52 $ 15.76 $ 13.09 $ 10.22
============================================================ ========== ======== ======== ========
Total return(b) (1.52)% 20.83% 28.08% 2.20%
============================================================ ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,098,005 $919,319 $186,029 $ 18,410
============================================================ ========== ======== ======== ========
Ratio of expenses to average net assets 1.74%(c)(d) 1.83% 2.11% 2.02%(e)(f)
============================================================ ========== ======== ======== ========
Ratio of net investment income (loss) to average net assets (0.89)%(c) (0.62)% (0.68)% 0.27%(f)(g)
============================================================ ========== ======== ======== ========
Portfolio turnover rate 27% 44% 64% 2%
============================================================ ========== ======== ======== ========
Average brokerage commission rate paid(h) $ 0.0285 $ 0.0155 N/A N/A
============================================================ ========== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are annualized and based on average net assets of $1,061,124,353.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) After fee waivers and expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and expense reimbursements is 4.03%
(annualized) for 1994.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratio of net investment income
(loss) to average net assets prior to fee waivers and expense reimbursements
is (1.74)% (annualized) for 1994.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ------------------------------------------
1997 1996 1995 1994
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 15.58 $ 13.02 $ 10.21 $ 10.00
- ------------------------------------------------------------ ---------- -------- -------- -------
Income from investment operations:
Net investment income (loss) (0.10) (0.17)(a) (0.14)(a) --
- ------------------------------------------------------------ ---------- -------- -------- -------
Net gains (losses) on securities (both realized and
unrealized) (0.17) 2.78 2.95 0.21
- ------------------------------------------------------------ ---------- -------- -------- -------
Total from investment operations (0.27) 2.61 2.81 0.21
- ------------------------------------------------------------ ---------- -------- -------- -------
Less distributions:
Distributions from capital gains -- (0.05) -- --
- ------------------------------------------------------------ ---------- -------- -------- -------
Net asset value, end of period $ 15.31 $ 15.58 $ 13.02 $ 10.21
============================================================ ========== ======== ======== ========
Total return(b) (1.73)% 20.09% 27.52% 2.10%
============================================================ ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,037,626 $807,215 $118,199 $ 6,201
============================================================ ========== ======== ======== ========
Ratio of expenses to average net assets 2.28%(c)(d) 2.37% 2.62% 2.54%(e)(f)
============================================================ ========== ======== ======== ========
Ratio of net investment income (loss) to average net assets (1.42)%(c) (1.16)% (1.19)% (0.25)%(f)(g)
============================================================ ========== ======== ======== ========
Portfolio turnover rate 27% 44% 64% 2%
============================================================ ========== ======== ======== ========
Average brokerage commission rate paid(h) $ 0.0285 $ 0.0155 N/A N/A
============================================================ ========== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are annualized and based on average net assets of $969,834,513.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average assets would have been 2.27% (annualized)
for 1997.
(e) After fee waivers and expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and expense reimbursements is 4.43%
(annualized) for 1994.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratio of net investment income
(loss) to average net assets prior to fee waivers and expense reimbursements
is (2.14)% (annualized) for 1994.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
FS-14
<PAGE> 243
SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING
- --------------------------------------------------------------------------------
An annual meeting of shareholders of the Company was held on February 7, 1997.
The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and AIM.
(3) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other companies and/or the amendment of
certain related fundamental investment policies.
(4) Ratification of KPMG Peat Marwick LLP as independent accountants for the
Company's fiscal year ended October 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
Votes
Director/Matter Votes For Against Abstentions
--------------- --------- --------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 130,433,380 0 3,798,959
Bruce L. Crockett........................................... 130,563,964 0 3,668,375
Owen Daly II................................................ 130,421,284 0 3,811,055
Carl Frischling............................................. 130,515,713 0 3,716,626
Robert H. Graham............................................ 130,587,498 0 3,644,841
John F. Kroeger............................................. 130,446,846 0 3,785,493
Lewis F. Pennock............................................ 130,506,142 0 3,726,197
Ian W. Robinson............................................. 130,446,093 0 3,786,246
Louis S. Sklar.............................................. 130,573,480 0 3,658,859
(2) Approval of the new Investment Advisory Agreement........... 59,560,291 868,768 2,843,639
(3) Elimination of Policy prohibiting investments in other
investment companies........................................ 44,936,713 2,141,368 2,956,734
(4) KPMG Peat Marwick LLP....................................... 128,509,801 995,829 4,726,709
</TABLE>
FS-15
<PAGE> 244
AIM GLOBAL GROWTH FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-28.46%
ADVERTISING/BROADCASTING-0.38%
Interpublic Group of Companies,
Inc. 22,000 $ 1,245,750
- ---------------------------------------------------------------
BANKING-0.37%
NationsBank Corp. 20,000 1,207,500
- ---------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-0.07%
PepsiCo, Inc. 6,600 230,175
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.42%
Amgen, Inc.(a) 7,000 412,125
- ---------------------------------------------------------------
Biogen, Inc.(a) 23,000 736,000
- ---------------------------------------------------------------
Guidant Corp. 3,200 218,400
- ---------------------------------------------------------------
1,366,525
- ---------------------------------------------------------------
BUSINESS SERVICES-0.65%
AccuStaff, Inc.(a) 25,000 456,250
- ---------------------------------------------------------------
Cognizant Corp. 25,900 844,988
- ---------------------------------------------------------------
Equifax, Inc. 28,000 805,000
- ---------------------------------------------------------------
2,106,238
- ---------------------------------------------------------------
CHEMICALS-0.23%
Monsanto Co. 17,100 731,025
- ---------------------------------------------------------------
COMPUTER MAINFRAMES-0.22%
International Business Machines
Corp. 4,500 723,375
- ---------------------------------------------------------------
COMPUTER MINI/PCS-1.55%
Compaq Computer Corp.(a) 14,000 1,195,250
- ---------------------------------------------------------------
Dell Computer Corp.(a) 15,800 1,322,263
- ---------------------------------------------------------------
Gateway 2000, Inc.(a) 15,000 823,125
- ---------------------------------------------------------------
Hewlett-Packard Co. 17,000 892,500
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 27,400 789,463
- ---------------------------------------------------------------
5,022,601
- ---------------------------------------------------------------
COMPUTER NETWORKING-0.21%
Ascend Communications, Inc.(a) 15,000 686,250
- ---------------------------------------------------------------
COMPUTER PERIPHERALS-0.25%
EMC Corp.(a) 18,000 654,750
- ---------------------------------------------------------------
Storage Technology Corp.(a) 4,400 154,550
- ---------------------------------------------------------------
809,300
- ---------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-1.58%
BMC Software, Inc.(a) 13,400 579,550
- ---------------------------------------------------------------
Computer Associates
International, Inc. 1,700 88,400
- ---------------------------------------------------------------
Compuware Corp.(a) 31,800 1,200,450
- ---------------------------------------------------------------
Fiserv, Inc.(a) 17,100 645,525
- ---------------------------------------------------------------
Microsoft Corp.(a) 11,000 1,336,500
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(CONTINUED)
Parametric Technology Co.(a) 9,300 $ 420,825
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 32,500 840,938
- ---------------------------------------------------------------
5,112,188
- ---------------------------------------------------------------
CONGLOMERATES-0.61%
Johnson Controls, Inc. 24,000 921,000
- ---------------------------------------------------------------
Tyco International Ltd. 10,000 610,000
- ---------------------------------------------------------------
U.S. Industries, Inc.(a) 12,700 458,788
- ---------------------------------------------------------------
1,989,788
- ---------------------------------------------------------------
COSMETICS & TOILETRIES-0.95%
Dial Corp. 62,000 961,000
- ---------------------------------------------------------------
McKesson Corp. 3,200 231,600
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 10,000 1,257,500
- ---------------------------------------------------------------
Warner-Lambert Co. 6,500 637,000
- ---------------------------------------------------------------
3,087,100
- ---------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.72%
Symbol Technologies, Inc. 18,000 582,750
- ---------------------------------------------------------------
Teradyne, Inc.(a) 26,000 851,500
- ---------------------------------------------------------------
Waters Corp.(a) 30,000 888,750
- ---------------------------------------------------------------
2,323,000
- ---------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.49%
Franklin Resources, Inc. 7,500 443,437
- ---------------------------------------------------------------
T. Rowe Price Associates 24,500 1,133,125
- ---------------------------------------------------------------
1,576,562
- ---------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.47%
Federal Home Loan Mortgage Corp. 38,800 1,236,750
- ---------------------------------------------------------------
Finova Group, Inc. 5,400 370,575
- ---------------------------------------------------------------
Green Tree Financial Corp. 30,000 888,750
- ---------------------------------------------------------------
Money Store, Inc. (The) 31,000 670,375
- ---------------------------------------------------------------
Student Loan Marketing
Association 13,500 1,596,375
- ---------------------------------------------------------------
SunAmerica, Inc. 300 13,800
- ---------------------------------------------------------------
4,776,625
- ---------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.88%
ContiFinancial Corp.(a) 14,100 405,375
- ---------------------------------------------------------------
Great Western Financial Corp. 31,000 1,302,000
- ---------------------------------------------------------------
H.F. Ahmanson & Co. 30,000 1,143,750
- ---------------------------------------------------------------
2,851,125
- ---------------------------------------------------------------
FOOD/PROCESSING-0.12%
ConAgra, Inc. 6,900 397,613
- ---------------------------------------------------------------
FUNERAL SERVICES-0.37%
Service Corp. International 35,000 1,198,750
- ---------------------------------------------------------------
</TABLE>
FS-16
<PAGE> 245
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOTELS/MOTELS-0.29%
HFS, Inc.(a) 16,000 $ 948,000
- ---------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.84%
Conseco Inc. 24,000 993,000
- ---------------------------------------------------------------
Equitable of Iowa Cos. 21,300 1,041,038
- ---------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A(a) 26,400 699,600
- ---------------------------------------------------------------
2,733,638
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.77%
American International Group,
Inc. 3,900 501,150
- ---------------------------------------------------------------
ITT Hartford Group, Inc. 11,000 819,500
- ---------------------------------------------------------------
Travelers Group, Inc. 21,066 1,166,530
- ---------------------------------------------------------------
2,487,180
- ---------------------------------------------------------------
LEISURE & RECREATION-0.15%
Walt Disney Co. (The) 6,000 492,000
- ---------------------------------------------------------------
MACHINERY (HEAVY)-0.27%
Caterpillar Inc. 10,000 890,000
- ---------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.34%
Thermo Electron Corp.(a) 32,000 1,104,000
- ---------------------------------------------------------------
MEDICAL (DRUGS)-2.38%
Abbott Laboratories 8,000 488,000
- ---------------------------------------------------------------
American Home Products Corp. 18,000 1,192,500
- ---------------------------------------------------------------
AmeriSource Health Corp.-Class
A(a) 22,000 981,750
- ---------------------------------------------------------------
Cardinal Health, Inc. 12,650 673,612
- ---------------------------------------------------------------
Johnson & Johnson 14,100 863,625
- ---------------------------------------------------------------
Merck & Co., Inc. 8,000 724,000
- ---------------------------------------------------------------
Pfizer, Inc. 12,000 1,152,000
- ---------------------------------------------------------------
Rhone-Poulenc Rorer, Inc. 6,000 432,750
- ---------------------------------------------------------------
Schering-Plough Corp. 5,400 432,000
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 21,900 782,925
- ---------------------------------------------------------------
7,723,162
- ---------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-1.15%
Columbia/HCA Healthcare Corp. 15,000 525,000
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 50,000 987,500
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 33,500 1,042,688
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 16,900 439,400
- ---------------------------------------------------------------
United Healthcare Corp. 15,500 753,688
- ---------------------------------------------------------------
3,748,276
- ---------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.41%
Baxter International Inc. 25,000 1,196,875
- ---------------------------------------------------------------
Becton, Dickinson & Co. 22,000 1,012,000
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 7,500 361,875
- ---------------------------------------------------------------
DePuy, Inc.(a) 8,700 182,700
- ---------------------------------------------------------------
Stryker Corp. 22,000 723,250
- ---------------------------------------------------------------
Sybron International Corp.(a) 12,700 422,275
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL INSTRUMENTS/PRODUCTS-(CONTINUED)
US Surgical Corp. 20,000 $ 685,000
- ---------------------------------------------------------------
4,583,975
- ---------------------------------------------------------------
OFFICE AUTOMATION-0.30%
Xerox Corp. 16,000 984,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING)-0.12%
Reading & Bates Corp.(a) 17,000 380,375
- ---------------------------------------------------------------
OIL & GAS (SERVICES)-0.94%
Exxon Corp. 22,000 1,245,750
- ---------------------------------------------------------------
Halliburton Co. 14,000 988,750
- ---------------------------------------------------------------
Louisiana Land & Exploration Co. 12,200 610,000
- ---------------------------------------------------------------
Unocal Corp. 5,200 198,250
- ---------------------------------------------------------------
3,042,750
- ---------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.98%
Baker Hughes, Inc. 19,000 655,500
- ---------------------------------------------------------------
Coastal Corp. 16,500 783,750
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 25,000 450,000
- ---------------------------------------------------------------
Schlumberger Ltd. 4,300 476,225
- ---------------------------------------------------------------
Tidewater, Inc. 20,000 802,500
- ---------------------------------------------------------------
3,167,975
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.10%
Kimberly-Clark Corp. 6,200 317,750
- ---------------------------------------------------------------
POLLUTION CONTROL-0.23%
USA Waste Services, Inc.(a) 23,000 753,250
- ---------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.84%
American Stores Co. 13,000 591,500
- ---------------------------------------------------------------
Kroger Co.(a) 23,600 649,000
- ---------------------------------------------------------------
Rite Aid Corp. 19,000 874,000
- ---------------------------------------------------------------
Safeway, Inc.(a) 13,500 602,438
- ---------------------------------------------------------------
2,716,938
- ---------------------------------------------------------------
RETAIL (STORES)-1.88%
Bed Bath & Beyond, Inc.(a) 30,000 821,250
- ---------------------------------------------------------------
Blyth Industries, Inc.(a) 30,000 1,185,000
- ---------------------------------------------------------------
CVS Corp. 25,000 1,240,625
- ---------------------------------------------------------------
Pep Boys-Manny, Moe & Jack 22,500 734,063
- ---------------------------------------------------------------
TJX Companies, Inc. 21,500 1,015,875
- ---------------------------------------------------------------
Toys "R" Us, Inc.(a) 12,000 342,000
- ---------------------------------------------------------------
U.S. Office Products Co.(a) 30,000 765,000
- ---------------------------------------------------------------
6,103,813
- ---------------------------------------------------------------
SEMICONDUCTORS-1.85%
Advanced Micro Devices, Inc.(a) 21,800 926,500
- ---------------------------------------------------------------
Applied Materials, Inc.(a) 19,000 1,042,625
- ---------------------------------------------------------------
Intel Corp. 4,500 689,063
- ---------------------------------------------------------------
KLA Instruments Corp.(a) 26,000 1,157,000
- ---------------------------------------------------------------
</TABLE>
F-17
<PAGE> 246
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SEMICONDUCTORS-(CONTINUED)
Micron Technology, Inc. 25,000 $ 881,250
- ---------------------------------------------------------------
Texas Instruments, Inc. 14,500 1,294,125
- ---------------------------------------------------------------
5,990,563
- ---------------------------------------------------------------
TELECOMMUNICATIONS-1.23%
ADC Telecommunications, Inc.(a) 15,200 397,100
- ---------------------------------------------------------------
Andrew Corp.(a) 9,750 241,313
- ---------------------------------------------------------------
Lucent Technologies, Inc. 18,500 1,093,813
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a) 25,000 650,000
- ---------------------------------------------------------------
Tellabs, Inc.(a) 16,000 638,000
- ---------------------------------------------------------------
WorldCom, Inc.(a) 40,730 977,520
- ---------------------------------------------------------------
3,997,746
- ---------------------------------------------------------------
TEXTILES-0.04%
Fruit of The Loom, Inc.-Class A(a) 4,000 144,000
- ---------------------------------------------------------------
TOBACCO-0.81%
Philip Morris Companies, Inc. 21,000 826,875
- ---------------------------------------------------------------
RJR Nabisco Holdings Corp. 30,000 892,500
- ---------------------------------------------------------------
Universal Corp. 32,000 896,000
- ---------------------------------------------------------------
2,615,375
- ---------------------------------------------------------------
Total Domestic Common Stocks 92,366,256
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-67.77%
ARGENTINA-1.13%
Banco de Galicia y Buenos Aires S.A.
de C.V.-ADR (Banking) 45,609 1,109,581
- ---------------------------------------------------------------
Perez Companc S.A.-Class B
(Oil & Gas-Services) 93,000 754,305
- ---------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil & Gas-Services) 65,600 1,812,200
- ---------------------------------------------------------------
3,676,086
- ---------------------------------------------------------------
AUSTRALIA-2.91%
Boral Ltd.
(Building Materials) 323,000 952,148
- ---------------------------------------------------------------
Coca-Cola Amatil Ltd.
(Consumer Non-Durables) 77,727 888,560
- ---------------------------------------------------------------
National Australia Bank Ltd.,
$1.97 Conv. Pfd., (Banking)(b) 42,500 1,126,250
- ---------------------------------------------------------------
National Australia Bank Ltd.
(Banking) 61,000 834,867
- ---------------------------------------------------------------
National Mutual Holdings Ltd.(a)
(Insurance-Multi-Line Property) 600,000 889,028
- ---------------------------------------------------------------
QBE Insurance Group Ltd.
(Insurance-Multi-Line Property) 181,125 1,035,363
- ---------------------------------------------------------------
QNI Ltd.
(Metals-Miscellaneous) 882,700 1,638,326
- ---------------------------------------------------------------
WMC Ltd.
(Metals-Miscellaneous) 350,000 2,074,398
- ---------------------------------------------------------------
9,438,940
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
AUSTRIA-0.67%
OMV A.G.
(Oil & Gas-Integrated) 9,400 $ 1,026,226
- ---------------------------------------------------------------
VA Technologie A.G.
(Engineering & Construction) 7,400 1,149,923
- ---------------------------------------------------------------
2,176,149
- ---------------------------------------------------------------
BELGIUM-1.17%
Barco Industries(a)
(Electronic
Components/Miscellaneous) 5,700 970,993
- ---------------------------------------------------------------
COLRUYT S.A.
(Retail-Food & Drug) 1,100 455,385
- ---------------------------------------------------------------
Delhaize-Le Lion, S.A.
(Retail-Food & Drug) 18,500 928,881
- ---------------------------------------------------------------
UCB S.A.
(Medical-Drugs) 520 1,426,909
- ---------------------------------------------------------------
3,782,168
- ---------------------------------------------------------------
CANADA-2.20%
Bank of Montreal
(Banking-Money Center) 20,500 743,987
- ---------------------------------------------------------------
Canadian National Railway Co.
(Railroads) 28,000 1,078,000
- ---------------------------------------------------------------
Canadian Natural Resources
Ltd.(a)
(Oil & Gas-Exploration &
Production) 48,000 1,144,166
- ---------------------------------------------------------------
Canadian Pacific, Ltd.
(Transportation) 20,000 487,500
- ---------------------------------------------------------------
Newbridge Networks Corp.(a)
(Computer Networking) 26,000 825,500
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 7,500 544,687
- ---------------------------------------------------------------
Philip Environmental, Inc.(a)
(Pollution Control) 65,000 1,023,750
- ---------------------------------------------------------------
Suncor, Inc.
(Oil & Gas-Exploration &
Production) 28,000 1,282,749
- ---------------------------------------------------------------
7,130,339
- ---------------------------------------------------------------
CHILE-0.31%
Cia. de Telecomunicaciones de
Chile S.A.-ADR
(Telephone) 30,600 990,675
- ---------------------------------------------------------------
DENMARK-0.91%
Novo Nordisk A/S-Class B
(Medical-Drugs) 30,000 2,967,818
- ---------------------------------------------------------------
FINLAND-0.26%
Nokia Oy A.B.-Class A
(Telecommunications) 13,800 853,146
- ---------------------------------------------------------------
FRANCE-8.35%
Alcatel Alsthom
(Telecommunications) 27,400 3,046,792
- ---------------------------------------------------------------
AXA S.A.
(Insurance-Life & Health) 11,250 692,174
- ---------------------------------------------------------------
</TABLE>
FS-18
<PAGE> 247
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Cap Gemini Sogeti S.A.
(Computer Software/Services) 27,000 $ 1,635,312
- ---------------------------------------------------------------
Carrefour Supermarche S.A.
(Retail-Food & Drug) 1,250 780,433
- ---------------------------------------------------------------
Cetelem
(Finance-Consumer Credit) 4,200 489,334
- ---------------------------------------------------------------
Compagnie Francaise d'Etudes et
de Construction Technip
(Engineering & Construction) 13,000 1,374,283
- ---------------------------------------------------------------
Compagnie Generale des Eaux
(Water Supply) 15,100 2,103,367
- ---------------------------------------------------------------
Elf Aquitaine S.A.
(Oil & Gas-Services) 13,500 1,309,175
- ---------------------------------------------------------------
Essilor International
(Medical Instruments/Products) 2,200 606,117
- ---------------------------------------------------------------
Etablissements Economiques du
Casino Guichard-Perrachon
(Retail-Food & Drug) 33,000 1,536,777
- ---------------------------------------------------------------
Lafarge S.A.
(Building Materials) 11,500 754,253
- ---------------------------------------------------------------
Michelin-Class B
(Automobile/Truck Parts &
Tires) 23,500 1,313,004
- ---------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-Stores) 2,900 1,219,824
- ---------------------------------------------------------------
Promodes
(Retail-Stores) 4,800 1,619,327
- ---------------------------------------------------------------
Rexel S.A.
(Electronic
Components/Miscellaneous) 2,600 692,710
- ---------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals) 46,500 1,563,942
- ---------------------------------------------------------------
Schneider S.A.
(Electronic
Components/Miscellaneous) 5,500 310,032
- ---------------------------------------------------------------
Sidel, S.A.
(Machinery-Miscellaneous) 9,800 703,874
- ---------------------------------------------------------------
Societe BIC S.A.
(Office Products) 16,100 2,551,615
- ---------------------------------------------------------------
Sodexho S.A.
(Business Services) 1,100 505,097
- ---------------------------------------------------------------
Total S.A.-Class B
(Oil & Gas-Exploration &
Production) 13,100 1,086,336
- ---------------------------------------------------------------
Valeo S.A.
(Automobile/Truck Parts &
Tires) 19,400 1,196,608
- ---------------------------------------------------------------
27,090,386
- ---------------------------------------------------------------
GERMANY-3.66%
Adidas A.G.
(Shoes & Related Apparel) 16,350 1,704,108
- ---------------------------------------------------------------
Altana A.G.
(Chemicals) 1,850 1,431,459
- ---------------------------------------------------------------
Commerzbank A.G.
(Banking-Money Center) 44,000 1,180,159
- ---------------------------------------------------------------
Continental A.G.
(Automobile/Truck Parts &
Tires) 29,600 651,207
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GERMANY-(CONTINUED)
Deutsche Bank A.G.
(Banking) 29,000 $ 1,530,546
- ---------------------------------------------------------------
Dresdner Bank A.G.
(Banking) 36,000 1,151,634
- ---------------------------------------------------------------
SAP A.G.-Pfd.
(Computer Software/Services) 4,600 847,061
- ---------------------------------------------------------------
SAP A.G.
(Computer Software/Services) 4,600 837,499
- ---------------------------------------------------------------
Schering A.G.
(Medical-Drugs) 8,000 766,832
- ---------------------------------------------------------------
SGL Carbon A.G.
(Metals-Miscellaneous) 6,000 836,702
- ---------------------------------------------------------------
VEBA A.G.
(Electric Power) 18,000 927,128
- ---------------------------------------------------------------
11,864,335
- ---------------------------------------------------------------
HONG KONG-4.94%
Asia Satellite Telecommunications
Holdings Ltd.-ADR(a)
(Telecommunications) 24,500 630,875
- ---------------------------------------------------------------
Asia Satellite Telecommunications
Holdings Ltd.
(Telecommunications) 232,000 588,498
- ---------------------------------------------------------------
Cheung Kong (Holdings) Ltd.
(Real Estate) 267,000 2,343,768
- ---------------------------------------------------------------
Cosco Pacific Ltd.
(Transportation-Miscellaneous) 1,560,000 2,184,987
- ---------------------------------------------------------------
Dao Heng Bank Group Ltd.
(Banking) 266,000 1,263,642
- ---------------------------------------------------------------
First Pacific Company Ltd.
(Conglomerates) 1,323,000 1,579,778
- ---------------------------------------------------------------
Hang Seng Bank Ltd.
(Banking) 114,500 1,289,631
- ---------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Electric Power) 746,640 1,185,525
- ---------------------------------------------------------------
HSBC Holdings PLC
(Banking) 63,400 1,604,131
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Conglomerates) 169,000 1,254,437
- ---------------------------------------------------------------
New World Infrastructure Ltd.(a)
(Building Materials) 339,800 960,643
- ---------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Real Estate) 105,600 1,145,085
- ---------------------------------------------------------------
16,031,000
- ---------------------------------------------------------------
INDONESIA-0.72%
PT Bank Internasional Indonesia
(Banking) 2,566,684 1,848,435
- ---------------------------------------------------------------
PT Indosat
(Telcommunications) 84,500 232,984
- ---------------------------------------------------------------
PT Indosat-ADR
(Telecommunications) 9,050 248,875
- ---------------------------------------------------------------
2,330,294
- ---------------------------------------------------------------
</TABLE>
FS-19
<PAGE> 248
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
IRELAND-0.10%
Elan Corp. PLC-ADR(a)
(Medical-Drugs) 9,200 $ 312,800
- ---------------------------------------------------------------
ISRAEL-0.41%
Teva Pharmaceutical Industries
Ltd.-ADR
(Medical-Drugs) 26,500 1,344,875
- ---------------------------------------------------------------
ITALY-2.66%
Credito Italiano S.p.A.
(Banking) 1,040,000 1,458,402
- ---------------------------------------------------------------
Edison S.p.A.
(Electric Power) 232,000 1,229,122
- ---------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Exploration &
Production) 290,000 1,476,274
- ---------------------------------------------------------------
Istituto Mobiliare Italiano
S.p.A.
(Banking) 138,000 1,173,041
- ---------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications) 460,000 1,442,995
- ---------------------------------------------------------------
Telecom Italia S.p.A.
(Telecommunications) 700,000 1,853,257
- ---------------------------------------------------------------
8,633,091
- ---------------------------------------------------------------
JAPAN-9.61%
Advantest Corp.
(Semiconductors) 17,930 995,836
- ---------------------------------------------------------------
Bridgestone Corp.
(Automobile/Truck Parts & Tires) 82,000 1,744,200
- ---------------------------------------------------------------
Canon, Inc.
(Office Automation) 97,000 2,300,154
- ---------------------------------------------------------------
DDI Corp.
(Telecommunications) 262 1,739,992
- ---------------------------------------------------------------
Fuji Photo Film Co.
(Electronic
Components/Miscellaneous) 61,000 2,330,720
- ---------------------------------------------------------------
Honda Motor Co., Ltd.
(Automobile-Manufacturers) 73,000 2,265,884
- ---------------------------------------------------------------
Ibiden Co., Ltd.
(Building Materials) 106,000 1,394,572
- ---------------------------------------------------------------
JUSCO Co.
(Retail-Stores) 40,000 1,228,975
- ---------------------------------------------------------------
Matsushita Electric Industrial
Co. Ltd.
(Electronic
Components\Miscellaneous) 61,000 975,539
- ---------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications) 250 1,762,713
- ---------------------------------------------------------------
Nippon Television Network
(Advertising/Broadcasting) 2,050 604,010
- ---------------------------------------------------------------
NSK Ltd.
(Metals) 230,000 1,387,954
- ---------------------------------------------------------------
NTT Data Communications Systems Co.
(Computer Software/Services) 470 1,373,695
- ---------------------------------------------------------------
Okuma Corp.(a)
(Machine Tools) 78,000 614,488
- ---------------------------------------------------------------
Ricoh Corp. Ltd.
(Office Automation) 124,000 1,475,086
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
SMC Corp.
(Machine-Miscellaneous) 6,800 $ 498,208
- ---------------------------------------------------------------
Sony Corp.
(Electronic
Components/Miscellaneous) 27,000 1,965,415
- ---------------------------------------------------------------
TDK Corp.
(Electronic
Components/Miscellaneous) 31,000 2,234,608
- ---------------------------------------------------------------
Tokyo Electron Ltd.
(Electronic
Components/Miscellaneous) 28,600 1,104,030
- ---------------------------------------------------------------
Toyota Motor Corp.
(Automobile-Manufacturers) 74,000 2,145,350
- ---------------------------------------------------------------
Yamatake-Honeywell Co.
(Airlines) 71,000 1,057,155
- ---------------------------------------------------------------
31,198,584
- ---------------------------------------------------------------
MALAYSIA-0.71%
Commerce Asset Holdings Berhad
(Finance-Asset Management) 93,000 555,600
- ---------------------------------------------------------------
Edaran Otomobil Nasional Berhad
(Automobile-Manufacturers) 70,000 660,746
- ---------------------------------------------------------------
Malayan Banking Berhad
(Banking) 109,000 1,085,311
- ---------------------------------------------------------------
2,301,657
- ---------------------------------------------------------------
MEXICO-1.75%
Coca-Cola Femsa S.A.-ADR
(Beverages-Soft Drinks) 24,200 843,975
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-Class B
(Beverages-Alcoholic) 261,050 1,225,340
- ---------------------------------------------------------------
Grupo Industrial Maseca S.A. de
C.V.-Class B
(Food/Processing) 807,600 790,679
- ---------------------------------------------------------------
Grupo Televisa S.A.-GDR(a)
(Advertising/Broadcasting) 36,900 853,313
- ---------------------------------------------------------------
Panamerican Beverages, Inc.-Class A
(Beverages-Soft Drinks) 68,000 1,972,000
- ---------------------------------------------------------------
5,685,307
- ---------------------------------------------------------------
NETHERLANDS-3.93%
DSM N.V.
(Chemicals-Specialty) 6,900 687,061
- ---------------------------------------------------------------
Elsevier N.V.
(Publishing) 23,000 368,321
- ---------------------------------------------------------------
Getronics N.V.
(Computer Software/Services) 41,000 1,241,595
- ---------------------------------------------------------------
Gucci Group N.V.-ADR -- New York
Registered Shares
(Textiles) 10,300 714,563
- ---------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food & Drugs) 10,200 696,299
- ---------------------------------------------------------------
Nutricia Verenigde Bedrijven N.V.
(Food/Processing) 11,750 1,782,734
- ---------------------------------------------------------------
Oce-Van Der Grinten N.V.
(Office Automation) 7,000 846,841
- ---------------------------------------------------------------
</TABLE>
FS-20
<PAGE> 249
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Philips Electronics N.V.
(Electronic
Components/Miscellaneous) 60,500 $ 3,158,061
- ---------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil & Gas-Services) 6,600 1,179,551
- ---------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR-New
York Shares
(Oil & Gas-Services) 6,000 1,081,500
- ---------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit
(Publishing) 15,500 320,613
- ---------------------------------------------------------------
Wolters Kluwer N.V.
(Publishing) 5,700 675,527
- ---------------------------------------------------------------
12,752,666
- ---------------------------------------------------------------
NORWAY-0.42%
Storebrand A.S.A.
(Insurance-Multi-Line Property)(a) 225,000 1,374,417
- ---------------------------------------------------------------
PHILIPPINES-0.97%
C & P Homes, Inc.
(Home Building) 1,280,000 485,400
- ---------------------------------------------------------------
Filinvest Land Inc.(a)
(Real Estate) 2,069,700 486,619
- ---------------------------------------------------------------
Metro Pacific Corp.
(Conglomerates) 2,309,000 534,126
- ---------------------------------------------------------------
Metropolitan Bank & Trust Co.
(Banking) 29,835 610,956
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co.
(Telecommunications) 8,230 469,706
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co.-ADR
(Telecommunications) 8,900 496,175
- ---------------------------------------------------------------
Southeast Asia Cement Holdings,
Inc.(a)
(Building Materials) 1,593,000 73,700
- ---------------------------------------------------------------
3,156,682
- ---------------------------------------------------------------
PORTUGAL-0.48%
Portugal Telecom S.A.(a)
(Telecommunications) 42,000 1,547,368
- ---------------------------------------------------------------
SINGAPORE-0.99%
City Developments Ltd.
(Real Estate) 129,000 1,042,694
- ---------------------------------------------------------------
DBS Land Ltd.
(Real Estate) 416,000 1,344,995
- ---------------------------------------------------------------
Overseas Union Bank Ltd.
(Banking) 125,000 820,380
- ---------------------------------------------------------------
3,208,069
- ---------------------------------------------------------------
SOUTH AFRICA-0.32%
Sasol Ltd.
(Oil & Gas-Exploration &
Production) 80,100 1,026,808
- ---------------------------------------------------------------
SPAIN-2.58%
Banco Bilbao Vizcaya, S.A.
(Banking) 24,500 1,648,918
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPAIN-(CONTINUED)
Banco Popular Espanol S.A.
(Banking) 8,000 $ 1,696,248
- ---------------------------------------------------------------
Empresa Nacional de Electricidad, S.A.
(Electric Power) 18,300 1,279,204
- ---------------------------------------------------------------
Gas Natural SDG, S.A.-Class E
(Gas Distribution) 3,300 700,831
- ---------------------------------------------------------------
Iberdrola S.A.
(Electric Power) 60,000 677,131
- ---------------------------------------------------------------
Telefonica de Espana
(Telecommunications) 93,000 2,382,169
- ---------------------------------------------------------------
8,384,501
- ---------------------------------------------------------------
SWEDEN-1.08%
Hennes & Mauritz A.B.-B Shares
(Retail-Stores) 10,300 1,490,242
- ---------------------------------------------------------------
Securitas A.B.-Class B
(Security & Safety Services) 18,300 440,896
- ---------------------------------------------------------------
Sparbanken Sverige A.B.-Class A
(Banking) 46,000 820,936
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR
(Telecommunications) 22,000 739,750
- ---------------------------------------------------------------
3,491,824
- ---------------------------------------------------------------
SWITZERLAND-2.49%
ABB A.G.(a)
(Engineering & Construction) 1,280 1,549,963
- ---------------------------------------------------------------
Adecco S.A.
(Business Services) 5,000 1,668,815
- ---------------------------------------------------------------
Ciba Specialty Chemicals A.G.(a)
(Chemicals-Specialty) 1,393 120,013
- ---------------------------------------------------------------
Clariant A.G.
(Chemicals-Specialty) 1,650 944,712
- ---------------------------------------------------------------
Nestle S.A.
(Food/Processing) 680 825,724
- ---------------------------------------------------------------
Novartis A.G.
(Medical-Drugs) 2,268 2,987,895
- ---------------------------------------------------------------
8,097,122
- ---------------------------------------------------------------
THAILAND-0.14%
Bank of Ayudhya Public Co., Ltd.
(Banking) 11,400 29,239
- ---------------------------------------------------------------
Krung Thai Bank Public Co. Ltd.
(Banking) 230,000 288,353
- ---------------------------------------------------------------
Siam Commercial Bank PLC
(Banking) 21,900 128,269
- ---------------------------------------------------------------
445,861
- ---------------------------------------------------------------
UNITED KINGDOM-11.90%
Airtours PLC
(Leisure & Recreation) 71,900 1,068,595
- ---------------------------------------------------------------
B.A.T. Industries PLC
(Conglomerates) 174,000 1,469,271
- ---------------------------------------------------------------
Bass PLC
(Beverages-Alcoholic) 24,000 309,822
- ---------------------------------------------------------------
</TABLE>
FS-21
<PAGE> 250
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
British Aerospace PLC
(Aerospace/Defense) 64,000 $ 1,359,870
- ---------------------------------------------------------------
British Petroleum Co. PLC
(Oil & Gas-Services) 62,000 711,442
- ---------------------------------------------------------------
Burton Group PLC
(Retail-Stores) 473,000 1,169,084
- ---------------------------------------------------------------
Caradon PLC
(Building Materials) 136,000 547,747
- ---------------------------------------------------------------
Compass Group PLC
(Restaurants) 59,200 649,751
- ---------------------------------------------------------------
Danka Business Systems PLC-ADR
(Office Automation) 16,000 489,000
- ---------------------------------------------------------------
Dixons Group PLC
(Retail-Stores) 164,000 1,344,959
- ---------------------------------------------------------------
EMAP PLC
(Publishing) 51,000 635,640
- ---------------------------------------------------------------
FKI PLC
(Conglomerates) 155,000 457,212
- ---------------------------------------------------------------
General Electric Co. PLC
(Electronic
Components/Miscellaneous) 160,000 951,702
- ---------------------------------------------------------------
GKN PLC
(Automobile/Truck Parts &
Tires) 39,000 601,118
- ---------------------------------------------------------------
Granada Group PLC
(Leisure & Recreation) 130,000 1,875,203
- ---------------------------------------------------------------
Guinness PLC
(Beverages-Alcoholic) 195,000 1,611,831
- ---------------------------------------------------------------
Hays PLC
(Business Services) 178,000 1,576,613
- ---------------------------------------------------------------
Kingfisher PLC
(Retail-Stores) 140,000 1,515,721
- ---------------------------------------------------------------
Ladbroke Group PLC
(Hotels/Motels) 382,000 1,433,274
- ---------------------------------------------------------------
Lloyds TSB Group PLC
(Finance-Savings & Loans) 96,000 877,536
- ---------------------------------------------------------------
LucasVarity PLC
(Automobile/Truck Parts &
Tires) 484,000 1,466,904
- ---------------------------------------------------------------
Marks & Spencer PLC
(Retail-Stores) 110,000 873,582
- ---------------------------------------------------------------
Medeva PLC
(Medical-Drugs) 67,200 326,742
- ---------------------------------------------------------------
Next PLC
(Retail-Stores) 77,000 813,055
- ---------------------------------------------------------------
Orange PLC(a)
(Telecommunications) 215,000 752,674
- ---------------------------------------------------------------
Peninsular & Oriental Steam Navigation
Co. (The)
(Transportation-Miscellaneous) 6,550 63,748
- ---------------------------------------------------------------
Provident Financial PLC
(Finance-Consumer Credit) 137,400 1,271,562
- ---------------------------------------------------------------
Railtrack Group PLC
(Railroads) 235,000 1,772,974
- ---------------------------------------------------------------
Rentokil Initial PLC
(Business Services) 239,000 1,566,864
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Scottish & Newcastle PLC
(Beverages-Alcoholic) 60,000 $ 647,650
- ---------------------------------------------------------------
Siebe PLC
(Electronic
Components/Miscellaneous) 75,000 1,109,806
- ---------------------------------------------------------------
SmithKline Beecham PLC-ADR
(Medical-Drugs) 15,000 1,209,375
- ---------------------------------------------------------------
Smiths Industries PLC
(Electronics/Defense) 30,000 367,341
- ---------------------------------------------------------------
Standard Chartered PLC
(Finance-Asset Management) 41,500 627,881
- ---------------------------------------------------------------
Tarmac PLC
(Building Materials) 840,000 1,681,361
- ---------------------------------------------------------------
Unilever PLC
(Consumer Non-Durables) 56,000 1,472,609
- ---------------------------------------------------------------
Vodafone Group PLC
(Telecommunications) 150,000 669,773
- ---------------------------------------------------------------
WPP Group PLC
(Advertising/Broadcasting) 316,000 1,293,193
- ---------------------------------------------------------------
38,642,485
- ---------------------------------------------------------------
Total Foreign Stocks & Other Equity
Interests 219,935,453
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-0.25%
FINANCE (CONSUMER CREDIT)-0.10%
SunAmerica, Inc., $3.10 Conv.
Pfd. 3,300 336,600
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.15%
MGIC Investment Corp., $3.12
Conv. Pfd. 7,000 489,125
- ---------------------------------------------------------------
Total Domestic Convertible Preferred Stocks 825,725
- ---------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT(c)
<S> <C> <C>
DOMESTIC CONVERTIBLE NOTES-0.30%
SEMICONDUCTORS-0.30%
Altera Corp.,
Conv. Sub. Notes
5.75%, 06/15/02(d)
(Acquired 02/10/97; cost
$869,363) $ 485,000 983,517
- ---------------------------------------------------------------
U.S. DOLLAR DENOMINATED FOREIGN
BONDS & NOTES-0.68%
GERMANY-0.51%
Volkswagen International Finance N.V.,
Conv. Gtd. Notes,
(Automobile-Manufacturers)
3.00%, 01/24/02 1,330,000 1,652,525
- ---------------------------------------------------------------
HONG KONG-0.07%
New World Infrastructure Ltd.,
Conv. Bonds, (Banking)
5.00%, 07/15/01(d)
(Acquired 04/10/97-04/11/97;
cost $234,938) 200,000 227,500
- ---------------------------------------------------------------
</TABLE>
FS-22
<PAGE> 251
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(c) VALUE
<S> <C> <C>
PHILIPPINES-0.10%
Metropolitan Bank & Trust
International Finance Ltd.,
Conv. Deb., (Banking)
2.75%, 09/10/00 $ 245,000 $ 313,600
- ---------------------------------------------------------------
Total U.S. Dollar Denominated
Foreign Bonds & Notes 2,193,625
- ---------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
FOREIGN BONDS & NOTES-0.80%
FRANCE-0.20%
AXA-UAP,
Conv. Sr. Deb., (Insurance-Life
& Health)
4.50%, 01/01/99 FRF 2,835,000 673,959
- ---------------------------------------------------------------
ITALY-0.40%
Pirelli S.p.A.,
Conv. Bonds, (Automobile/Truck
Parts & Tires)
5.00%, 12/31/98 ITL 1,591,686,200 1,287,535
- ---------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(c) VALUE
<S> <C> <C>
JAPAN-0.20%
Ricoh Co., Ltd.,
Conv. Bonds, (Office
Automation)
0.35%, 03/31/03 JPY 65,000,000 $ 641,116
- ---------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Foreign Bonds &
Notes 2,602,610
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-0.40%(e)
HSBC Securities, Inc., 5.05%,
05/01/97(f) $ 1,287,908 1,287,908
- ---------------------------------------------------------------
TOTAL INVESTMENT-98.66% 320,195,094
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.34% 4,334,512
- ---------------------------------------------------------------
NET ASSETS-100.00% $324,529,606
===============================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
GDR - Global Depository Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Issued as a unit. This unit also includes 42,500 warrants to exchange into
one ordinary share per warrant.
(c) Principal in U.S. Dollars unless otherwise indicated.
(d) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at April 30, 1997 was $1,211,017
which represented 0.37% of the Fund's net assets.
(e) 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% of the sales price of the
repurchase agreement. The investment in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(f) Joint repurchase agreement entered into 04/30/97 with a maturing value of
$100,014,028. Collateralized by $96,950,000 U.S. Government obligations,
7.50% to 7.875% due 10/31/99 to 12/31/99 with an aggregate market value at
April 30, 1997 of $102,002,050.
See Notes to Financial Statements.
FS-23
<PAGE> 252
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$284,581,349) $ 320,195,094
- --------------------------------------------------------
Foreign currencies, at market value
(cost $1,669,554) 1,649,017
- --------------------------------------------------------
Receivables for:
Investments sold 5,054,287
- --------------------------------------------------------
Capital stock sold 1,447,389
- --------------------------------------------------------
Dividends and interest 815,224
- --------------------------------------------------------
Investment for deferred compensation
plan 7,578
- --------------------------------------------------------
Other assets 28,977
- --------------------------------------------------------
Total assets 329,197,566
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 3,504,253
- --------------------------------------------------------
Capital stock reacquired 496,621
- --------------------------------------------------------
Deferred compensation 7,578
- --------------------------------------------------------
Accrued advisory fees 218,517
- --------------------------------------------------------
Accrued administrative services fees 6,958
- --------------------------------------------------------
Accrued distribution fees 225,871
- --------------------------------------------------------
Accrued transfer agent fees 81,800
- --------------------------------------------------------
Accrued operating expenses 126,362
- --------------------------------------------------------
Total liabilities 4,667,960
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 324,529,606
========================================================
NET ASSETS:
Class A $ 148,010,453
========================================================
Class B $ 176,519,153
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER
SHARE:
Class A:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 9,811,280
========================================================
Class B:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 11,856,382
========================================================
Class A:
Net asset value and redemption price
per share $ 15.09
========================================================
Offering price per share:
(Net asset value $15.09 divided by
95.25%) $ 15.84
========================================================
Class B:
Net asset value and offering price per
share $ 14.89
========================================================
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<S> <C>
INVESTMENT INCOME:
Dividends (net of $191,730 foreign
withholding tax) $ 1,692,020
- --------------------------------------------------------
Interest 178,493
- --------------------------------------------------------
Total investment income 1,870,513
- --------------------------------------------------------
EXPENSES:
Advisory fees 1,210,003
- --------------------------------------------------------
Administrative services fees 42,968
- --------------------------------------------------------
Directors' fees 3,826
- --------------------------------------------------------
Distribution fees -- Class A 336,112
- --------------------------------------------------------
Distribution fees -- Class B 751,310
- --------------------------------------------------------
Custodian fees 168,387
- --------------------------------------------------------
Transfer agent fees -- Class A 147,965
- --------------------------------------------------------
Transfer agent fees -- Class B 209,315
- --------------------------------------------------------
Other 118,820
- --------------------------------------------------------
Total expenses 2,988,706
- --------------------------------------------------------
Less: Expenses paid indirectly (2,363)
- --------------------------------------------------------
Net expenses 2,986,343
- --------------------------------------------------------
Net investment income (loss) (1,115,830)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 3,518,326
- --------------------------------------------------------
Foreign currencies (160,717)
- --------------------------------------------------------
3,357,609
- --------------------------------------------------------
Net unrealized appreciation of:
Investment securities 12,527,245
- --------------------------------------------------------
Foreign currencies 36,629
- --------------------------------------------------------
12,563,874
- --------------------------------------------------------
Net gain on investment securities and
foreign currencies 15,921,483
- --------------------------------------------------------
Net increase in net assets resulting from
operations $14,805,653
========================================================
</TABLE>
See Notes to Financial Statements.
FS-24
<PAGE> 253
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND THE YEAR ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,115,830) $ (548,400)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities, foreign currencies and futures contracts 3,357,609 (604,088)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 12,563,874 20,032,132
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 14,805,653 18,879,644
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (516,173)
- -------------------------------------------------------------------------------------------
Class B -- (413,018)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 25,693,399 81,693,730
- -------------------------------------------------------------------------------------------
Class B 47,211,382 96,263,897
- -------------------------------------------------------------------------------------------
Net increase in net assets 87,710,434 195,908,080
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 236,819,172 40,911,092
- -------------------------------------------------------------------------------------------
End of period $324,529,606 $ 236,819,172
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $287,357,242 $ 214,452,461
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,108,292) 7,538
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities, foreign currencies and futures
contracts 2,695,402 (662,207)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 35,585,254 23,021,380
- -------------------------------------------------------------------------------------------
$324,529,606 $ 236,819,172
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED)
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: Class A shares and 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 Fund's investment objective is to provide long-term growth of capital. The
Fund seeks to achieve its objectives by investing in a portfolio of global
equity securities of selected companies which are considered by AIM to have
strong earnings momentum.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at the last sales price on the exchange where
the security is principally traded or, lacking any sales, at the mean between
the closing bid and asked prices on the day of valuation. If a mean is not
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Securities traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) are valued at the mean between the closing bid and asked prices on
valuation date. Securities reported on the NASDAQ National Market System are
valued at the last sales price on the valuation date or, absent a
FS-25
<PAGE> 254
last sales price, at the mean of the closing bid and asked prices. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by an independent
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
corporate and maturity date. Securities for which market quotations are
either not readily available or are questionable 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 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 forward 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 Distribu-
tions--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. The Fund has a capital loss carryforward of
$630,387 (which may be carried forward to offset future taxable capital
gains, if any) which expires, if not previously utilized, in the year 2004.
F. Stock Index Futures Contracts--The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the Fund's
basis in the contract. Risks include the possibility of an illiquid market
and that a change in the value of contracts may not correlate with changes in
the value of the securities being hedged.
G. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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 investment 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.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for administrative costs incurred in providing
accounting services to the Fund. During the six months ended April 30, 1997, AIM
was reimbursed $42,968 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the six months ended April 30, 1997, AFS was paid
$209,646 for such services.
The Fund received reductions in transfer agency fees of $2,234 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $129 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $2,363 during the six months ended
April 30, 1997.
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
distribution plans pursuant to
FS-26
<PAGE> 255
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, pays
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. Of the
total compensation payable, a service fee of 0.25% is paid to selected dealers
and financial institutions who furnish continuing personal shareholder services
to their customers who purchase and own Class A shares of the Fund. The Fund,
pursuant to the Class B Plan, pays 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 pays 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. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more designees, its rights to all or a designated
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan) and (b) any contingent deferred sales charges received by
AIM Distributors related to the Class B shares. During the six months ended
April 30, 1997, the Class A shares and the Class B shares paid AIM Distributors
$336,112 and $751,310, respectively, as compensation under the Plans.
AIM Distributors received commissions of $166,163 from the sales of the Class
A shares of the Fund during the six months ended April 30, 1997. 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 six months
ended April 30, 1997, AIM Distributors received commissions of $18,107 in
contingent deferred sales charges imposed on redemptions of Fund shares. Certain
officers and directors of the Company are officers and directors of AIM, AFS and
AIM Distributors.
During the six months ended April 30, 1997, the Fund incurred legal fees of
$2,733 for services rendered by the law firm of Kramer, Levin, Naftalis &
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 AIM. 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-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended April 30, 1997, the Fund did not borrow under the
line of credit agreement. The funds which are party to the line of credit are
charged a commitment fee of 0.08% on the unused balance of the committed line.
The commitment fee is allocated among the funds based on their respective
average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1997 was
$192,660,508 and $120,261,274, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $43,030,878
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (7,429,856)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $35,601,022
=========================================================
</TABLE>
Cost of investments for tax purposes is $284,594,072.
FS-27
<PAGE> 256
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1997 and the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1997 OCTOBER 31, 1996
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 2,689,114 $ 40,270,274 7,117,057 $ 94,636,553
- ------------------------------------------------------------ --------- ------------ ----------- ------------
Class B 3,790,488 56,209,738 7,683,810 101,786,913
- ------------------------------------------------------------ --------- ------------ ----------- ------------
Issued as reinvestment of distributions:
Class A -- -- 36,930 453,130
- ------------------------------------------------------------ --------- ------------ ----------- ------------
Class B -- -- 31,124 379,711
- ------------------------------------------------------------ --------- ------------ ----------- ------------
Reacquired:
Class A (975,862) (14,576,875) (983,830) (13,395,953)
- ------------------------------------------------------------ --------- ------------ ----------- ------------
Class B (607,226) (8,998,356) (441,521) (5,902,727)
- ------------------------------------------------------------ --------- ------------ ----------- ------------
4,896,514 $ 72,904,781 13,443,570 $177,957,627
============================================================ ========= ============ =========== ============
</TABLE>
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share and a Class B share
outstanding during six months ended April 30, 1997, each of the years in the
two-year period ended October 31, 1996 and the period September 15, 1994 (date
operations commenced) through October 31, 1994.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ---------------------------------
1997 1996 1995 1994
--------- --------- -------- --------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 14.20 $ 12.32 $ 10.23 $ 10.00
- ------------------------------------------------------------ -------- --------- -------- --------
Income from investment operations:
Net investment income (loss) (0.03) (0.01) (0.02) -
- ------------------------------------------------------------ -------- --------- -------- --------
Net gains on securities (both realized and unrealized) 0.92 2.11 2.11 0.23
- ------------------------------------------------------------ -------- --------- -------- --------
Total from investment operations 0.89 2.10 2.09 0.23
- ------------------------------------------------------------ -------- --------- -------- --------
Less distributions:
Dividends from net investment income - - (0.004) -
- ------------------------------------------------------------ -------- --------- -------- --------
Distributions from net realized capital gains - (0.22) - -
- ------------------------------------------------------------ -------- --------- -------- --------
Total distributions - (0.22) (0.004) -
- ------------------------------------------------------------ -------- --------- -------- --------
Net asset value, end of period $ 15.09 $ 14.20 $ 12.32 $ 10.23
============================================================ ======== ========= ======== ========
Total return(a) 6.27% 17.26% 20.48% 2.30%
============================================================ ======== ========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $148,010 $ 114,971 $ 23,754 $ 3,093
============================================================ ======== ========= ======== ========
Ratio of expenses to average net assets(b) 1.81%(c)(d) 1.93% 2.12% 1.95%(e)
============================================================ ======== ========= ======== ========
Ratio of net investment income (loss) to average net
assets(f) (0.50)%(c) (0.13)% (0.28)% 0.10%(e)
============================================================ ======== ========= ======== ========
Portfolio turnover rate 43% 82% 79% 6%
============================================================ ======== ========= ======== ========
Average brokerage commission rate paid(g) $ 0.0427 $ 0.0234 N/A N/A
============================================================ ======== ========= ======== ========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets prior to fee waivers and/or expense reimbursements were 1.94%,
2.98% and 5.67% (annualized) for the periods 1996-1994, respectively.
(c) Ratios are annualized and based on average net assets of $135,558,903.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.14)%, (1.14)% and (3.63)% (annualized) for the
periods 1996-1994, respectively.
(g) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
FS-28
<PAGE> 257
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, -------------------------------------
1997 1996 1995 1994
--------- --------- -------- --------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 14.05 $ 12.26 $ 10.22 $ 10.00
- ------------------------------------------------------------ --------- --------- -------- --------
Income from investment operations:
Net investment income (loss) (0.07) (0.05) (0.04) -
- ------------------------------------------------------------ --------- --------- -------- --------
Net gains on securities (both realized and unrealized) 0.91 2.06 2.08 0.22
- ------------------------------------------------------------ --------- --------- -------- --------
Total from investment operations 0.84 2.01 2.04 0.22
- ------------------------------------------------------------ --------- --------- -------- --------
Less distributions:
Distributions from net realized capital gains - (0.22) - -
- ------------------------------------------------------------ --------- --------- -------- --------
Total distributions - (0.22) - -
- ------------------------------------------------------------ --------- --------- -------- --------
Net asset value, end of period $ 14.89 $ 14.05 $ 12.26 $ 10.22
============================================================ ========= ========= ======== ========
Total return(a) 5.98% 16.60% 19.96% 2.20%
============================================================ ========= ========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 176,519 $ 121,848 $ 17,157 $ 1,277
============================================================ ========= ========= ======== ========
Ratio of expenses to average net assets(b) 2.35%(c)(d) 2.48% 2.64% 2.51%(e)
============================================================ ========= ========= ======== ========
Ratio of net investment income (loss) to average net
assets(f) (1.04)%(c) (0.69)% (0.79)% (0.47)%(e)
============================================================ ========= ========= ======== ========
Portfolio turnover rate 43% 82% 79% 6%
============================================================ ========= ========= ======== ========
Average brokerage commission rate paid(g) $ 0.0427 $ 0.0234 N/A N/A
============================================================ ========= ========= ======== ========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets prior to fee waivers and/or expense reimbursements were 2.49%,
3.38% and 6.20% (annualized) for the periods 1996-1994, respectively.
(c) Ratios are annualized and based on average net assets of $151,507,217.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.69)%, (1.54)% and (4.16)% (annualized) for the
periods 1996-1994, respectively.
(g) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
FS-29
<PAGE> 258
SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of the Company was held on February 7, 1997.
The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and AIM.
(3) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other investment companies and/or the
amendment of certain related fundamental investment policies.
(4) Ratification of KPMG Peat Marwick LLP as independent accountants for the
Company's fiscal year ending October 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
Votes
Director/Matter Votes For Against Abstentions
--------------- --------- ------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 130,433,380 0 3,798,959
Bruce L. Crockett........................................... 130,563,964 0 3,668,375
Owen Daly II................................................ 130,421,284 0 3,811,055
Carl Frischling............................................. 130,515,713 0 3,716,626
Robert H. Graham............................................ 130,587,498 0 3,644,841
John F. Kroeger............................................. 130,446,846 0 3,785,493
Lewis F. Pennock............................................ 130,506,142 0 3,726,197
Ian W. Robinson............................................. 130,446,093 0 3,786,246
Louis S. Sklar.............................................. 130,573,480 0 3,658,859
(2) Approval of new Investment Advisory Agreement............... 10,535,120 124,963 463,813
(3) Elimination of Fundamental Investment Policy................ 7,611,924 323,037 504,221
(4) KPMG Peat Marwick LLP....................................... 128,509,801 995,829 4,726,709
</TABLE>
FS-30
<PAGE> 259
AIM GLOBAL INCOME FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES-46.26%
ADVERTISING/BROADCASTING-2.29%
Esat Holdings Ltd., Units,
12.50%, 02/01/07
(acquired 02/21/97-03/05/97;
cost $204,750)(b)(c)(d) $ 350,000 $ 199,062
- --------------------------------------------------------------
News America Holdings, Inc.,
Sr. Gtd. Deb., 9.25%, 02/01/13 250,000 275,105
- --------------------------------------------------------------
SFX Broadcasting, Inc.,
Series B Sr. Sub. Notes, 10.75%,
05/15/06 200,000 210,000
- --------------------------------------------------------------
Time Warner, Inc.,
Notes, 8.18%, 08/15/07 200,000 204,972
- --------------------------------------------------------------
Unsec. Deb., 6.85%, 01/15/26 125,000 122,129
- --------------------------------------------------------------
United International Holdings, Inc.,
Sr. Sec. Disc. Notes, 12.85%,
11/15/99(e) 200,000 145,750
- --------------------------------------------------------------
1,157,018
- --------------------------------------------------------------
AIRLINES-2.37%
Airplanes Pass Through Trust,
Sub. Bonds, 10.875%, 03/15/19 230,000 254,295
- --------------------------------------------------------------
Delta Air Lines, Inc.,
Deb., 9.00%, 05/15/16 550,000 607,244
- --------------------------------------------------------------
United Air Lines, Inc.,
Pass Thru Certificates, 9.56%,
10/19/18 300,000 338,175
- --------------------------------------------------------------
1,199,714
- --------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-1.43%
Blue Bird Body Co.,
Series B Sr. Sub. Notes, 10.75%,
11/15/06 80,000 84,000
- --------------------------------------------------------------
CSK Auto Inc.,
Sr. Sub. Notes, 11.00%, 11/01/06
(acquired 10/23/96; cost $60,000)(b) 60,000 61,725
- --------------------------------------------------------------
Lear Seating,
Sr. Gtd. Sub. Notes, 11.25%,
07/15/00 570,000 579,263
- --------------------------------------------------------------
724,988
- --------------------------------------------------------------
BANKING-3.97%
Bankers Trust New York Corp.,
Gtd. Notes, 7.75%, 02/25/27 400,000 381,044
- --------------------------------------------------------------
Deutsche Bank Financial,
Gtd. Unsec. Sub. Deb., 6.70%,
12/13/06 750,000 720,375
- --------------------------------------------------------------
First Union Bancorp,
Sub. Deb., 7.50%, 04/15/35 200,000 205,122
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
BANKING-(CONTINUED)
Royal Bank of Scotland PLC,
Yankee Sub. Notes, 6.375%,
02/01/11 $ 500,000 $ 451,235
- --------------------------------------------------------------
Sovereign Bancorp, Inc.,
Sub. Notes, 8.00%, 03/15/03 250,000 253,997
- --------------------------------------------------------------
2,011,773
- --------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-1.15%
Coca-Cola Enterprises, Inc.,
Putable Notes, 7.40%, 06/20/20(e) 3,113,000 579,827
- --------------------------------------------------------------
CABLE TELEVISION-2.94%
Comcast Cable Communications,
Notes, 8.50%, 05/01/27
(acquired 04/24/97; cost
$499,145)(b) 500,000 515,000
- --------------------------------------------------------------
Diamond Cable Communications PLC,
Sr. Yankee Disc. Notes, 10.75%,
02/15/07
(acquired 02/21/97; cost
$517,198)(b)(d) 870,000 522,000
- --------------------------------------------------------------
Fundy Cable Ltd.,
Sr. Yankee Sec. Second Priority
Notes, 11.00%, 11/15/05 30,000 31,350
- --------------------------------------------------------------
Kabelmedia Holdings
GmbH, Sr. Yankee Unsec. Disc. Notes,
13.625%, 08/01/06(d) 200,000 117,000
- --------------------------------------------------------------
Rifkin Acquisition Partners L.L.P.,
Sr. Sub. Notes, 11.125%, 01/15/06 40,000 41,000
- --------------------------------------------------------------
TeleWest Communications PLC,
Sr. Yankee Disc. Deb., 11.00%,
10/01/07(d) 50,000 34,000
- --------------------------------------------------------------
Viacom, Inc.,
Sr. Notes, 7.75%, 06/01/05 100,000 97,615
- --------------------------------------------------------------
Wireless One, Inc.,
Sr. Notes, 13.00%, 10/15/03 200,000 132,000
- --------------------------------------------------------------
1,489,965
- --------------------------------------------------------------
CHEMICALS-1.26%
BPC Holding Corp.,
Series B Sr. Notes, 12.50%, 06/15/06 100,000 104,500
- --------------------------------------------------------------
Crain Industries, Inc.,
Sr. Sub. Notes, 13.50%, 08/15/05 40,000 45,400
- --------------------------------------------------------------
LaRoche Industries, Inc.,
Sr. Sub. Notes, 13.00%, 08/15/04 100,000 109,500
- --------------------------------------------------------------
Polymer Group, Inc.,
Sr. Notes, 12.25%, 07/15/02 200,000 219,000
- --------------------------------------------------------------
</TABLE>
FS-31
<PAGE> 260
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CHEMICALS-(CONTINUED)
Sterling Chemicals, Inc.,
Sr. Unsec. Sub. Notes, 11.75%,
08/15/06 $ 150,000 $ 158,625
- --------------------------------------------------------------
637,025
- --------------------------------------------------------------
CONSUMER NON-DURABLES-0.21%
Hines Horticulture, Inc.,
Series B Sr. Gtd. Sub. Notes,
11.75%, 10/15/05 100,000 104,500
- --------------------------------------------------------------
CONTAINERS-2.38%
Ivex Holdings Corp.,
Series B Sr. Disc. Deb., 13.25%,
03/15/05(d) 500,000 414,375
- --------------------------------------------------------------
MVE Inc.,
Sr. Sec. Notes, 12.50%, 02/15/02 100,000 102,375
- --------------------------------------------------------------
National Fiberstock Corp.,
Series B Sr. Notes, 11.625%,
06/15/02 200,000 207,000
- --------------------------------------------------------------
Owens-Illinois, Inc.,
Sr. Sub Notes, 10.50%, 06/15/02 50,000 52,750
- --------------------------------------------------------------
Sr. Deb., 11.00%, 12/01/03 200,000 222,750
- --------------------------------------------------------------
Tekni-Plex Inc.,
Sr. Sub. Notes, 11.25%, 04/01/07
(acquired 04/01/97; cost
$200,000)(b) 200,000 206,120
- --------------------------------------------------------------
1,205,370
- --------------------------------------------------------------
ELECTRIC POWER-2.01%
AES China Generating Co.,
Sr. Yankee Unsec. Notes, 10.125%,
12/15/06 30,000 31,575
- --------------------------------------------------------------
El Paso Electric Co.,
Series D Sec. 1st Mortgage Bonds,
8.90%, 02/01/06 250,000 262,865
- --------------------------------------------------------------
Series E Sec. 1st Mortgage Bonds,
9.40%, 05/01/11 250,000 268,267
- --------------------------------------------------------------
Panda Funding Corp.,
Series A-1 Pooled Project Bonds,
11.625%, 08/20/12 199,591 206,577
- --------------------------------------------------------------
Panda Global Energy Co.,
Sr. Yankee Sec. Notes, 12.50%,
04/15/04 (acquired 04/11/97;
cost $242,954)(b) 260,000 248,300
- --------------------------------------------------------------
1,017,584
- --------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.59%
Electronic Retailing Systems
International, Inc., Units,
13.25%, 02/01/04 (acquired 01/21.97;
cost $298,685)(b)(d)(f) 440,000 299,200
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
ENGINEERING & CONSTRUCTION-0.53%
MMI Products Inc.,
Sr. Sub. Notes, 11.25%, 04/15/07
(acquired 04/11/97; cost
$260,000)(b) $ 260,000 $ 269,100
- --------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.57%
Associates Corp. of North America,
Series B Sr. Deb., 7.95%, 02/15/10 100,000 105,291
- --------------------------------------------------------------
Household Finance Corp.,
Notes, 7.125%, 09/01/05 700,000 691,187
- --------------------------------------------------------------
796,478
- --------------------------------------------------------------
FOOD/PROCESSING-1.79%
Chiquita Brands International, Inc.,
Sr. Unsec. Notes, 10.25%, 11/01/06 80,000 84,600
- --------------------------------------------------------------
ConAgra Inc.,
Sr. Unsec. Notes, 7.125%, 10/01/26 400,000 400,084
- --------------------------------------------------------------
Del Monte Corp.,
Sr. Sub. Notes, 12.25%, 04/15/07
(acquired 04/15/97;
cost $254,540)(b) 260,000 267,800
- --------------------------------------------------------------
International Home Foods, Inc.,
Sr. Gtd. Sub. Notes, 10.375%,
11/01/06 50,000 51,000
- --------------------------------------------------------------
Pilgrim's Pride Corp.,
Sr. Sub. Notes, 10.875%, 08/01/03 100,000 103,625
- --------------------------------------------------------------
907,109
- --------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES-0.61%
Province of Manitoba,
Yankee Bonds, 7.75%, 07/17/16 300,000 309,297
- --------------------------------------------------------------
GAMING-0.89%
Coast Hotels & Casinos Inc.,
Series B Sec. 1st Mortgage Gtd.
Notes, 13.00%, 12/15/02 70,000 77,350
- --------------------------------------------------------------
Harvey Casinos Resorts,
Sr. Unsec. Sub. Notes, 10.625%,
06/01/06 100,000 106,125
- --------------------------------------------------------------
Showboat Marina Casino
Partnership & Showboat
Marina Financial Corp.,
Series B Sec. 1st Mortgage Notes,
13.50%, 03/15/03 100,000 114,000
- --------------------------------------------------------------
Trump Atlantic City Associates,
Sec. 1st Mortgage
Gtd. Notes, 11.25%, 05/01/06 155,000 151,125
- --------------------------------------------------------------
448,600
- --------------------------------------------------------------
GAS DISTRIBUTION-0.60%
Ferrellgas Partners,
Series B Sr. Sec. Gtd. Notes,
9.375%, 06/15/06 300,000 301,500
- --------------------------------------------------------------
</TABLE>
FS-32
<PAGE> 261
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
HOME BUILDING-0.11%
Continental Homes Holdings Corp.,
Sr. Unsec. Gtd. Notes, 10.00%,
04/15/06 $ 55,000 $ 54,450
- --------------------------------------------------------------
HOTELS/MOTELS-0.47%
ITT Corp., Unsec. Gtd. Deb.,
7.375%, 11/15/15 150,000 136,933
- --------------------------------------------------------------
John Q. Hammons Hotels Inc.,
Sec. 1st Mortgage Notes, 9.75%,
10/01/05 100,000 100,750
- --------------------------------------------------------------
237,683
- --------------------------------------------------------------
LEISURE & RECREATION-0.36%
Cobblestone Golf Group Inc.,
Series B Sr. Notes, 11.50%, 06/01/03 100,000 104,000
- --------------------------------------------------------------
Icon Health & Fitness,
Series B Sr. Sub. Notes, 13.00%,
07/15/02 70,000 77,350
- --------------------------------------------------------------
181,350
- --------------------------------------------------------------
MACHINERY (HEAVY)-0.10%
Fairfield Manufacturing Co., Inc.,
Sr. Sub. Notes, 11.375%, 07/01/01 50,000 52,375
- --------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.09%
Interlake Corp.,
Sr. Notes, 12.00%, 11/15/01 40,000 44,300
- --------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-1.13%
Dynacare Inc.,
Sr. Yankee Notes, 10.75%, 01/15/06 80,000 82,000
- --------------------------------------------------------------
Tenet Healthcare Corp.,
Sr. Notes, 8.00%, 01/15/05 500,000 490,000
- --------------------------------------------------------------
572,000
- --------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-0.76%
Dade International Inc.,
Series B Sr. Sub. Notes, 11.125%,
05/01/06 100,000 110,000
- --------------------------------------------------------------
Graphic Controls Corp.,
Series A Sr. Sub. Notes, 12.00%,
09/15/05 70,000 76,300
- --------------------------------------------------------------
IMED Corp.,
Sr. Sub. Notes, 9.75%, 12/01/06
(acquired 11/19/96 to 04/01/97;
cost $198,050)(b) 200,000 200,000
- --------------------------------------------------------------
386,300
- --------------------------------------------------------------
METALS-0.40%
GS Industries, Inc.,
Sr. Gtd. Notes, 12.00%, 09/01/04 75,000 78,750
- --------------------------------------------------------------
Rio Algom Ltd.,
Yankee Unsec. Deb., 7.05%, 11/01/05 130,000 124,275
- --------------------------------------------------------------
203,025
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)-1.62%
Abraxas Petroleum Corp.,
Series B Sr. Notes, 11.50%,
11/01/04 $ 120,000 $ 127,800
- --------------------------------------------------------------
Forest Oil Corp.,
Sr. Sub. Notes, 11.25%, 09/01/03 100,000 107,250
- --------------------------------------------------------------
Mariner Energy, Inc.,
Series B Sr. Sub. Notes, 10.50%,
08/01/06 110,000 112,750
- --------------------------------------------------------------
Maxus Energy Corp.,
Gtd. Deb., 11.50%, 11/15/15 170,000 178,712
- --------------------------------------------------------------
Plains Resources, Inc.,
Series B Sr. Gtd. Sub. Notes,
10.25%, 03/15/06 50,000 52,250
- --------------------------------------------------------------
Talisman Energy, Inc.,
Yankee Deb., 7.125%, 06/01/07 250,000 242,247
- --------------------------------------------------------------
821,009
- --------------------------------------------------------------
OIL & GAS (INTEGRATED)-0.41%
Wainoco Oil Corp.,
Sr. Notes, 12.00%, 08/01/02 200,000 205,500
- --------------------------------------------------------------
OIL & GAS (SPECIALTY)-1.18%
Nova Chemicals Ltd.,
Yankee Deb., 7.00%, 08/15/26 600,000 595,242
- --------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.04%
Falcon Drilling Co., Inc.,
Series B Sr. Notes, 9.75%, 01/15/01 20,000 20,500
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.37%
RAPP International Finance,
Gtd. Yankee Sec. Notes, 11.50%,
12/15/00 50,000 51,250
- --------------------------------------------------------------
United Stationer Supply,
Sr. Sub. Notes, 12.75%, 05/01/05 120,000 134,100
- --------------------------------------------------------------
185,350
- --------------------------------------------------------------
POLLUTION CONTROL-1.62%
Norcal Waste Systems Inc.,
Series B Sr. Gtd. Notes, 13.00%,
11/15/05 150,000 165,750
- --------------------------------------------------------------
WMX Technologies, Inc.,
Unsec. Notes, 7.10%, 08/01/26 650,000 655,428
- --------------------------------------------------------------
821,178
- --------------------------------------------------------------
PUBLISHING-0.12%
MDC Communications Corp.,
Sr. Yankee Unsec. Sub. Notes,
10.50%, 12/01/06 60,000 63,000
- --------------------------------------------------------------
REAL ESTATE-0.99%
Finova Capital Corp.,
Unsec. Notes, 7.40%, 05/06/06 500,000 500,740
- --------------------------------------------------------------
</TABLE>
FS-33
<PAGE> 262
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
RETAIL (FOOD & DRUG)-0.85%
Carr-Gottstein Foods Co.,
Sr. Sub. Notes, 12.00%, 11/15/05 $ 100,000 $ 107,750
- --------------------------------------------------------------
Great Atlantic & Pacific
Tea Co., Inc.,
Yankee Gtd. Notes, 7.78%, 11/01/00
(acquired 10/18/95;
cost $100,000)(b) 100,000 101,899
- --------------------------------------------------------------
Jitney-Jungle Stores of America Inc.,
Sr. Gtd. Notes, 12.00%, 03/01/06 200,000 218,250
- --------------------------------------------------------------
427,899
- --------------------------------------------------------------
RETAIL (STORES)-0.36%
Loehmann's Holdings, Inc.,
Sr. Unsec. Notes, 11.875%, 05/15/03 100,000 104,375
- --------------------------------------------------------------
Specialty Retailers Inc.,
Series B Sr. Sub. Notes, 11.00%,
08/15/03 75,000 78,656
- --------------------------------------------------------------
183,031
- --------------------------------------------------------------
SCHOOLS-0.38%
Herff Jones Inc.,
Sr. Sub. Notes, 11.00%, 08/15/05 100,000 105,875
- --------------------------------------------------------------
Scholastic Brands Inc.,
Sr. Sub. Notes, 11.00%, 01/15/07
(acquired 12/10/96-12/12/96; cost
$85,694)(b) 85,000 87,125
- --------------------------------------------------------------
193,000
- --------------------------------------------------------------
SEMICONDUCTORS-0.24%
Advanced Micro Devices, Inc.,
Sr. Sec. Notes, 11.00%, 08/01/03 110,000 120,038
- --------------------------------------------------------------
STEEL-0.11%
Gulf States Steel Corp.,
1st Mortgage Notes, 13.50%, 04/15/03 60,000 57,000
- --------------------------------------------------------------
TELECOMMUNICATIONS-6.08%
Capstar Broadcasting Partners,
Sr. Disc. Notes, 12.75%, 02/01/09
(acquired 02/14/97-02/19/97; cost
$213,762)(b)(d) 390,000 219,375
- --------------------------------------------------------------
Celcaribe S.A.,
Sr. Sec. Notes, 13.50%, 03/15/04(d) 500,000 447,500
- --------------------------------------------------------------
Dial Call Communications,
Sr. Disc. Notes, 12.25%, 04/15/04(d) 140,000 110,250
- --------------------------------------------------------------
ICG Holdings, Inc.,
Sr. Disc. Notes, 11.625%, 03/15/07
(acquired 03/06/97; cost
$227,064)(b)(d) 400,000 211,420
- --------------------------------------------------------------
Nextel Communications, Inc.,
Sr. Disc. Notes, 11.50%, 09/01/03(d) 220,000 182,600
- --------------------------------------------------------------
Orion Network Systems, Inc.,
Units, 11.25%, 01/15/07(g) 420,000 424,200
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TELECOMMUNICATIONS-(CONTINUED)
PriCellular Wireless Corp.,
Sr. Notes, 10.75%, 11/01/04 $ 130,000 $ 135,200
- --------------------------------------------------------------
PrimeCo Inc.,
Sr. Sub. Notes, 12.75%, 03/01/05 80,000 90,600
- --------------------------------------------------------------
ProNet, Inc.,
Sr. Sub. Notes, 11.875%, 06/15/05 30,000 28,050
- --------------------------------------------------------------
Sprint Spectrum L.P.,
Sr. Unsec. Notes, 11.00%, 08/15/06 200,000 217,000
- --------------------------------------------------------------
Sygnet Wireless Inc.,
Sr. Unsec. Notes, 11.50%, 10/01/06 160,000 159,800
- --------------------------------------------------------------
TCI Communications Inc.,
Sr. Notes, 8.00%, 08/01/05 150,000 148,425
- --------------------------------------------------------------
Teleport Communications Group Inc.,
Sr. Unsec. Disc. Notes, 11.125%,
07/01/07(d) 300,000 207,750
- --------------------------------------------------------------
360 Communications Co.,
Sr. Unsec. Notes, 7.50%, 03/01/06 500,000 494,350
- --------------------------------------------------------------
3,076,520
- --------------------------------------------------------------
TELEPHONE-0.16%
PhoneTel Technologies, Inc.,
Sr. Unsec. Gtd. Notes, 12.00%,
12/15/06 80,000 79,200
- --------------------------------------------------------------
TRANSPORTATION-1.12%
Stena A.B.,
Sr. Yankee Unsec. Notes, 10.50%,
12/15/05 80,000 85,200
- --------------------------------------------------------------
Transportacion Maritima
Mexicana S.A. de C.V.,
Sr. Yankee Unsec. Notes, 10.00%,
11/15/06 200,000 190,000
- --------------------------------------------------------------
Travelcenters of America,
Sr. Sub. Notes, 10.25%, 04/01/07
(acquired 03/24/97-04/07/97; cost
$288,500)(b) 290,000 290,000
- --------------------------------------------------------------
565,200
- --------------------------------------------------------------
TRUCKING-0.60%
AmeriTruck Distribution Corp.,
Series B Sr. Sub. Notes, 12.25%,
11/15/05 300,000 306,000
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes 23,410,938
- --------------------------------------------------------------
U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES-0.54%
TRANSPORTATION-0.54%
Laidlaw, Inc.,
Yankee Unsec. Conv. Deb., 6.00%,01/15/99
(acquired 08/19/96; cost $265,000)(b) 200,000 271,126
- --------------------------------------------------------------
</TABLE>
FS-34
<PAGE> 263
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS &
NOTES(h)-11.80%
CANADA-5.82%
Bank of Montreal (Banking),
Sub. Deb., 7.92%, 07/31/12 CAD 300,000 $ 228,876
- --------------------------------------------------------------
Bell Canada (Telecommunications),
Unsec. Deb., 10.875, 10/11/04 250,000 218,379
- --------------------------------------------------------------
Canadian Oil Debco Inc. (Oil & Gas),
Deb., 11.00%, 10/31/00 250,000 204,026
- --------------------------------------------------------------
NAV Canada (Transportation),
Bonds, 7.40%, 06/01/27 1,000,000 711,324
- --------------------------------------------------------------
Telegobe Canada, Inc.
(Telecommunications),
Unsec. Deb., 8.35%, 06/20/03 650,000 503,994
- --------------------------------------------------------------
Trans-Canada Pipelines (Oil & Gas)
Unsec. Notes, 8.55%, 02/01/06 500,000 393,880
- --------------------------------------------------------------
Series Q Deb., 10.625%, 10/20/09 375,000 337,956
- --------------------------------------------------------------
Westcoast Energy, Inc. (Electric Power),
Deb., 6.45%, 12/18/06 (acquired
12/03/96; cost $369,585)(b) 500,000 344,477
- --------------------------------------------------------------
2,942,912
- --------------------------------------------------------------
FRANCE-0.45%
Credit Foncier de France (Banking),
Sr. Unsec. Unsub. Eurobonds,
6.50%, 02/22/99 FRF 750,000 97,140
- --------------------------------------------------------------
Sr. Unsec. Unsub. Eurobonds,
6.00%, 11/15/01 250,000 44,920
- --------------------------------------------------------------
IBM International Finance N.V.
(Computer Mainframes),
Sr. Unsec. Unsub. Eurobonds,
10.00%, 08/29/97 500,000 87,857
- --------------------------------------------------------------
229,917
- --------------------------------------------------------------
GERMANY-2.60%
Daimler-Benz A.G. (Finance-Consumer Credit)
Gtd. Unsub. Eurobonds, 4.125%,
07/05/03 DEM 400,000 314,990
- --------------------------------------------------------------
International Bank for
Reconstruction & Development
(Supranational Organization),
Unsec. Global Bonds, 7.125%,
04/12/05 475,000 300,091
- --------------------------------------------------------------
LKB Global (Banking),
Gtd. Notes, 6.00%, 01/25/06 1,200,000 701,929
- --------------------------------------------------------------
1,317,010
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
ITALY-1.48%
KFW International Finance Inc.
(Finance-Consumer Credit), Gtd.
Eurobonds, 11.625%, 11/27/98 ITL 1,200,000,000 $ 747,926
- --------------------------------------------------------------
SWEDEN-0.86%
Swedish Export Credit
(Finance-Consumer Credit),
Unsec. Unsub. Eurobonds,
11.70%, 12/04/98 SEK 700,000,000 437,210
- --------------------------------------------------------------
UNITED KINGDOM-0.59%
Ford Credit Europe PLC
(Automobile-Manufacturers),
Deb., 6.00%, 03/30/99 GBP 200,000 119,852
- --------------------------------------------------------------
KFW International Finance
(Finance-Asset Management),
Gtd. Eurobonds, 10.625%, 09/03/01 100,000 179,692
- --------------------------------------------------------------
299,544
- --------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Non-Convertible Bonds & Notes 5,974,519
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES(h)-3.75%
FRANCE-0.10%
Societe Generale (Banking),
Conv. Deb., 3.50%, 01/01/00 FRF 231,000 47,542
- --------------------------------------------------------------
JAPAN-2.71%
JUSCO Co. Ltd.
(Consumer Non-Durables),
Conv. Bonds, 1.20%, 02/20/01 JPY 40,000,000 566,116
- --------------------------------------------------------------
Sony Corp.
(Electronic Components/Miscellaneous),
Conv. Deb., 1.40%, 03/31/05 8,000,000 75,472
- --------------------------------------------------------------
Sumitomo Bank International
Finance N.V. (Banking),
Conv. Gtd. Eurobonds, 0.75%,
05/31/01 60,000,000 505,180
- --------------------------------------------------------------
Toyota Motor Corp.
(Automobile-Manufacturers),
Conv. Bonds, 1.20%, 01/28/98 15,000,000 224,229
- --------------------------------------------------------------
1,370,997
- --------------------------------------------------------------
UNITED KINGDOM-0.09%
Glaxo Wellcome PLC (Medical-Drugs),
Conv. Unsub. Notes, 4.30%,
09/28/98 GBP 4,000,000 47,426
- --------------------------------------------------------------
</TABLE>
FS-35
<PAGE> 264
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
SWITZERLAND-0.85%
Aderans Co. Ltd.
(Cosmetics & Toiletries),
Unsec. Conv. Deb., 0.875%,
08/31/98 CHF 300,000 $ 215,216
- --------------------------------------------------------------
Yamada Denki Co. Ltd.
(Retail-Stores),
Unsec. Conv. Notes, 0.25%,
03/31/00 300,000 216,234
- --------------------------------------------------------------
431,450
- --------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Convertible Bonds & Notes 1,897,415
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED GOVERNMENT
BONDS & NOTES(h)-22.28%
AUSTRALIA-3.72%
Australian Government,
Bonds, 7.50%, 07/15/05 AUD 750,000 576,198
- --------------------------------------------------------------
Western Australia Treasury Corp.,
Gtd. Notes, 8.00%, 07/15/03 1,650,000 1,306,869
- --------------------------------------------------------------
1,883,067
- --------------------------------------------------------------
CANADA-3.36%
B.C. Generic Residual,
Deb., 6.80%, 06/21/04(e) CAD 150,000 66,781
- --------------------------------------------------------------
Canadian Government,
Bonds, 7.00%, 12/01/06 1,000,000 734,789
- --------------------------------------------------------------
Municipal Finance Authority of
British Columbia,
Unsec. Bonds, 7.75%, 12/01/05 500,000 381,396
- --------------------------------------------------------------
Ontario Province,
Sr. Unsec. Unsub. Deb., 6.875%,
09/15/00 GBP 35,000 55,901
- --------------------------------------------------------------
Sr. Unsec. Unsub. Global Bonds,
8.00%, 03/11/03 CAD 600,000 463,636
- --------------------------------------------------------------
1,702,503
- --------------------------------------------------------------
FRANCE-1.22%
French Treasury Bill,
5.75%, 11/12/98 FRF 3,500,000 618,414
- --------------------------------------------------------------
GERMANY-1.42%
Bundesrepublic Deutschland
Bonds, 6.75, 07/15/04 DEM 750,000 466,812
- --------------------------------------------------------------
Bonds, 6.875%, 05/12/05 400,000 249,682
- --------------------------------------------------------------
716,494
- --------------------------------------------------------------
NEW ZEALAND-1.97%
New Zealand Government
Bonds, 10.00%, 07/15/97 NZD 425,000 296,513
- --------------------------------------------------------------
Bonds, 8.00%, 02/15/01 1,000,000 702,111
- --------------------------------------------------------------
998,624
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
SWEDEN-4.34%
Swedish Government
Bonds, 13.00%, 06/15/01 SEK 3,000,000 $ 477,915
- --------------------------------------------------------------
Bonds, 10.25%, 05/05/03 5,000,000 751,431
- --------------------------------------------------------------
Bonds, 6.00%, 02/09/05 4,000,000 481,293
- --------------------------------------------------------------
Bonds, 6.50%, 10/25/06 4,000,000 486,188
- --------------------------------------------------------------
2,196,827
- --------------------------------------------------------------
UNITED KINGDOM-6.25%
Fannie Mae, Sr. Unsec. Notes,
6.875%, 06/07/02 GBP 350,000 558,213
- --------------------------------------------------------------
United Kingdom Treasury
Bonds, 8.00%, 12/07/00 350,000 583,712
- --------------------------------------------------------------
Gtd. Notes, 7.00%, 11/06/01 800,000 1,288,947
- --------------------------------------------------------------
Bonds, 7.50%, 12/07/06 450,000 732,300
- --------------------------------------------------------------
3,163,172
- --------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Government Bonds & Notes 11,279,101
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS-1.66%
ELECTRIC POWER-0.50%
Citizens Utilities Co.-$2.50 Conv. Pfd. 5,000 253,750
- --------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-1.16%
Conseco Inc.-$4.278 Conv. Pfd. PRIDES 4,000 586,000
- --------------------------------------------------------------
Total Convertible Preferred Stocks 839,750
- --------------------------------------------------------------
WARRANTS-0.02%
CABLE TELEVISION-0.00%
Wireless One, Inc., expiring 10/19/00(i) 150 0
- --------------------------------------------------------------
CONTAINERS-0.00%
MVE Inc., expiring 02/15/02(i) 100 2,000
- --------------------------------------------------------------
LEISURE & RECREATION-0.01%
IHF Capital Inc., expiring
11/14/99(b)(i)
(acquired 11/04/94-12/07/94; cost $0) 70 2,800
- --------------------------------------------------------------
STEEL-0.00%
Gulf States Steel Corp., expiring
04/15/03(i) 60 270
- --------------------------------------------------------------
TELECOMMUNICATIONS-0.01%
Clearnet Communications Inc.,
expiring 09/15/05(i) 330 1,155
- --------------------------------------------------------------
Intermedia Communications Inc.,
expiring 06/01/00(i) 150 3,000
- --------------------------------------------------------------
4,155
- --------------------------------------------------------------
Total Warrants 9,225
- --------------------------------------------------------------
</TABLE>
FS-36
<PAGE> 265
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-8.12%
Bonds, 6.50%, 05/31/01 $1,500,000 $ 1,498,650
- --------------------------------------------------------------
Notes, 6.50%, 08/15/05 1,200,000 1,182,648
- --------------------------------------------------------------
Notes, 6.50%, 10/15/06 500,000 492,005
- --------------------------------------------------------------
Notes, 6.50%, 11/15/26 1,000,000 938,600
- --------------------------------------------------------------
Total U.S. Treasury Securities 4,111,903
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY-0.79%
Tennessee Valley Authority, Bonds,
5.98%, 04/01/36 400,000 400,860
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENT-3.01%(j)
HSBC Securities Inc., 5.05%,
05/01/97(k) $1,522,498 $ 1,522,498
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.23% 49,717,335
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.77% 894,754
- --------------------------------------------------------------
NET ASSETS-100.00% $ 50,612,089
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by
note (h).
(b) Restricted Security. May be resold to qualified
institutional buyers in accordance with the provisions of
Rule 144A under the Securities Act of 1933, as amended. The
valuation of these securities has been determined in
accordance with procedures established by the Board of
Directors. The aggregate market value of these securities at
April 30, 1997 was $4,316,529 which represented 8.53% of the
Fund's net assets.
(c) Issued as a unit. This unit also includes one Sr. Deferred
Coupon Note plus one warrant to purchase 0.0447 shares of
common stock.
(d) Discounted bond at purchase. Interest rate represents coupon
rate at which the bond will accrue at a specified future
date.
(e) Zero coupon bond issued at a discount. The interest rate
shown represents the rate of original issue discount.
(f) Issued as a unit. This unit also includes one Sr. Disc. Note
plus one warrant to purchase 17.23 shares of common stock at
$5.23 per share.
(g) Issued as a unit. This unit also includes one Sr. Note plus
warrants to purchase 0.8444 shares of common stock.
(h) Foreign denominated security. Par value and coupon are
denominated in currency of country indicated.
(i) Non-income producing security acquired as part of a unit
with or in exchange for other securities.
(j) 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% of the sales
price of the repurchase agreement. The investments in some
repurchase agreements are through participation in joint
accounts with other mutual funds, private accounts, and
certain non-registered investment companies managed by the
investment advisor or its affiliates.
(k) Joint repurchase agreement entered into 04/30/97 with a
maturing value of $100,014,028. Collateralized by
$96,950,000 U.S. Treasury obligations, 7.50% to 7.875% due
10/31/99 to 12/31/99 with an aggregate market value at April
30, 1997 of $102,002,050.
Abbreviations:
AUD - Australian Dollar JPY - Japanese Yen
CAD - Canadian Dollar NZD - New Zealand Dollar
CHF - Swiss Franc PRIDES - Preferred Redemption Increase
Conv. - Convertible Dividend Equity Security
Deb. - Debentures Sec. - Secured
DEM - German Deutschemark SEK - Swedish Krona
Disc. - Discounted Sr. - Senior
FRF - French Franc Sub. - Subordinated
GBP - British Pound Sterling Unsec. - Unsecured
Gtd. - Guaranteed Unsub. - Unsubordinated
ITL - Italian Lire Wt. - Warrant
See Notes to Financial Statements.
FS-37
<PAGE> 266
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$50,131,433) $49,717,335
- -----------------------------------------------------------
Foreign currencies, at market value (cost
$42,577) 42,404
- -----------------------------------------------------------
Receivables for:
Capital stock sold 364,575
- -----------------------------------------------------------
Forward contracts 97,593
- -----------------------------------------------------------
Dividends and interest 1,158,168
- -----------------------------------------------------------
Investment for deferred compensation plan 7,236
- -----------------------------------------------------------
Other assets 24,242
- -----------------------------------------------------------
Total assets 51,411,553
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 617,970
- -----------------------------------------------------------
Capital stock reacquired 57,907
- -----------------------------------------------------------
Dividends 57,763
- -----------------------------------------------------------
Deferred compensation plan 7,236
- -----------------------------------------------------------
Accrued administrative service fees 6,692
- -----------------------------------------------------------
Accrued distribution fees 30,171
- -----------------------------------------------------------
Accrued transfer agent fees 11,258
- -----------------------------------------------------------
Accrued operating expenses 10,467
- -----------------------------------------------------------
Total liabilities 799,464
- -----------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $50,612,089
===========================================================
NET ASSETS:
Class A $28,252,818
- -----------------------------------------------------------
Class B $22,359,271
===========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 2,698,256
===========================================================
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 2,137,569
===========================================================
Class A:
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 10.47
===========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.47
divided by 95.25%) $ 10.99
===========================================================
Class B:
NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 10.46
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $1,733,926
- -----------------------------------------------------------
Dividends 14,808
- -----------------------------------------------------------
1,748,734
- -----------------------------------------------------------
EXPENSES:
Advisory fees 156,434
- -----------------------------------------------------------
Administrative service fees 40,811
- -----------------------------------------------------------
Directors' fees 4,046
- -----------------------------------------------------------
Distribution fees-Class A 62,979
- -----------------------------------------------------------
Distribution fees-Class B 97,518
- -----------------------------------------------------------
Custodian fees 15,492
- -----------------------------------------------------------
Transfer agent fees-Class A 29,434
- -----------------------------------------------------------
Transfer agent fees-Class B 24,344
- -----------------------------------------------------------
Other 53,789
- -----------------------------------------------------------
Total expenses 484,847
- -----------------------------------------------------------
Less: Expenses assumed by advisor (156,434)
- -----------------------------------------------------------
Expenses paid indirectly (373)
- -----------------------------------------------------------
Net expenses 328,040
- -----------------------------------------------------------
Net investment income 1,420,694
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCY
TRANSACTIONS AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities (142,676)
- -----------------------------------------------------------
Foreign currency transactions (56,752)
- -----------------------------------------------------------
Forward currency contracts 396,716
- -----------------------------------------------------------
197,288
- -----------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities (1,346,639)
- -----------------------------------------------------------
Foreign currency transactions (32,761)
- -----------------------------------------------------------
Forward currency contracts 56,702
- -----------------------------------------------------------
(1,322,698)
- -----------------------------------------------------------
Net gain (loss) from investment securities,
foreign currency transactions and forward
currency contracts. (1,125,410)
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $ 295,284
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-38
<PAGE> 267
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1997 and the year ended October 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,420,694 $ 1,844,305
- -----------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currency transactions and forward currency
contracts 197,288 418,371
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currency transactions and forward
currency contracts (1,322,698) 543,300
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 295,284 2,805,976
- -----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (828,771) (1,175,361)
- -----------------------------------------------------------------------------------------
Class B (591,923) (705,239)
- -----------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A (111,708)
- -----------------------------------------------------------------------------------------
Class B (86,484)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (213,278) (122,866)
- -----------------------------------------------------------------------------------------
Class B (162,115) (57,565)
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 7,285,001 11,543,105
- -----------------------------------------------------------------------------------------
Class B 6,312,313 12,214,514
- -----------------------------------------------------------------------------------------
Net increase in net assets 11,898,319 24,502,564
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 38,713,770 14,211,206
- -----------------------------------------------------------------------------------------
End of period $50,612,089 $ 38,713,770
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $50,878,467 $ 37,281,153
- -----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (74,537) 123,655
- -----------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currency transactions and forward
currency contracts 152,309 330,414
- -----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currency transactions and forward
currency contracts (344,150) 978,548
- -----------------------------------------------------------------------------------------
$50,612,089 $ 38,713,770
=========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
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 Income Fund, AIM Global Aggressive Growth Fund,
AIM Global Growth Fund and AIM International Equity Fund. The Fund currently
offers two different classes of shares: Class A shares and 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 the financial statements pertains only to the Fund. The
Fund's investment objective is to provide high current income.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations-Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted
FS-39
<PAGE> 268
prices, and may reflect appropriate factors such as institution-size trading
in similar groups of securities, developments related to special securities,
yield, quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Investment securities for which prices
are not provided by the pricing service and which are listed or traded on an
exchange (except convertible bonds) are valued at the last sales price on the
exchange where the security is principally traded or, lacking any sales on a
particular day, at the mean between the closing bid and asked prices on that
day unless the Board of Directors, or persons designated by the Board of
Directors, determines that the over-the-counter quotations more closely
reflect the current market value of the security. Securities traded in the
over-the-counter market, except (i) securities priced by the pricing service,
(ii) securities for which representative exchange prices are available, and
(iii) securities reported in the NASDAQ National Market System, are valued at
the mean between representative last bid and asked prices obtained from an
electronic quotation reporting system, if such prices are available, or from
established market makers. Each security reported in the NASDAQ National
Market System is valued at the last sales price on the valuation date or
absent a last sales price, at the mean between the closing bid and asked
prices. Securities for which market quotations are not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Company's officers in accordance with methods
which are specifically authorized by the Board of Directors. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. Generally, trading in foreign securities, as
well as corporate bonds and U.S. Government 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 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 would 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.
Outstanding contracts at April 30, 1997 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACT TO APPRECIATION
DATE DELIVER VALUE RECEIVE (DEPRECIATION)
---------- ------------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
06/10/97 CHF 100,000 $ 68,149 $ 67,866 $ (283)
07/31/97 CHF 525,000 359,906 362,419 2,513
05/20/97 DEM 1,400,000 809,554 835,821 26,267
07/14/97 DEM 570,000 330,951 333,528 2,577
07/28/97 DEM 1,700,000 988,037 996,483 8,446
06/05/97 JPY 47,500,000 374,227 396,858 22,631
06/17/97 JPY 18,000,000 141,815 147,905 6,090
07/14/97 JPY 70,000,000 551,525 558,414 6,889
08/06/97 JPY 32,000,000 252,135 258,065 5,930
07/29/97 SEK 16,000,000 2,047,450 2,063,983 16,533
---------- ---------- -------
$5,923,749 $6,021,342 $97,593
========== ========== =======
</TABLE>
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 is recorded on the ex-dividend
date. It is the policy of the Fund to declare daily dividends from net
investment income. Such dividends are paid monthly.
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. It is estimated that the Fund will incur a return
of capital for tax purposes during its year ended October 31, 1997.
F. Expenses-Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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 investment 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 six months
ended April 30, 1997, AIM waived fees of $156,434.
The Fund, pursuant to a master administrative services agreement, has agreed
to reimburse AIM for administrative costs incurred in providing accounting
services to the Fund. During the six months ended April 30, 1997, AIM was
reimbursed $40,811 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for
FS-40
<PAGE> 269
providing transfer agency services to the Fund. During the six months ended
April 30, 1997, the Fund paid AFS $33,895 for such services.
The Fund received reductions in transfer agency fees of $352 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $21 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $373 during the six months ended April
30, 1997.
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
distribution 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, pays 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. Of the total compensation payable, the Fund pays a service fee of
0.25% of the average daily net assets attributable to the Class A shares to
selected 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, pays 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the six months ended April 30, 1997, the Class A shares
and the Class B shares paid AIM Distributors $62,979 and $97,518, respectively,
as compensation under the Plans.
AIM Distributors received commissions of $35,437 from sales of the Class A
shares of the Fund during the six months ended April 30, 1997. 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 six months ended April 30,
1997, AIM Distributors received commissions of $1,208 in contingent deferred
sales charges imposed on redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, AFS and AIM
Distributors.
During the six months ended April 30, 1997, the Fund incurred legal fees of
$2,409 for services rendered by the law firm of Kramer, Levin, Naftalis, &
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 AIM. 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-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended April 30, 1997, the Fund did not borrow under the
line of credit agreement. The funds which are party to the line of credit are
charged a commitment fee of 0.08% on the unused balance of the committed line.
The commitment fee is allocated among the funds based on their respective
average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1997 was
$24,498,962 and $10,823,076, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1997, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,143,869
- ------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,557,967)
- ------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities $ (414,098)
======================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
FS-41
<PAGE> 270
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1997 and the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1997 OCTOBER 31, 1996
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 1,016,103 $10,879,307 1,609,644 $17,019,341
- ---------------------------------------------------------------------------------------------------------------
Class B 736,279 7,878,719 1,313,279 13,876,204
- ---------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 92,385 989,496 92,969 985,383
- ---------------------------------------------------------------------------------------------------------------
Class B 64,275 687,709 58,431 618,362
- ---------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (430,381) (4,583,802) (613,922) (6,461,619)
- ---------------------------------------------------------------------------------------------------------------
Class B (211,095) (2,254,115) (215,814) (2,280,052)
- ---------------------------------------------------------------------------------------------------------------
1,267,566 $13,597,314 2,244,587 $23,757,619
===============================================================================================================
</TABLE>
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share and Class B share
outstanding during the six months ended April 30, 1997, each of the years in the
two-year period ended October 31, 1996 and the period September 15, 1994 (dates
operations commenced) through October 31, 1994.
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------ ----------------------------------------
OCTOBER 31, OCTOBER 31,
APRIL 30, ---------------------------- APRIL 30, --------------------------
1997 1996 1995 1994 1997 1996 1995 1994
---------- ------- ------- ------ ---------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.85 $10.74 $10.02 $10.00 $ 10.84 $10.73 $10.01 $10.00
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Income from investment operations:
Net investment income 0.35 0.79(a) 0.79 0.08 0.32 0.74(a) 0.74 0.07
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (0.23) 0.25 0.75 0.01 (0.23) 0.24 0.75 0.01
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Total from investment operations 0.12 1.04 1.54 0.09 0.09 0.98 1.49 0.08
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Less distributions:
Dividends from investment income (0.40) (0.81) (0.82) (0.07) (0.37) (0.75) (0.77) (0.07)
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Distributions from net realized capital
gains (0.10) (0.12) -- -- (0.10) (0.12) -- --
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Total distributions (0.50) (0.93) (0.82) (0.07) (0.47) (0.87) (0.77) (0.07)
- ----------------------------------------- ----------------------------------------- ----------------------------------------
Net asset value, end of period $ 10.47 $10.85 $10.74 $10.02 $ 10.46 $10.84 $10.73 $10.01
========================================= ========================================= ========================================
Total return(b) 1.04% 10.22% 16.07% 0.93% 0.78% 9.66% 15.56% 0.79%
========================================= ========================================= ========================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $28,253 $21,926 $10,004 $2,661 $22,359 $16,787 $4,207 $362
========================================= ========================================= ========================================
Ratio of expenses to average net
assets(c) 1.25%(d)(e) 1.25% 1.25% 1.25%(f) 1.75%(d)(e) 1.75% 1.74% 1.73%(f)
========================================= ========================================== ========================================
Ratio of net investment income to
average net assets(c) 6.57%(d) 7.27% 7.38% 6.01%(f) 6.07%(d) 6.77% 6.88% 3.59%(f)
========================================= ========================================= ========================================
Portfolio turnover rate 25% 83% 128% 6% 25% 83% 128% 6%
========================================= ========================================= ========================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses and
net investment income to average net assets prior to fee waivers and/or
expense reimbursements were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------- -------------------------
NET INVESTMENT NET INVESTMENT
EXPENSES INCOME EXPENSES INCOME
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
April 30, 1997 (annualized) 1.95% 5.87% 2.44% 5.38%
- ----------------------------------------------------------------------------------------------
October 31, 1996 2.02% 6.51% 2.53% 6.00%
- ----------------------------------------------------------------------------------------------
October 31, 1995 3.03% 5.59% 3.57% 5.05%
- ----------------------------------------------------------------------------------------------
October 31, 1994 (annualized) 5.61% 1.65% 22.09% (16.77)%
==============================================================================================
</TABLE>
(d) Ratios are annualized and based on average net assets of $25,400,530 for
Class A shares and $19,665,182 for Class B shares.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have remained the same for
both Class A shares and Class B shares.
(f) Annualized.
FS-42
<PAGE> 271
SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of the Company was held on February 7, 1997.
The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and AIM.
(3) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other investment companies and/or the
amendment of certain related fundamental investment policies.
(4) Ratification of KPMG Peat Marwick LLP as independent accountants for the
Company's fiscal year ending October 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
Votes
Director/Matter Votes For Against Abstentions
--------------- --------- ------------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 130,433,380 0 3,798,959
Bruce L. Crockett........................................... 130,563,964 0 3,668,375
Owen Daly II................................................ 130,421,284 0 3,811,055
Carl Frischling............................................. 130,515,713 0 3,716,626
Robert H. Graham............................................ 130,587,498 0 3,644,841
John F. Kroeger............................................. 130,446,846 0 3,785,493
Lewis F. Pennock............................................ 130,506,142 0 3,726,197
Ian W. Robinson............................................. 130,446,093 0 3,786,246
Louis S. Sklar.............................................. 130,573,480 0 3,658,859
(2) Approval of new Investment Advisory Agreement............... 2,328,031 16,695 93,860
(3) Elimination of Fundamental Investment Policy................ 1,812,986 52,636 101,451
(4) KPMG Peat Marwick LLP....................................... 128,509,801 995,829 4,726,709
</TABLE>
FS-43
<PAGE> 272
AIM INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-94.81%
ARGENTINA-1.57%
Banco de Galicia y Buenos Aires
S.A. de C.V.-ADR
(Banking)(a) 354,880 $ 8,633,565
- ----------------------------------------------------------------
Perez Companc S.A.-Class B
(Oil & Gas-Services) 878,000 7,121,292
- ----------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil & Gas-Services) 508,200 14,039,025
- ----------------------------------------------------------------
29,793,882
- ----------------------------------------------------------------
AUSTRALIA-3.54%
Boral Ltd.
(Building Materials)(a) 2,500,000 7,369,570
- ----------------------------------------------------------------
Coca-Cola Amatil Ltd.
(Beverages) 454,905 5,200,384
- ----------------------------------------------------------------
National Australia Bank Ltd.
(Banking)(a) 579,000 7,924,394
- ----------------------------------------------------------------
National Australia Bank Ltd.-Conv.
Preferred (Banking)(b) 240,000 6,360,000
- ----------------------------------------------------------------
National Mutual Holdings Ltd.
(Insurance-Multi-Line
Property)(a) 3,770,000 5,586,056
- ----------------------------------------------------------------
QBE Insurance Group Ltd.
(Insurance-Multi-Line Property) 1,870,277 10,691,048
- ----------------------------------------------------------------
QNI Ltd.
(Metals-Miscellaneous) 6,126,400 11,370,843
- ----------------------------------------------------------------
WMC Ltd.
(Metals-Miscellaneous) 2,125,000 12,594,557
- ----------------------------------------------------------------
67,096,852
- ----------------------------------------------------------------
AUSTRIA-0.76%
OMV A.G.
(Oil & Gas-Integrated) 66,000 7,205,417
- ----------------------------------------------------------------
VA Technologie A.G.
(Engineering & Construction) 45,700 7,101,553
- ----------------------------------------------------------------
14,306,970
- ----------------------------------------------------------------
BELGIUM-1.46%
Barco Industries
(Electronic
Components/Miscellaneous) 41,000 6,984,336
- ----------------------------------------------------------------
COLRUYT S.A.
(Retail-Food & Drug) 14,600 6,044,196
- ----------------------------------------------------------------
Delhaize-Le Lion, S.A.
(Retail-Food & Drug) 124,000 6,226,014
- ----------------------------------------------------------------
UCB S.A.
(Medical-Drugs) 3,100 8,506,573
- ----------------------------------------------------------------
27,761,119
- ----------------------------------------------------------------
BRAZIL-1.07%
Telecomunicacoes Brasileiras
S.A.-Telebras-ADR
(Telecommunications) 177,000 20,310,750
- ----------------------------------------------------------------
CANADA-2.64%
Bank of Montreal
(Banking-Money Center) 118,000 4,282,462
- ----------------------------------------------------------------
Canadian National Railway Co.
(Railroads) 170,000 6,545,000
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Canadian Natural Resources Ltd.
(Oil & Gas-Exploration &
Production)(a) 335,000 $ 7,985,326
- ----------------------------------------------------------------
Canadian Pacific, Ltd.
(Transportation) 307,000 7,483,125
- ----------------------------------------------------------------
Newbridge Networks Corp.
(Computer Networking)(a) 188,000 5,969,000
- ----------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 124,700 9,056,338
- ----------------------------------------------------------------
Suncor, Inc.
(Oil & Gas-Exploration &
Production) 190,000 8,704,367
- ----------------------------------------------------------------
50,025,618
- ----------------------------------------------------------------
CHILE-0.45%
Cia. de Telecomunicaciones de Chile
S.A.-ADR
(Telephone) 263,925 8,544,572
- ----------------------------------------------------------------
DENMARK-0.92%
Novo Nordisk A/S-Class B
(Medical-Drugs) 176,600 17,470,557
- ----------------------------------------------------------------
FINLAND-0.23%
Nokia Oy A.B.-Class A
(Telecommunications) 70,000 4,327,552
- ----------------------------------------------------------------
FRANCE-11.01%
Alcatel Alsthom
(Telecommunications) 160,000 17,791,485
- ----------------------------------------------------------------
AXA S.A.
(Insurance-Life & Health) 132,000 8,121,511
- ----------------------------------------------------------------
Cap Gemini Sogeti S.A.
(Computer Software/Services)(a) 162,000 9,811,874
- ----------------------------------------------------------------
Carrefour S.A.
(Retail-Food & Drug) 7,500 4,682,601
- ----------------------------------------------------------------
Cetelem
(Finance-Consumer Credit) 44,800 5,219,567
- ----------------------------------------------------------------
Compagnie Francaise d'Etudes et de
Construction Technip
(Engineering & Construction) 86,000 9,091,408
- ----------------------------------------------------------------
Compagnie Generale des Eaux
(Water Supply) 126,000 17,551,272
- ----------------------------------------------------------------
Elf Aquitaine S.A.
(Oil & Gas-Services) 180,500 17,504,155
- ----------------------------------------------------------------
Essilor International
(Medical Instruments/Products) 24,940 6,871,159
- ----------------------------------------------------------------
Etablissements Economiques du
Casino Guichard-Perrachon
(Retail-Food & Drug) 195,000 9,080,956
- ----------------------------------------------------------------
Lafarge S.A.
(Building Materials)(a) 66,500 4,361,552
- ----------------------------------------------------------------
Michelin-Class B
(Automobile/Truck Parts & Tires) 134,000 7,486,919
- ----------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-Stores) 34,800 14,637,882
- ----------------------------------------------------------------
Promodes
(Retail-Stores)(a) 28,000 9,446,072
- ----------------------------------------------------------------
Rexel S.A.
(Electronic
Components/Miscellaneous) 23,200 6,181,102
- ----------------------------------------------------------------
</TABLE>
FS-44
<PAGE> 273
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Rhone-Poulenc-Class A
(Chemicals) 270,000 $ 9,080,956
- ----------------------------------------------------------------
Schneider S.A.
(Electronic
Components/Miscellaneous) 160,000 9,019,104
- ----------------------------------------------------------------
Sidel, S.A.
(Machinery-Miscellaneous) 57,000 4,093,960
- ----------------------------------------------------------------
Societe BIC S.A.
(Office Products) 111,000 17,591,879
- ----------------------------------------------------------------
Sodexho S.A.
(Business Services) 9,200 4,224,450
- ----------------------------------------------------------------
Total S.A.-Class B
(Oil & Gas-Exploration &
Production) 111,000 9,204,832
- ----------------------------------------------------------------
Valeo S.A.
(Automobile/Truck Parts & Tires) 128,500 7,925,983
- ----------------------------------------------------------------
208,980,679
- ----------------------------------------------------------------
GERMANY-4.64%
Adidas A.G.
(Shoes & Related Apparel) 42,000 4,377,526
- ----------------------------------------------------------------
Adidas A.G.-ADR
(Shoes & Related Apparel)
(Acquired 04/11/97; cost
$8,533,263)(c) 81,000 8,442,372
- ----------------------------------------------------------------
Altana A.G.
(Chemicals) 13,350 10,329,715
- ----------------------------------------------------------------
Commerzbank A.G.
(Banking-Money Center) 295,000 7,912,432
- ----------------------------------------------------------------
Continental A.G.
(Automobile/Truck Parts & Tires) 285,000 6,270,066
- ----------------------------------------------------------------
Deutsche Bank A.G.
(Banking)(a) 170,500 8,998,556
- ----------------------------------------------------------------
Dresdner Bank A.G.
(Banking) 240,000 7,677,561
- ----------------------------------------------------------------
SAP A.G.
(Computer Software/Services)(a) 27,000 4,915,752
- ----------------------------------------------------------------
SAP A.G. -Preferred
(Computer Software/Services) 27,000 4,971,879
- ----------------------------------------------------------------
Schering A.G.
(Medical-Drugs) 94,000 9,010,278
- ----------------------------------------------------------------
SGL Carbon A.G.
(Metals-Miscellaneous) 50,500 7,042,239
- ----------------------------------------------------------------
VEBA A.G.
(Electric Power) 155,000 7,983,601
- ----------------------------------------------------------------
87,931,977
- ----------------------------------------------------------------
HONG KONG-7.63%
Asia Satellite Telecommunications
Holdings Ltd.
(Telecommunications) 1,000,000 2,536,629
- ----------------------------------------------------------------
Asia Satellite Telecommunications
Holdings Ltd.-ADR
(Telecommunications) 174,500 4,493,375
- ----------------------------------------------------------------
Cheung Kong (Holdings) Ltd.
(Real Estate) 1,795,000 15,756,793
- ----------------------------------------------------------------
Cosco Pacific Ltd.
(Transportation-Miscellaneous) 14,908,000 20,880,630
- ----------------------------------------------------------------
Dao Heng Bank Group Ltd.
(Banking) 2,564,700 12,183,691
- ----------------------------------------------------------------
First Pacific Company Ltd.
(Conglomerates) 11,493,908 13,724,734
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HONG KONG-(CONTINUED)
Hang Seng Bank Ltd.
(Banking) 834,100 $ 9,394,594
- ----------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Electric Power) 7,764,960 12,329,311
- ----------------------------------------------------------------
HSBC Holdings PLC
(Banking) 675,000 17,078,681
- ----------------------------------------------------------------
Hutchison Whampoa Ltd.
(Conglomerates)(a) 1,830,000 13,583,554
- ----------------------------------------------------------------
New World Infrastructure Ltd.
(Building Materials)(a) 3,321,400 9,389,874
- ----------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Real Estate) 1,240,100 13,447,157
- ----------------------------------------------------------------
144,799,023
- ----------------------------------------------------------------
INDONESIA-1.00%
PT Bank Dagang Nasional
(Banking) 602,500 601,260
- ----------------------------------------------------------------
PT Bank Internasional Indonesia
(Banking)(a) 19,635,906 14,141,085
- ----------------------------------------------------------------
PT Indosat
(Telecommunications) 933,000 2,572,469
- ----------------------------------------------------------------
PT Indosat-ADR
(Telecommunications) 63,500 1,746,250
- ----------------------------------------------------------------
19,061,064
- ----------------------------------------------------------------
IRELAND-0.28%
Elan Corp. PLC-ADR
(Medical-Drugs)(a) 158,800 5,399,200
- ----------------------------------------------------------------
ISRAEL-0.50%
Teva Pharmaceutical Industries
Ltd.-ADR
(Medical-Drugs) 186,800 9,480,100
- ----------------------------------------------------------------
ITALY-3.25%
Credito Italiano S.p.A.
(Banking)(a) 6,200,000 8,694,322
- ----------------------------------------------------------------
Edison S.p.A.
(Electric Power) 1,940,000 10,278,003
- ----------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Exploration &
Production) 2,050,000 10,435,732
- ----------------------------------------------------------------
Istituto Mobiliare Italiano S.p.A.
(Banking) 825,000 7,012,747
- ----------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications) 3,800,000 11,920,394
- ----------------------------------------------------------------
Telecom Italia S.p.A.
(Telecommunications) 5,000,000 13,237,549
- ----------------------------------------------------------------
61,578,747
- ----------------------------------------------------------------
JAPAN-14.47%
Advantest Corp.
(Semiconductors) 249,700 13,868,397
- ----------------------------------------------------------------
Bridgestone Corp.
(Automobile/Truck Parts & Tires) 685,000 14,570,449
- ----------------------------------------------------------------
Canon, Inc.
(Office Automation) 797,000 18,899,200
- ----------------------------------------------------------------
DDI Corp.
(Telecommunications) 2,120 14,079,332
- ----------------------------------------------------------------
Fuji Photo Film Co.
(Electronic
Components/Miscellaneous) 530,000 20,250,522
- ----------------------------------------------------------------
Honda Motor Co., Ltd.
(Automobile-Manufacturers) 610,000 18,934,100
- ----------------------------------------------------------------
</TABLE>
FS-45
<PAGE> 274
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Ibiden Co., Ltd.
(Building Materials) 946,000 $ 12,445,898
- ----------------------------------------------------------------
Matsushita Electric Industrial Co.
Ltd.
(Electronic
Components/Miscellaneous) 569,000 9,099,697
- ----------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications) 2,320 16,357,978
- ----------------------------------------------------------------
Nippon Television Network
(Advertising/Broadcasting) 26,530 7,816,772
- ----------------------------------------------------------------
NSK Ltd.
(Metals) 1,750,000 10,560,523
- ----------------------------------------------------------------
NTT Data Communications Systems Co.
(Computer Software/Services) 4,500 13,152,401
- ----------------------------------------------------------------
Okuma Corp.
(Machine Tools) 871,000 6,861,780
- ----------------------------------------------------------------
Ricoh Corp. Ltd.
(Office Automation) 1,095,000 13,025,958
- ----------------------------------------------------------------
SMC
(Machinery-Miscellaneous) 100,000 7,326,584
- ----------------------------------------------------------------
Sony Corp.
(Electronic
Components/Miscellaneous) 234,000 17,033,600
- ----------------------------------------------------------------
TDK Corp.
(Electronic
Components/Miscellaneous) 244,000 17,588,530
- ----------------------------------------------------------------
Tokyo Electron Ltd.
(Electronic
Components/Miscellaneous)(a) 397,100 15,329,027
- ----------------------------------------------------------------
Toyota Motor Corp.
(Automobile-Manufacturers) 604,000 17,510,694
- ----------------------------------------------------------------
Yamatake-Honeywell
(Airlines) 665,000 9,901,524
- ----------------------------------------------------------------
274,612,966
- ----------------------------------------------------------------
MALAYSIA-1.55%
Commerce Asset Holdings Berhad
(Finance-Asset Management) 1,469,000 8,776,087
- ----------------------------------------------------------------
Edaran Otomobil Nasional Berhad
(Automobile-Manufacturers) 618,000 5,833,440
- ----------------------------------------------------------------
Malayan Banking Berhad
(Banking) 1,032,000 10,275,609
- ----------------------------------------------------------------
UMW Holdings Berhad
(Finance-Asset Management) 856,000 4,500,239
- ----------------------------------------------------------------
29,385,375
- ----------------------------------------------------------------
MEXICO-2.18%
Coca-Cola Femsa S.A.-ADR
(Beverages-Soft Drinks) 142,100 4,955,738
- ----------------------------------------------------------------
Fomento Economico Mexicano, S.A. de
C.V.-Class B
(Beverages-Alcoholic)(a) 1,900,050 8,918,626
- ----------------------------------------------------------------
Grupo Industrial Maseca S.A. de
C.V.-Class B
(Food/Processing) 6,469,600 6,334,045
- ----------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Advertising/Broadcasting)(a) 270,800 6,262,250
- ----------------------------------------------------------------
Panamerican Beverages, Inc.-Class A
(Beverages-Soft Drinks) 514,000 14,906,000
- ----------------------------------------------------------------
41,376,659
- ----------------------------------------------------------------
NETHERLANDS-5.01%
DSM N.V.
(Chemicals-Specialty)(a) 80,750 8,040,600
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Elsevier N.V.
(Publishing) 383,000 $ 6,133,347
- ----------------------------------------------------------------
Getronics N.V.
(Computer Software/Services) 292,000 8,842,581
- ----------------------------------------------------------------
Gucci Group N.V.-New York
shares-ADR
(Textiles) 61,000 4,231,875
- ----------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food & Drug) 142,000 9,693,579
- ----------------------------------------------------------------
Nutricia Verenigde Bedrijven N.V.
(Food/Processing) 69,150 10,491,577
- ----------------------------------------------------------------
Oce-Van Der Grinten N.V.
(Office Automation) 60,000 7,258,636
- ----------------------------------------------------------------
Philips Electronics N.V.
(Electronic
Components/Miscellaneous)(a) 358,000 18,687,368
- ----------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil & Gas-Services) 44,500 7,953,036
- ----------------------------------------------------------------
VNU-Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit
(Publishing) 332,000 6,867,320
- ----------------------------------------------------------------
Wolters Kluwer N.V.
(Publishing) 58,000 6,873,787
- ----------------------------------------------------------------
95,073,706
- ----------------------------------------------------------------
NORWAY-0.42%
Storebrand A.S.A.
(Insurance-Multi-Line
Property)(a) 1,300,000 7,941,077
- ----------------------------------------------------------------
PHILIPPINES-1.99%
C & P Homes, Inc.
(Home Building) 19,200,000 7,281,001
- ----------------------------------------------------------------
Filinvest Land Inc.
(Real Estate)(a) 27,303,500 6,419,480
- ----------------------------------------------------------------
Metro Pacific Corp.
(Conglomerates) 33,845,000 7,829,143
- ----------------------------------------------------------------
Metropolitan Bank & Trust Co.
(Banking) 379,174 7,764,655
- ----------------------------------------------------------------
Philippine Long Distance Telephone
Co.
(Telecommunications) 84,480 4,821,479
- ----------------------------------------------------------------
Philippine Long Distance Telephone
Co.-ADR
(Telecommunications) 59,600 3,322,700
- ----------------------------------------------------------------
Southeast Asia Cement Holdings,
Inc.
(Building Materials)(a) 8,777,000 406,065
- ----------------------------------------------------------------
37,844,523
- ----------------------------------------------------------------
PORTUGAL-0.99%
Portugal Telecom S.A.
(Telecommunications)(a) 510,000 18,789,474
- ----------------------------------------------------------------
SINGAPORE-1.79%
City Developments Ltd.
(Real Estate) 1,600,000 12,932,642
- ----------------------------------------------------------------
DBS Land Ltd.
(Real Estate) 3,391,000 10,963,648
- ----------------------------------------------------------------
Overseas Union Bank Ltd.
(Banking) 1,539,000 10,100,518
- ----------------------------------------------------------------
33,996,808
- ----------------------------------------------------------------
SOUTH AFRICA-0.40%
Sasol Ltd.
(Oil & Gas-Exploration &
Production) 590,700 7,572,225
- ----------------------------------------------------------------
</TABLE>
FS-46
<PAGE> 275
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPAIN-3.15%
Banco Bilbao Vizcaya, S.A.
(Banking) 144,000 $ 9,691,597
- ----------------------------------------------------------------
Banco Popular Espanol S.A.
(Banking) 47,000 9,965,459
- ----------------------------------------------------------------
Empresa Nacional de Electricidad,
S.A.
(Electric Power) 125,250 8,755,207
- ----------------------------------------------------------------
Gas Natural SDG, S.A.-Class E
(Gas Distribution) 40,000 8,494,922
- ----------------------------------------------------------------
Iberdrola S.A.
(Electric Power) 745,000 8,407,715
- ----------------------------------------------------------------
Telefonica de Espana
(Telecommunications) 565,000 14,472,316
- ----------------------------------------------------------------
59,787,216
- ----------------------------------------------------------------
SWEDEN-1.64%
Hennes & Mauritz A.B.-B Shares
(Retail-Stores) 74,000 10,706,592
- ----------------------------------------------------------------
Securitas A.B.-Class B
(Security & Safety Services) 267,000 6,432,751
- ----------------------------------------------------------------
Sparbanken Sverige A.B.-Class A
(Banking) 530,000 9,458,615
- ----------------------------------------------------------------
Telefonaktiebolaget LM Ericsson-ADR
(Telecommunications) 133,480 4,488,265
- ----------------------------------------------------------------
31,086,223
- ----------------------------------------------------------------
SWITZERLAND-3.09%
ABB A.G.
(Engineering & Construction)(a) 7,500 9,081,813
- ----------------------------------------------------------------
Adecco S.A.
(Business Services) 30,000 10,012,889
- ----------------------------------------------------------------
Ciba Specialty Chemicals A.G.
(Chemicals-Specialty)(a) 11,046 951,660
- ----------------------------------------------------------------
Clariant A.G.
(Chemicals-Specialty) 19,200 10,993,013
- ----------------------------------------------------------------
Nestle S.A.
(Food/Processing)(a) 7,800 9,471,542
- ----------------------------------------------------------------
Novartis A.G.
(Medical-Drugs)(a) 13,696 18,043,302
- ----------------------------------------------------------------
58,554,219
- ----------------------------------------------------------------
THAILAND-0.23%
Bank of Ayudhya Public Co., Ltd.
(Banking) 120,150 308,165
- ----------------------------------------------------------------
Krung Thai Bank Public Co. Ltd.
(Banking) 1,502,920 1,884,224
- ----------------------------------------------------------------
Siam Commercial Bank Public Co.
Ltd.
(Banking) 375,500 2,199,311
- ----------------------------------------------------------------
4,391,700
- ----------------------------------------------------------------
UNITED KINGDOM-16.95%
Airtours PLC
(Leisure & Recreation) 466,450 6,932,490
- ----------------------------------------------------------------
B.A.T. Industries PLC
(Conglomerates) 1,285,000 10,850,648
- ----------------------------------------------------------------
Bass PLC
(Beverages-Alcoholic) 650,000 8,391,005
- ----------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 425,000 9,030,389
- ----------------------------------------------------------------
British Petroleum Co. PLC
(Oil & Gas-Services) 1,410,000 16,179,579
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Burton Group PLC
(Retail-Stores) 3,140,000 $ 7,760,940
- ----------------------------------------------------------------
Caradon PLC
(Building Materials) 1,800,000 7,249,595
- ----------------------------------------------------------------
Compass Group PLC
(Restaurants) 970,000 10,646,261
- ----------------------------------------------------------------
Dixons Group PLC
(Retail-Stores) 1,370,000 11,235,332
- ----------------------------------------------------------------
EMAP PLC
(Publishing) 625,000 7,789,708
- ----------------------------------------------------------------
FKI PLC
(Conglomerates) 1,110,000 3,274,230
- ----------------------------------------------------------------
General Electric Co. PLC
(Electronic
Components/Miscellaneous) 1,140,000 6,780,875
- ----------------------------------------------------------------
GKN PLC
(Automobile/Truck Parts & Tires) 530,000 8,169,044
- ----------------------------------------------------------------
Granada Group PLC
(Leisure & Recreation) 785,000 11,323,339
- ----------------------------------------------------------------
Guinness PLC
(Beverages-Alcoholic) 2,130,000 17,606,159
- ----------------------------------------------------------------
Hays PLC
(Business Services) 1,050,050 9,300,686
- ----------------------------------------------------------------
Kingfisher PLC
(Retail-Stores) 825,000 8,931,929
- ----------------------------------------------------------------
Ladbroke Group PLC
(Hotels/Motels) 4,325,000 16,227,512
- ----------------------------------------------------------------
Lloyds TSB Group PLC
(Finance-Savings & Loans) 570,000 5,210,373
- ----------------------------------------------------------------
LucasVarity PLC
(Automobile/Truck Parts &
Tires)(a) 2,300,000 6,970,827
- ----------------------------------------------------------------
Marks & Spencer PLC
(Retail-Stores) 850,000 6,750,405
- ----------------------------------------------------------------
Medeva PLC
(Medical-Drugs) 1,490,000 7,244,733
- ----------------------------------------------------------------
Next PLC
(Retail-Stores) 1,010,000 10,664,749
- ----------------------------------------------------------------
Orange PLC
(Telecommunications)(a) 2,550,000 8,927,066
- ----------------------------------------------------------------
Peninsular & Oriental Steam
Navigation Co.
(The)
(Transportation-Miscellaneous) 85,100 828,242
- ----------------------------------------------------------------
Provident Financial PLC
(Finance-Consumer Credit) 942,400 8,721,400
- ----------------------------------------------------------------
Railtrack Group PLC
(Railroads) 1,450,000 10,939,627
- ----------------------------------------------------------------
Rentokil Initial PLC
(Business Services) 1,380,000 9,047,164
- ----------------------------------------------------------------
Scottish & Newcastle PLC
(Beverages-Alcoholic) 730,000 7,879,741
- ----------------------------------------------------------------
Siebe PLC
(Electronic
Components/Miscellaneous) 370,000 5,475,041
- ----------------------------------------------------------------
Smiths Industries PLC
(Electronics/Defense) 256,000 3,134,652
- ----------------------------------------------------------------
Standard Chartered PLC
(Finance-Asset Management) 645,000 9,758,630
- ----------------------------------------------------------------
Tarmac PLC
(Building Materials) 5,000,000 10,008,104
- ----------------------------------------------------------------
Unilever PLC
(Consumer Non-Durables) 516,000 13,569,044
- ----------------------------------------------------------------
</TABLE>
FS-47
<PAGE> 276
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Vodafone Group PLC
(Telecommunications) 1,865,000 $ 8,327,512
- ----------------------------------------------------------------
WPP Group PLC
(Advertising/Broadcasting) 2,575,000 10,537,884
- ----------------------------------------------------------------
321,674,915
- ----------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 1,798,955,748
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(d)
<S> <C> <C>
FOREIGN CONVERTIBLE BONDS-1.79%
FRANCE-0.42%
AXA-UAP
(Insurance-Life & Health),
Conv. Sr. Deb., 4.50%,
01/01/99 FRF 33,885,000 8,055,416
- ---------------------------------------------------------------
GERMANY-0.52%
Volkswagen International Finance
N.V.
(Automobile-Manufacturers),
Conv. Gtd. Notes, 3.00%,
01/24/02 DEM 7,880,000 9,790,900
- ---------------------------------------------------------------
HONG KONG-0.12%
New World Infrastructure Ltd.
(Banking), Conv. Bonds, 5.00%,
07/15/01 $ 250,000 284,375
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Banking), Conv. Bonds, 5.00%,
07/15/01
(Acquired 04/10/97 - 04/11/97;
cost $2,056,313)(c) $ 1,750,000 1,990,625
- ---------------------------------------------------------------
2,275,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
ITALY-0.43%
Pirelli S.p.A.
(Automobile/Truck Parts &
Tires), Conv. Bonds, 5.00%,
12/31/98 ITL 10,062,964,600 $ 8,140,059
- ---------------------------------------------------------------
JAPAN-0.20%
Ricoh Co., Ltd.
(Office Automation), Conv.
Bonds,
0.35%, 03/31/03 JPY 395,000,000 3,896,010
- ---------------------------------------------------------------
PHILIPPINES-0.10%
Metropolitan Bank & Trust
International Finance Ltd.
(Banking), Conv. Deb., 2.75%,
09/10/00 PHP 1,535,000 1,964,800
- ---------------------------------------------------------------
Total Foreign Convertible Bonds 34,122,185
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-1.94%(e)
Greenwich Capital Markets, Inc.,
5.55%, 05/01/97(f) 36,790,376 36,790,376
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.54% 1,869,868,309
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.46% 27,639,417
- ---------------------------------------------------------------
NET ASSETS-100.00% $1,897,507,726
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
DEM - German Deutschemark
FRF - French Franc
GDR - Global Depositary Receipt
Gtd. - Guaranteed
HKD - Hong Kong Dollar
ITL - Italian Lira
JPY - Japanese Yen
PHP - Philippine Peso
Sr. - Senior
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Issued as a unit. This unit also includes 240,000 warrants exchangeable into
one ordinary share per warrant.
(c) Restricted securities. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933, as
amended. The valuation of these securities has been determined in accordance
with procedures established by the Board of Directors. The aggregate market
value of these securities at 04/30/97 was $10,432,997 which represented
0.55% of the Fund's net assets.
(d) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(e) 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% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(f) Joint repurchase agreement entered into 04/30/97 with a maturing value of
$500,077,083. Collateralized by $1,057,237,408 U.S. Government obligations,
0% to 14.00% due 06/01/97 to 10/01/30 with an aggregate market value at
04/30/97 of $510,000,397.
See Notes to Financial Statements.
FS-48
<PAGE> 277
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,584,256,086) $1,869,868,309
- ------------------------------------------------------------
Foreign currencies, at market value
(cost $21,256,687) 20,972,541
- ------------------------------------------------------------
Receivables for:
Investments sold 30,169,202
- ------------------------------------------------------------
Capital stock sold 9,467,901
- ------------------------------------------------------------
Dividends and interest 7,629,534
- ------------------------------------------------------------
Investment for deferred compensation plan 20,173
- ------------------------------------------------------------
Other assets 77,624
- ------------------------------------------------------------
Total assets 1,938,205,284
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 34,722,376
- ------------------------------------------------------------
Capital stock reacquired 2,511,451
- ------------------------------------------------------------
Deferred compensation 20,173
- ------------------------------------------------------------
Accrued advisory fees 1,345,407
- ------------------------------------------------------------
Accrued administrative services fees 8,587
- ------------------------------------------------------------
Accrued directors' fees 3,619
- ------------------------------------------------------------
Accrued distribution fees 996,324
- ------------------------------------------------------------
Accrued transfer agent fees 408,011
- ------------------------------------------------------------
Accrued operating expenses 681,610
- ------------------------------------------------------------
Total liabilities 40,697,558
- ------------------------------------------------------------
Net assets applicable to shares outstanding $1,897,507,726
============================================================
NET ASSETS:
Class A $1,368,063,068
============================================================
Class B $ 529,444,658
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 86,396,122
============================================================
Class B:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 34,067,228
============================================================
Class A:
Net asset value and redemption price per
share $ 15.83
============================================================
Offering price per share:
(Net asset value of $15.83 divided
by 94.50%) $ 16.75
============================================================
Class B:
Net asset value and offering price per
share $ 15.54
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,743,173 foreign
withholding tax) $11,783,482
- -----------------------------------------------------------
Interest 1,993,445
- -----------------------------------------------------------
Total investment income 13,776,927
- -----------------------------------------------------------
EXPENSES:
Advisory fees 7,878,482
- -----------------------------------------------------------
Administrative services fees 52,210
- -----------------------------------------------------------
Directors' fees 6,892
- -----------------------------------------------------------
Distribution fees-Class A 1,863,767
- -----------------------------------------------------------
Distribution fees-Class B 2,265,816
- -----------------------------------------------------------
Custodian fees 687,636
- -----------------------------------------------------------
Transfer agent fees-Class A 1,051,021
- -----------------------------------------------------------
Transfer agent fees-Class B 570,724
- -----------------------------------------------------------
Other 365,738
- -----------------------------------------------------------
Total expenses 14,742,286
- -----------------------------------------------------------
Less: Advisory fees waived (299,946)
- -----------------------------------------------------------
Expenses paid indirectly (14,119)
- -----------------------------------------------------------
Net expenses 14,428,221
- -----------------------------------------------------------
Net investment income (loss) (651,294)
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities 1,824,102
- -----------------------------------------------------------
Foreign currencies (1,195,856)
- -----------------------------------------------------------
628,246
- -----------------------------------------------------------
Net unrealized appreciation of:
Investment securities 90,680,075
- -----------------------------------------------------------
Foreign currencies 92,762
- -----------------------------------------------------------
90,772,837
- -----------------------------------------------------------
Net gain on investment securities and
foreign currencies 91,401,083
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $90,749,789
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-49
<PAGE> 278
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1997 and the year ended October 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (651,294) $ 1,130,094
- -----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and
foreign currencies 628,246 43,829,404
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 90,772,837 98,461,748
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 90,749,789 143,421,246
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (1,581,010) (295,965)
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized capital gains:
Class A (31,480,110) (18,468,041)
- -----------------------------------------------------------------------------------------------
Class B (11,363,723) (1,875,276)
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 223,501,986 350,398,961
- -----------------------------------------------------------------------------------------------
Class B 150,931,326 296,841,074
- -----------------------------------------------------------------------------------------------
Net increase in net assets 420,758,258 770,021,999
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,476,749,468 706,727,469
- -----------------------------------------------------------------------------------------------
End of period $1,897,507,726 $1,476,749,468
- -----------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,612,559,633 $1,238,126,321
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,119,193) 1,113,111
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities
and foreign currencies 733,683 42,949,270
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 285,333,603 194,560,766
- -----------------------------------------------------------------------------------------------
$1,897,507,726 $1,476,749,468
- -----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM International Equity Fund (the "Fund") is a series 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 International Equity Fund, AIM Global Aggressive Growth
Fund, AIM Global Growth Fund and AIM Global Income Fund. The Fund currently
offers two different classes of shares: Class A shares and 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 Fund's investment objective is to provide long-term growth of capital. The
Fund seeks to achieve its objective by investing in a diversified portfolio of
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at the last sales price on the exchange where
the security is principally traded or, lacking any sales on a particular day,
at the mean between the closing bid and asked prices on that day. If a mean
is not
FS-50
<PAGE> 279
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Securities traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) are valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. Securities
reported on the NASDAQ National Market System are valued at the last sales
price on the valuation date or absent a last sales price, at the mean of the
closing bid and asked prices. Debt obligations (including convertible bonds)
are valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors, such as
yield, type of issue, coupon rate and maturity date. Securities for which
market quotations are either not readily available or are questionable 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 would 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 the 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 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 forward 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.
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.
F. Expenses--Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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 investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of
the first $1 billion of the Fund's average daily net assets, plus 0.90% of the
Fund's average daily net assets in excess of $1 billion. AIM is currently
voluntarily waiving a portion of its advisory fees paid by the Fund to AIM to
the extent necessary to reduce the fees paid by the Fund at net asset levels
higher than those currently incorporated in the present advisory fee schedule.
Under the voluntary waiver, AIM will receive a fee calculated at the annual rate
of 0.95% of the first $500 million of the Fund's average daily net assets, plus
0.90% of the Fund's average daily net assets in excess of $500 million to and
including $1 billion, plus 0.85% of the Fund's average daily net assets in
excess of $1 billion. The waiver of fees is voluntary and the Board of Directors
of the Company would be advised of any decision by AIM to discontinue the
waiver. During the six months ended April 30, 1997, AIM waived fees of $299,946.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended April 30, 1997, AIM
was reimbursed $52,210 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Fund. During the six months ended April 30,
1997, the Fund paid AFS $833,648 for such services.
The Fund received reductions in transfer agency fees of $13,313 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $806 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $14,119 during the six months ended
April 30, 1997.
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
distribution Plans pursuant to
FS-51
<PAGE> 280
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, pays
AIM Distributors at an annual rate of 0.30% 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. Of the
total compensation payable, the Fund pays a service fee of 0.25% to selected
dealers and financial institutions who furnish continuing personal shareholder
services to their customers who purchase and own Class A shares of the Fund. The
Fund, pursuant to the Class B Plan, pays AIM Distributors 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. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more designees, its rights to all or a designated
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan) and (b) any contingent deferred sales charges received by
AIM Distributors related to the Class B shares. During the six months ended
April 30, 1997, the Class A shares and the Class B shares paid AIM Distributors
$1,863,767 and $2,265,816, respectively, as compensation under the Plans.
AIM Distributors received commissions of $632,873 from sales of the Class A
shares of the Fund during the six months ended April 30, 1997. 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 six months ended April 30,
1997, AIM Distributors received commissions of $45,741 in contingent deferred
sales charges imposed on redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, AFS and AIM
Distributors.
During the six months ended April 30, 1997, the Fund incurred legal fees of
$4,669 for services rendered by the law firm of Kramer, Levin, Naftalis &
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 AIM. 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-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended April 30, 1997, the Fund did not borrow under the
line of credit agreement. The funds which are party to the line of credit are
charged a commitment fee of 0.08% on the unused balance of the committed line.
The commitment fee is allocated among the funds based on their respective
average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1997 was
$785,132,255 and $396,864,292, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $324,485,027
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (38,950,109)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $285,534,918
=========================================================
</TABLE>
Costs of investments for tax purposes is $1,584,333,391.
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1997 and the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1997 OCTOBER 31, 1996
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 42,678,604 673,877,033 41,055,911 $ 601,559,902
- --------------------- ----------- ------------- ----------- -------------
Class B 10,911,373 169,633,951 21,641,528 313,690,762
- --------------------- ----------- ------------- ----------- -------------
Issued as
reinvestment of
dividends:
Class A 2,035,615 31,230,705 1,305,811 17,576,215
- --------------------- ----------- ------------- ----------- -------------
Class B 707,989 10,690,410 130,593 1,741,975
- --------------------- ----------- ------------- ----------- -------------
Reacquired:
Class A (30,426,860) (481,605,752) (18,205,834) (268,737,156)
- --------------------- ----------- ------------- ----------- -------------
Class B (1,890,100) (29,393,035) (1,270,776) (18,591,663)
- --------------------- ----------- ------------- ----------- -------------
24,016,621 $ 374,433,312 44,657,233 $ 647,240,035
===================== =========== ============= =========== =============
</TABLE>
FS-52
<PAGE> 281
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
the six months ended April 30, 1997, each of the years in the four-year period
ended October 31, 1996 and the period November 5, 1991 (date operations
commenced) through October 31, 1992 and for a Class B share outstanding during
the six months ended April 30, 1997, each of the years in the two-year period
ended October 31, 1996 and the period September 15, 1994 (date sales commenced)
through October 31, 1994.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, -------------------------------------
1997 1996 1995 1994
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 15.37 $ 13.65 $ 13.50 $ 12.18
- -------------------------------------------------- ----------- ----------- --------- ---------
Income from investment operations:
Net investment income 0.01 0.04(b) 0.01 0.02
- -------------------------------------------------- ----------- ----------- --------- ---------
Net gains on securities (both realized and
unrealized) 0.90 2.07 0.62 1.31
- -------------------------------------------------- ----------- ----------- --------- ---------
Total from investment operations 0.91 2.11 0.63 1.33
- -------------------------------------------------- ----------- ----------- --------- ---------
Less distributions:
Dividends from net investment income (0.02) (0.01) (0.04) (0.01)
- -------------------------------------------------- ----------- ----------- --------- ---------
Distributions from capital gains (0.43) (0.38) (0.44) --
- -------------------------------------------------- ----------- ----------- --------- ---------
Total distributions (0.45) (0.39) (0.48) (0.01)
- -------------------------------------------------- ----------- ----------- --------- ---------
Net asset value, end of period $ 15.83 $ 15.37 $ 13.65 $ 13.50
================================================== =========== =========== ========= =========
Total return(c) 6.01% 15.79% 5.24% 10.94%
================================================== =========== =========== ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,368,063 $ 1,108,395 $ 654,764 $ 708,159
================================================== =========== =========== ========= =========
Ratio of expenses to average net assets(d) 1.50%(e)(f) 1.58% 1.67% 1.64%
================================================== =========== =========== ========= =========
Ratio of net investment income to average net
assets(h) 0.13%(e) 0.25% 0.10% 0.22%
================================================== =========== =========== ========= =========
Portfolio turnover rate 24% 66% 68% 67%
================================================== =========== =========== ========= =========
Average brokerage commission rate(i) $ 0.0196 $ 0.0192 N/A N/A
================================================== =========== =========== ========= =========
<CAPTION>
OCTOBER 31,
---------------------
1993 1992
--------- ---------
<S> <C> <C>
CLASS A:
Net asset value, beginning of period $ 8.88 $ 8.61(a)
- -------------------------------------------------- --------- ---------
Income from investment operations:
Net investment income 0.02 0.03
- -------------------------------------------------- --------- ---------
Net gains on securities (both realized and
unrealized) 3.29 0.26
- -------------------------------------------------- --------- ---------
Total from investment operations 3.31 0.29
- -------------------------------------------------- --------- ---------
Less distributions:
Dividends from net investment income (0.01) (0.02)
- -------------------------------------------------- --------- ---------
Distributions from capital gains -- --
- -------------------------------------------------- --------- ---------
Total distributions (0.01) (0.02)
- -------------------------------------------------- --------- ---------
Net asset value, end of period $ 12.18 $ 8.88
================================================== ========= =========
Total return(c) 37.36% 3.36%
================================================== ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 372,282 $ 122,663
================================================== ========= =========
Ratio of expenses to average net assets(d) 1.78% 1.80%(g)
================================================== ========= =========
Ratio of net investment income to average net
assets(h) 0.28% 0.30%(g)
================================================== ========= =========
Portfolio turnover rate 62% 41%
================================================== ========= =========
Average brokerage commission rate(i) N/A N/A
================================================== ========= =========
</TABLE>
(a) Net asset value at the beginning of the period has been restated to reflect
a 1.1619 for 1 stock split, effected in the form of a dividend, on May 21,
1992.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers and expense reimbursements are 1.53%
(annualized), 1.60%, 1.68% and 1.89% (annualized), respectively for 1997,
1996, 1995 and 1992.
(e) Ratios are annualized and based on average net assets of $1,252,808,764.
(f) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been
1.49%.
(g) Annualized.
(h) After fee waivers and expense reimbursements. Ratios of net investment
income to average net assets before fee waivers and expense reimbursements
are 0.09% (annualized), 0.22%, 0.09% and 0.22% (annualized), respectively
for 1997, 1996, 1995 and 1992.
(i) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, --------------------------------------
1997 1996 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 15.13 $ 13.54 $ 13.49 $ 13.42
- ------------------------------------------------------------ --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss) (0.05) (0.07)(a) (0.09) (0.01)
- ------------------------------------------------------------ --------- --------- --------- ---------
Net gains on securities (both realized and unrealized) 0.89 2.04 0.61 0.08
- ------------------------------------------------------------ --------- --------- --------- ---------
Total from investment operations 0.84 1.97 0.52 0.07
- ------------------------------------------------------------ --------- --------- --------- ---------
Less distributions:
Dividends from net investment income -- -- (0.03) --
- ------------------------------------------------------------ --------- --------- --------- ---------
Distributions from capital gains (0.43) (0.38) (0.44) --
- ------------------------------------------------------------ --------- --------- --------- ---------
Total distributions (0.43) (0.38) (0.47) --
- ------------------------------------------------------------ --------- --------- --------- ---------
Net asset value, end of period $ 15.54 $ 15.13 $ 13.54 $ 13.49
============================================================ ========= ========= ========= =========
Total return(b) 5.65% 14.88% 4.35% 0.52%
============================================================ ========= ========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 529,445 $ 368,355 $ 51,964 $ 4,833
============================================================ ========= ========= ========= =========
Ratio of expenses to average net assets(c) 2.27%(d)(e) 2.35% 2.55% 2.53%(f)
============================================================ ========= ========= ========= =========
Ratio of net investment income (loss) to average net
assets(g) (0.65)%(d) (0.53)% (0.78)% (0.67)%(f)
============================================================ ========= ========= ========= =========
Portfolio turnover rate 24% 66% 68% 67%
============================================================ ========= ========= ========= =========
Average brokerage commission rate(h) $ 0.0196 $ 0.0192 N/A N/A
============================================================ ========= ========= ========= =========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(c) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers are 2.31% (annualized), 2.37% and 2.56%,
respectively for 1997, 1996 and 1995.
(d) Ratios are annualized and based on average net assets of $456,918,626.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets before fee waivers are (0.69)%
(annualized), (0.55)% and (0.79)%, respectively for 1997, 1996 and 1995.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
FS-53
<PAGE> 282
SUPPLEMENTAL PROXY INFORMATION -- SHAREHOLDER MEETING
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of the Company was held on February 7, 1997.
The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and AIM.
(3) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other investment companies and/or the
amendment of certain related fundamental investment policies.
(4) To approve the elimination of the fundamental investment policy prohibiting
investments in companies with less than three years of continuous operation.
(5) Ratification of KPMG Peat Marwick LLP as independent accountants for the
Company's fiscal year ending October 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
Votes
Director/Matter Votes For Against Abstentions
--------------- --------- ------------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer............................................ 130,433,380 0 3,798,959
Bruce L. Crockett........................................... 130,563,964 0 3,668,375
Owen Daly II................................................ 130,421,284 0 3,811,055
Carl Frischling............................................. 130,515,713 0 3,716,626
Robert H. Graham............................................ 130,587,498 0 3,644,841
John F. Kroeger............................................. 130,446,846 0 3,785,493
Lewis F. Pennock............................................ 130,506,142 0 3,726,197
Ian W. Robinson............................................. 130,446,093 0 3,786,246
Louis S. Sklar.............................................. 130,573,480 0 3,658,859
(2) Approval of new Investment Advisory Agreement............... 54,370,676 742,775 2,283,704
(3) Elimination of policy restricting investments in other
investment companies........................................ 39,608,624 1,920,390 2,447,220
(4) Elimination of policy prohibiting investments in companies
with less than three years of operations.................... 39,192,652 2,454,024 2,329,557
(5) KPMG Peat Marwick LLP....................................... 128,509,801 995,829 4,726,709
</TABLE>
FS-54
<PAGE> 283
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 Aggressive Growth Fund (a
portfolio of AIM International Funds, Inc.), including the
schedule of investments, as of October 31, 1996, and the
related statement of operations for the year then ended,
the statement of changes in net assets for each of the
years in the two-year period then ended and the financial
highlights for the two-year period then ended and 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 audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1996, 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Aggressive Growth Fund as of October 31, 1996, the results
of its operations for the year then ended, the changes in
its net assets for each of the years in the two year
period then ended and the financial highlights for the
two-year period then ended and 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 6, 1996
FS-55
<PAGE> 284
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-38.11%
ADVERTISING/BROADCASTING-0.80%
Clear Channel Communications,
Inc.(a) 62,300 $ 4,547,900
- -----------------------------------------------------------------
Heftel Broadcasting Corp.(a) 100,000 3,625,000
- -----------------------------------------------------------------
Jacor Communications, Inc.(a) 100,000 2,800,000
- -----------------------------------------------------------------
Paxson Communications Corp.(a) 70,000 621,250
- -----------------------------------------------------------------
SFX Broadcasting, Inc.-Class A(a) 50,000 2,150,000
- -----------------------------------------------------------------
13,744,150
- -----------------------------------------------------------------
AEROSPACE/DEFENSE-0.17%
BE Aerospace, Inc.(a) 137,500 2,990,625
- -----------------------------------------------------------------
AIRLINES-0.06%
Reno Air, Inc.(a) 150,000 1,050,000
- -----------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS &
TIRES-0.04%
Borg-Warner Automotive, Inc. 8,000 307,000
- -----------------------------------------------------------------
Mark IV Industries, Inc. 15,750 340,594
- -----------------------------------------------------------------
647,594
- -----------------------------------------------------------------
BANKING-0.51%
Bank of Boston Corp. 45,000 2,880,000
- -----------------------------------------------------------------
Cole Taylor Financial Group, Inc. 100,000 3,006,250
- -----------------------------------------------------------------
Washington Mutual, Inc. 70,800 2,991,300
- -----------------------------------------------------------------
8,877,550
- -----------------------------------------------------------------
BIOTECHNOLOGY-0.11%
Guidant Corp. 40,900 1,886,512
- -----------------------------------------------------------------
BUSINESS SERVICES-1.34%
APAC Teleservices, Inc.(a) 40,000 1,845,000
- -----------------------------------------------------------------
Cambridge Technology Partners,
Inc.(a) 100,200 3,306,600
- -----------------------------------------------------------------
Career Horizons, Inc.(a) 80,300 3,262,188
- -----------------------------------------------------------------
Claremont Technology Group,
Inc.(a) 50,700 1,546,350
- -----------------------------------------------------------------
CUC International Inc.(a) 56,550 1,385,475
- -----------------------------------------------------------------
Data Processing Resources Corp.(a) 13,500 271,688
- -----------------------------------------------------------------
Equifax, Inc. 5,200 154,700
- -----------------------------------------------------------------
IntelliQuest Information Group,
Inc.(a) 70,000 1,540,000
- -----------------------------------------------------------------
Pharmaceutical Product
Development, Inc.(a) 100,810 1,927,991
- -----------------------------------------------------------------
RemedyTemp, Inc.-Class A(a) 38,000 760,000
- -----------------------------------------------------------------
Robert Half International, Inc.(a) 65,000 2,608,125
- -----------------------------------------------------------------
Romac International, Inc.(a) 50,000 1,437,500
- -----------------------------------------------------------------
Sterling Healthcare Group(a) 12,100 213,263
- -----------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 32,300 791,350
- -----------------------------------------------------------------
Vincam Group, Inc. (The)(a) 49,500 1,571,625
- -----------------------------------------------------------------
Whittman-Hart, Inc.(a) 10,800 513,000
- -----------------------------------------------------------------
23,134,855
- -----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.31%
Airgas, Inc.(a) 150,000 3,393,750
- -----------------------------------------------------------------
IMC Global, Inc. 50,000 1,875,000
- -----------------------------------------------------------------
5,268,750
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER MINI/PCS-0.65%
Dell Computer Corp.(a) 50,000 $ 4,068,750
- -----------------------------------------------------------------
Rational Software Corp.(a) 50,000 1,918,750
- -----------------------------------------------------------------
Sun Microsystems, Inc.(a) 86,100 5,252,100
- -----------------------------------------------------------------
11,239,600
- -----------------------------------------------------------------
COMPUTER NETWORKING-1.34%
ACT Networks, Inc.(a) 83,400 2,856,450
- -----------------------------------------------------------------
Ascend Communications, Inc.(a) 68,200 4,458,575
- -----------------------------------------------------------------
Auspex Systems, Inc.(a) 71,700 734,925
- -----------------------------------------------------------------
Cascade Communications Corp.(a) 53,100 3,856,388
- -----------------------------------------------------------------
Cisco Systems, Inc.(a) 33,600 2,079,000
- -----------------------------------------------------------------
Digital Systems International,
Inc.(a) 14,500 197,563
- -----------------------------------------------------------------
FORE Systems, Inc.(a) 66,600 2,647,350
- -----------------------------------------------------------------
Sync Research, Inc.(a) 40,900 541,925
- -----------------------------------------------------------------
3Com Corp.(a) 64,900 4,388,863
- -----------------------------------------------------------------
Xircom, Inc.(a) 69,100 1,399,275
- -----------------------------------------------------------------
23,160,314
- -----------------------------------------------------------------
COMPUTER PERIPHERALS-0.32%
American Power Conversion Corp.(a) 84,500 1,806,188
- -----------------------------------------------------------------
U.S. Robotics Corp.(a) 58,100 3,653,038
- -----------------------------------------------------------------
5,459,226
- -----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-6.31%
Affiliated Computer Services,
Inc.(a) 64,200 3,531,000
- -----------------------------------------------------------------
Amisys Managed Care Systems(a) 64,800 988,200
- -----------------------------------------------------------------
ANSYS, Inc.(a) 105,300 1,289,925
- -----------------------------------------------------------------
Applied Microsystems Corp.(a) 60,000 652,500
- -----------------------------------------------------------------
Applix, Inc.(a) 74,500 1,806,625
- -----------------------------------------------------------------
Bell & Howell Co.(a) 68,800 1,840,400
- -----------------------------------------------------------------
BISYS Group, Inc. (The)(a) 81,900 3,050,775
- -----------------------------------------------------------------
Cellular Technical Services Co.(a) 180,000 2,902,500
- -----------------------------------------------------------------
Citrix Systems, Inc.(a) 50,000 2,762,500
- -----------------------------------------------------------------
Clarify, Inc.(a) 5,300 255,725
- -----------------------------------------------------------------
Computer Associates International,
Inc. 45,375 2,682,796
- -----------------------------------------------------------------
Computer Data Systems, Inc. 4,100 110,700
- -----------------------------------------------------------------
Computer Task Group, Inc. 53,700 2,027,175
- -----------------------------------------------------------------
CSG Systems International, Inc.(a) 85,000 1,423,750
- -----------------------------------------------------------------
Dendrite International, Inc.(a) 79,600 2,119,350
- -----------------------------------------------------------------
Documentum, Inc.(a) 40,000 1,490,000
- -----------------------------------------------------------------
DST Systems, Inc.(a) 34,200 1,051,650
- -----------------------------------------------------------------
Electronic Arts, Inc.(a) 77,200 2,895,000
- -----------------------------------------------------------------
Engineering Animation, Inc.(a) 126,800 3,106,600
- -----------------------------------------------------------------
Forte Software, Inc.(a) 32,000 1,208,000
- -----------------------------------------------------------------
GT Interactive Software Corp.(a) 60,900 1,164,712
- -----------------------------------------------------------------
HBO & Co.(a) 36,500 2,194,562
- -----------------------------------------------------------------
HPR, Inc.(a) 150,000 2,100,000
- -----------------------------------------------------------------
Indus Group, Inc.(a) 37,500 759,375
- -----------------------------------------------------------------
Integrated Systems, Inc.(a) 69,900 1,887,300
- -----------------------------------------------------------------
</TABLE>
FS-56
<PAGE> 285
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-
(CONTINUED)
Intuit, Inc.(a) 20,000 $ 540,000
- -----------------------------------------------------------------
JDA Software Group, Inc.(a) 50,000 1,718,750
- -----------------------------------------------------------------
McAfee Associates, Inc.(a) 118,125 5,374,687
- -----------------------------------------------------------------
Mechanical Dynamics, Inc.(a) 70,000 1,006,250
- -----------------------------------------------------------------
Medic Computer Systems, Inc.(a) 62,000 1,751,500
- -----------------------------------------------------------------
Microsoft Corp.(a) 21,200 2,909,700
- -----------------------------------------------------------------
National Data Corp. 75,000 3,084,375
- -----------------------------------------------------------------
Network General Corp.(a) 75,800 1,828,675
- -----------------------------------------------------------------
OpenVision Technologies, Inc.(a) 200,000 2,150,000
- -----------------------------------------------------------------
Oracle Systems Corp.(a) 53,200 2,251,025
- -----------------------------------------------------------------
Parametric Technology Co.(a) 30,200 1,476,025
- -----------------------------------------------------------------
Physician Computer Network,
Inc.(a) 170,500 1,523,843
- -----------------------------------------------------------------
Pure Atria Corp.(a) 130,800 3,564,300
- -----------------------------------------------------------------
Renaissance Solutions, Inc.(a) 65,000 2,616,250
- -----------------------------------------------------------------
S3 Inc.(a) 200,000 3,775,000
- -----------------------------------------------------------------
Scopus Technology, Inc.(a) 18,800 723,800
- -----------------------------------------------------------------
Segue Software, Inc.(a) 50,000 668,750
- -----------------------------------------------------------------
Sterling Commerce, Inc.(a) 69,200 1,946,250
- -----------------------------------------------------------------
Structural Dynamics Research
Corp.(a) 60,000 1,065,000
- -----------------------------------------------------------------
Sungard Data Systems Inc.(a) 40,100 1,714,275
- -----------------------------------------------------------------
Sykes Enterprises, Inc.(a) 10,200 474,300
- -----------------------------------------------------------------
Synopsys, Inc.(a) 46,300 2,083,500
- -----------------------------------------------------------------
Systemsoft Corp.(a) 75,000 2,118,750
- -----------------------------------------------------------------
Transition Systems, Inc.(a) 14,700 139,650
- -----------------------------------------------------------------
Vanstar Corp.(a) 95,000 2,256,250
- -----------------------------------------------------------------
Veritas Software Corp.(a) 75,000 3,787,500
- -----------------------------------------------------------------
Viasoft, Inc.(a) 75,000 3,693,750
- -----------------------------------------------------------------
Visio Corp.(a) 53,000 2,444,625
- -----------------------------------------------------------------
Wind River Systems(a) 76,500 3,251,250
- -----------------------------------------------------------------
Xylan Corp.(a) 43,700 1,748,000
- -----------------------------------------------------------------
108,987,150
- -----------------------------------------------------------------
CONSUMER NON-DURABLES-0.24%
Central Garden and Pet Co.(a) 75,000 1,771,875
- -----------------------------------------------------------------
Herbalife International, Inc. 38,000 755,250
- -----------------------------------------------------------------
USA Detergents, Inc.(a) 50,000 1,650,000
- -----------------------------------------------------------------
4,177,125
- -----------------------------------------------------------------
COSMETICS & TOILETRIES-0.62%
Helen Of Troy Ltd.(a) 170,800 3,117,100
- -----------------------------------------------------------------
Nature's Sunshine Products, Inc. 150,000 3,318,750
- -----------------------------------------------------------------
NBTY, Inc.(a) 275,000 4,296,875
- -----------------------------------------------------------------
10,732,725
- -----------------------------------------------------------------
ELECTRONIC COMPONENTS/
MISCELLANEOUS-0.49%
Berg Electronics Corp.(a) 76,400 2,158,300
- -----------------------------------------------------------------
BMC Industries, Inc. 110,000 3,258,750
- -----------------------------------------------------------------
Checkpoint Systems, Inc.(a) 50,000 1,118,750
- -----------------------------------------------------------------
Harman International Industries,
Inc. 1,785 91,704
- -----------------------------------------------------------------
Sawtek Inc.(a) 20,500 620,125
- -----------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 20,000 605,000
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONIC COMPONENTS/
MISCELLANEOUS-(CONTINUED)
ThermoQuest Corp.(a) 45,000 $ 590,625
- -----------------------------------------------------------------
8,443,254
- -----------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.10%
Imperial Credit Industries,
Inc.(a) 100,000 1,812,500
- -----------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-1.32%
AmeriCredit Corp.(a) 50,000 950,000
- -----------------------------------------------------------------
Amresco, Inc.(a) 70,000 1,478,750
- -----------------------------------------------------------------
Cityscape Financial Corp.(a) 18,400 473,800
- -----------------------------------------------------------------
CMAC Investment Corp. 12,200 843,325
- -----------------------------------------------------------------
Concord EFS, Inc.(a) 92,737 2,689,373
- -----------------------------------------------------------------
Credit Acceptance Corp.(a) 77,400 2,089,800
- -----------------------------------------------------------------
Green Tree Financial Corp. 38,500 1,525,563
- -----------------------------------------------------------------
Money Store, Inc. (The) 69,275 1,783,831
- -----------------------------------------------------------------
Olympic Financial Ltd.(a) 143,500 2,278,063
- -----------------------------------------------------------------
PMT Services, Inc.(a) 100,000 2,000,000
- -----------------------------------------------------------------
RAC Financial Group, Inc.(a) 34,000 2,040,000
- -----------------------------------------------------------------
Student Loan Marketing Association 25,000 2,068,750
- -----------------------------------------------------------------
SunAmerica, Inc. 70,000 2,625,000
- -----------------------------------------------------------------
22,846,255
- -----------------------------------------------------------------
FOOD/PROCESSING-0.20%
Richfood Holdings, Inc. 146,200 3,527,075
- -----------------------------------------------------------------
FUNERAL SERVICES-0.14%
Equity Corp. International(a) 105,000 2,415,000
- -----------------------------------------------------------------
FURNITURE-0.18%
Ethan Allen Interiors, Inc. 86,000 3,074,500
- -----------------------------------------------------------------
GAMING-0.34%
GTECH Holdings Corp.(a) 47,600 1,404,200
- -----------------------------------------------------------------
Primadonna Resorts, Inc.(a) 150,000 2,418,750
- -----------------------------------------------------------------
Trump Hotels & Casino Resorts,
Inc.(a) 132,800 2,108,200
- -----------------------------------------------------------------
5,931,150
- -----------------------------------------------------------------
HOMEBUILDING-0.24%
American Homestar Corp.(a) 50,000 1,062,500
- -----------------------------------------------------------------
Southern Energy Homes, Inc.(a) 202,500 3,012,188
- -----------------------------------------------------------------
4,074,688
- -----------------------------------------------------------------
HOTELS/MOTELS-0.16%
Prime Hospitality Corp.(a) 30,000 457,500
- -----------------------------------------------------------------
Suburban Lodges Of America,
Inc.(a) 20,000 417,500
- -----------------------------------------------------------------
Sun International Hotels Ltd.(a) 33,100 1,563,975
- -----------------------------------------------------------------
Wyndham Hotel Corp.(a) 16,700 317,300
- -----------------------------------------------------------------
2,756,275
- -----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.35%
Compdent Corp.(a) 60,000 2,062,500
- -----------------------------------------------------------------
CRA Managed Care, Inc.(a) 30,300 1,537,725
- -----------------------------------------------------------------
First Commonwealth, Inc.(a) 45,000 945,000
- -----------------------------------------------------------------
United Companies Financial Corp. 50,000 1,493,750
- -----------------------------------------------------------------
6,038,975
- -----------------------------------------------------------------
</TABLE>
FS-57
<PAGE> 286
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE
PROPERTY)-0.27%
CapMAC Holdings, Inc. 70,000 $ 2,336,250
- -----------------------------------------------------------------
HCC Insurance Holdings, Inc. 77,250 1,969,875
- -----------------------------------------------------------------
Vesta Insurance Group, Inc. 12,000 307,500
- -----------------------------------------------------------------
4,613,625
- -----------------------------------------------------------------
LEISURE & RECREATION-0.83%
Callaway Golf Co. 60,000 1,837,500
- -----------------------------------------------------------------
Cannondale Corp.(a) 100,000 1,925,000
- -----------------------------------------------------------------
Lewis Galoob Toys, Inc.(a) 50,000 1,343,750
- -----------------------------------------------------------------
Harley-Davidson, Inc. 34,100 1,538,763
- -----------------------------------------------------------------
Imax Corp.(a) 75,000 2,700,000
- -----------------------------------------------------------------
West Marine, Inc.(a) 70,600 2,488,650
- -----------------------------------------------------------------
WMS Industries, Inc.(a) 100,000 2,450,000
- -----------------------------------------------------------------
14,283,663
- -----------------------------------------------------------------
MACHINE TOOLS-0.14%
Precision Castparts Corp. 50,000 2,337,500
- -----------------------------------------------------------------
MEDICAL (DRUGS)-0.83%
Arbor Drugs, Inc. 110,900 2,509,113
- -----------------------------------------------------------------
Cardinal Health, Inc. 45,000 3,532,500
- -----------------------------------------------------------------
Curative Technologies, Inc.(a) 75,000 1,706,250
- -----------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 50,000 1,725,000
- -----------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 40,000 1,165,000
- -----------------------------------------------------------------
Medicis Pharmaceutical Corp.(a) 75,000 3,768,750
- -----------------------------------------------------------------
14,406,613
- -----------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-3.03%
ABR Information Services, Inc.(a) 35,000 2,423,750
- -----------------------------------------------------------------
American HomePatient, Inc.(a) 100,000 2,375,000
- -----------------------------------------------------------------
American Medical Response, Inc.(a) 22,100 663,000
- -----------------------------------------------------------------
Apria Healthcare Group, Inc.(a) 78,019 1,492,113
- -----------------------------------------------------------------
Arbor Health Care Co.(a) 60,100 1,314,688
- -----------------------------------------------------------------
ClinTrials Research Inc.(a) 35,900 1,332,788
- -----------------------------------------------------------------
EmCare Holdings Inc.(a) 61,500 1,537,500
- -----------------------------------------------------------------
Enterprise Systems, Inc.(a) 50,000 806,250
- -----------------------------------------------------------------
Envoy Corp.(a) 50,000 1,837,500
- -----------------------------------------------------------------
FPA Medical Management, Inc.(a) 100,000 1,862,500
- -----------------------------------------------------------------
Genesis Health Ventures, Inc.(a) 50,900 1,164,337
- -----------------------------------------------------------------
Health Care and Retirement
Corp.(a) 115,000 2,831,875
- -----------------------------------------------------------------
HEALTHSOUTH Corp.(a) 69,000 2,587,500
- -----------------------------------------------------------------
Hologic, Inc.(a) 50,000 1,137,500
- -----------------------------------------------------------------
MedPartners, Inc.(a) 38,500 813,312
- -----------------------------------------------------------------
Multicare Co., Inc.(a) 34,350 618,300
- -----------------------------------------------------------------
Myriad Genetics, Inc.(a) 15,000 371,250
- -----------------------------------------------------------------
NCS HealthCare, Inc.-Class A(a) 60,000 1,822,500
- -----------------------------------------------------------------
OccuSystems, Inc.(a) 45,000 1,231,875
- -----------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 123,000 1,768,125
- -----------------------------------------------------------------
Oxford Health Plans, Inc.(a) 20,000 910,000
- -----------------------------------------------------------------
Pediatrix Medical Group, Inc.(a) 15,200 598,500
- -----------------------------------------------------------------
PhyCor, Inc.(a) 49,950 1,548,450
- -----------------------------------------------------------------
Physicians Resource Group, Inc.(a) 75,000 2,025,000
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES)-(CONTINUED)
Renal Care Group, Inc.(a) 90,400 $ 3,344,800
- -----------------------------------------------------------------
Renal Treatment Centers, Inc.(a) 50,000 1,337,500
- -----------------------------------------------------------------
Rotech Medical Corp.(a) 77,200 1,235,200
- -----------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 63,200 1,453,600
- -----------------------------------------------------------------
Tenet Healthcare Corp.(a) 80,000 1,670,000
- -----------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 37,600 1,466,400
- -----------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 89,800 2,245,000
- -----------------------------------------------------------------
UroCor, Inc.(a) 57,200 672,100
- -----------------------------------------------------------------
Vencor, Inc.(a) 95,100 2,817,338
- -----------------------------------------------------------------
Veterinary Centers of America,
Inc.(a) 50,000 918,750
- -----------------------------------------------------------------
52,234,301
- -----------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.81%
Advanced Technology Laboratories,
Inc.(a) 25,000 762,500
- -----------------------------------------------------------------
Capstone Pharmacy Services,
Inc.(a) 150,000 1,753,125
- -----------------------------------------------------------------
Cardiovascular Dynamics, Inc.(a) 80,000 1,040,000
- -----------------------------------------------------------------
Dentsply International, Inc. 37,400 1,575,475
- -----------------------------------------------------------------
Gulf South Medical Supply, Inc.(a) 100,300 2,206,600
- -----------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 29,300 1,150,025
- -----------------------------------------------------------------
IRIDEX Corp.(a) 70,100 560,800
- -----------------------------------------------------------------
Mentor Corp. 100,000 2,212,500
- -----------------------------------------------------------------
Meridian Diagnostics, Inc. 200,000 2,100,000
- -----------------------------------------------------------------
Omnicare, Inc. 61,400 1,673,150
- -----------------------------------------------------------------
Patterson Dental Co.(a) 146,000 4,088,000
- -----------------------------------------------------------------
Physician Sales & Services,
Inc.(a) 50,000 1,062,500
- -----------------------------------------------------------------
Quintiles Transnational Corp.(a) 35,000 2,301,250
- -----------------------------------------------------------------
ResMed, Inc.(a) 40,000 670,000
- -----------------------------------------------------------------
Spine-Tech, Inc.(a) 5,300 133,825
- -----------------------------------------------------------------
St. Jude Medical, Inc.(a) 63,300 2,500,350
- -----------------------------------------------------------------
Steris Corp.(a) 50,000 1,887,500
- -----------------------------------------------------------------
Suburban Ostomy Supply Co.,
Inc.(a) 92,800 1,131,000
- -----------------------------------------------------------------
Sybron International Corp.(a) 32,800 955,300
- -----------------------------------------------------------------
Target Therapeutics, Inc.(a) 40,000 1,480,000
- -----------------------------------------------------------------
31,243,900
- -----------------------------------------------------------------
METALS-0.17%
Oregon Metallurgical Corp.(a) 37,100 1,168,650
- -----------------------------------------------------------------
Rental Service Corp.(a) 41,400 952,200
- -----------------------------------------------------------------
Shaw Group, Inc.(a) 35,000 861,875
- -----------------------------------------------------------------
2,982,725
- -----------------------------------------------------------------
OFFICE PRODUCTS-0.21%
Daisytek International Corp.(a) 44,700 1,709,775
- -----------------------------------------------------------------
Reynolds & Reynolds Co. -- Class A 73,000 1,925,375
- -----------------------------------------------------------------
3,635,150
- -----------------------------------------------------------------
OIL & GAS (DRILLING)-0.22%
Reading & Bates Corp.(a) 90,000
- -----------------------------------------------------------------
Transocean Offshore Inc. 20,000 1,265,000
- -----------------------------------------------------------------
3,852,500
- -----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.22%
Benton Oil & Gas Co.(a) 150,000 3,675,000
- -----------------------------------------------------------------
</TABLE>
FS-58
<PAGE> 287
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (SERVICES)-0.74%
Camco International, Inc. 80,000 $ 3,100,000
- -----------------------------------------------------------------
Energy Ventures, Inc.(a) 100,000 4,400,000
- -----------------------------------------------------------------
Global Marine, Inc.(a) 150,000 2,756,250
- -----------------------------------------------------------------
Veritas DGC, Inc.(a) 125,000 2,562,500
- -----------------------------------------------------------------
12,818,750
- -----------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.78%
Diamond Offshore Drilling, Inc.(a) 55,300 3,366,388
- -----------------------------------------------------------------
ENSCO International, Inc.(a) 70,000 3,027,500
- -----------------------------------------------------------------
Marine Drilling Co., Inc.(a) 66,700 925,462
- -----------------------------------------------------------------
Pride Petroleum Services, Inc.(a) 49,100 859,250
- -----------------------------------------------------------------
Rowan Companies, Inc.(a) 150,000 3,356,250
- -----------------------------------------------------------------
Varco International, Inc.(a) 100,000 1,975,000
- -----------------------------------------------------------------
13,509,850
- -----------------------------------------------------------------
POLLUTION CONTROL-0.43%
GTS Duratek, Inc.(a) 50,000 581,250
- -----------------------------------------------------------------
US Filter Corp.(a) 90,150 3,110,175
- -----------------------------------------------------------------
USA Waste Services, Inc.(a) 118,240 3,783,680
- -----------------------------------------------------------------
7,475,105
- -----------------------------------------------------------------
RESTAURANTS-0.84%
Apple South, Inc. 50,800 596,900
- -----------------------------------------------------------------
Brinker International, Inc.(a) 150,000 2,550,000
- -----------------------------------------------------------------
Foodmaker, Inc.(a) 250,000 2,437,500
- -----------------------------------------------------------------
Landry's Seafood Restaurants,
Inc.(a) 72,100 1,478,050
- -----------------------------------------------------------------
Lone Star Steakhouse & Saloon(a) 26,300 673,937
- -----------------------------------------------------------------
Outback Steakhouse, Inc.(a) 25,000 579,688
- -----------------------------------------------------------------
Papa John's International, Inc.(a) 15,000 746,250
- -----------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 96,600 1,787,100
- -----------------------------------------------------------------
Sonic Corp.(a) 75,500 1,717,625
- -----------------------------------------------------------------
Starbucks Corp.(a) 58,900 1,914,250
- -----------------------------------------------------------------
14,481,300
- -----------------------------------------------------------------
RETAIL (FOOD & DRUGS)-0.17%
Eckerd Corp. (The)(a) 10,400 288,600
- -----------------------------------------------------------------
Kroger Co.(a) 18,000 803,250
- -----------------------------------------------------------------
Quality Food Centers, Inc.(a) 50,000 1,825,000
- -----------------------------------------------------------------
2,916,850
- -----------------------------------------------------------------
RETAIL (STORES)-5.97%
AutoZone, Inc.(a) 34,400 881,500
- -----------------------------------------------------------------
Barnett, Inc.(a) 24,700 583,538
- -----------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 40,400 1,020,100
- -----------------------------------------------------------------
Blyth Industries, Inc.(a) 108,300 4,210,162
- -----------------------------------------------------------------
Boise Cascade Office Products
Corp.(a) 20,400 387,600
- -----------------------------------------------------------------
CDW Computer Centers, Inc.(a) 40,300 2,536,382
- -----------------------------------------------------------------
Claire's Stores, Inc. 100,350 1,705,950
- -----------------------------------------------------------------
Compucom Systems, Inc.(a) 200,000 1,950,000
- -----------------------------------------------------------------
CompUSA, Inc.(a) 61,200 2,830,500
- -----------------------------------------------------------------
Corporate Express, Inc.(a) 60,400 1,970,550
- -----------------------------------------------------------------
Dayton-Hudson Corp. 75,000 2,596,875
- -----------------------------------------------------------------
Dollar General Corp. 45,250 1,255,688
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (STORES)-(CONTINUED)
Duty Free International, Inc. 19,900 $ 318,400
- -----------------------------------------------------------------
Eagle Hardware & Garden, Inc.(a) 84,000 2,404,500
- -----------------------------------------------------------------
Gadzooks, Inc.(a) 50,050 1,451,450
- -----------------------------------------------------------------
Gap, Inc. (The) 58,400 1,693,600
- -----------------------------------------------------------------
Global DirectMail Corp.(a) 50,200 2,472,350
- -----------------------------------------------------------------
Gymboree Corp.(a) 94,800 2,962,500
- -----------------------------------------------------------------
Inacom Corp.(a) 50,000 1,581,250
- -----------------------------------------------------------------
Jones Apparel Group, Inc.(a) 90,000 2,812,500
- -----------------------------------------------------------------
Just for Feet, Inc.(a) 137,500 3,557,812
- -----------------------------------------------------------------
Loehmann's Holdings, Inc.(a) 159,500 4,286,563
- -----------------------------------------------------------------
Marks Bros. Jewelers, Inc.(a) 152,400 3,543,300
- -----------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 19,500 402,187
- -----------------------------------------------------------------
Meyer (Fred), Inc.(a) 41,100 1,443,637
- -----------------------------------------------------------------
Micro Warehouse, Inc.(a) 104,700 2,408,100
- -----------------------------------------------------------------
MSC Industrial Direct Co.,
Inc.-Class A(a) 40,000 1,480,000
- -----------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 86,600 3,063,475
- -----------------------------------------------------------------
Oakley, Inc.(a) 250,000 3,718,750
- -----------------------------------------------------------------
Performance Food Group Co.(a) 87,750 1,349,156
- -----------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 57,000 1,339,500
- -----------------------------------------------------------------
PETsMART, Inc.(a) 92,200 2,489,400
- -----------------------------------------------------------------
Pier 1 Imports, Inc. 265,000 3,710,000
- -----------------------------------------------------------------
Rexall Sundown, Inc.(a) 60,500 1,641,063
- -----------------------------------------------------------------
Ross Stores, Inc. 40,600 1,684,900
- -----------------------------------------------------------------
Sports Authority, Inc. (The)(a) 110,400 2,677,200
- -----------------------------------------------------------------
Staples, Inc.(a) 200,000 3,725,000
- -----------------------------------------------------------------
Sunglass Hut International,
Inc.(a) 50,000 443,750
- -----------------------------------------------------------------
Tech Data Corp.(a) 85,700 2,206,775
- -----------------------------------------------------------------
Tiffany & Co. 42,500 1,572,500
- -----------------------------------------------------------------
TJX Companies, Inc. 64,600 2,584,000
- -----------------------------------------------------------------
Toys "R" Us, Inc.(a) 133,500 4,522,313
- -----------------------------------------------------------------
Viking Office Products, Inc.(a) 150,500 4,383,312
- -----------------------------------------------------------------
Wet Seal, Inc.-Class A(a) 55,000 1,732,500
- -----------------------------------------------------------------
Williams-Sonoma, Inc.(a) 75,000 2,062,500
- -----------------------------------------------------------------
Zale Corp.(a) 175,000 3,390,625
- -----------------------------------------------------------------
103,043,713
- -----------------------------------------------------------------
SCHOOLS-0.04%
Children's Comprehensive Services,
Inc.(a) 50,000 737,500
- -----------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.17%
Dynatech Corp.(a) 35,700 1,764,918
- -----------------------------------------------------------------
Input/Output, Inc.(a) 40,000 1,190,000
- -----------------------------------------------------------------
2,954,918
- -----------------------------------------------------------------
SEMICONDUCTORS-1.74%
Actel Corp.(a) 83,300 1,488,987
- -----------------------------------------------------------------
Altera Corp.(a) 76,400 4,736,800
- -----------------------------------------------------------------
Chips & Technologies, Inc.(a) 175,000 3,478,125
- -----------------------------------------------------------------
Computer Products, Inc.(a) 200,000 3,950,000
- -----------------------------------------------------------------
HADCO Corp.(a) 76,700 2,329,762
- -----------------------------------------------------------------
Intel Corp. 43,000 4,724,625
- -----------------------------------------------------------------
Sanmina Corp.(a) 61,000 2,790,750
- -----------------------------------------------------------------
</TABLE>
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<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SEMICONDUCTORS-(CONTINUED)
Solectron Corp.(a) 25,500 $ 1,364,250
- -----------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 25,000 796,875
- -----------------------------------------------------------------
VLSI Technology, Inc.(a) 250,000 4,312,500
- -----------------------------------------------------------------
29,972,674
- -----------------------------------------------------------------
SHOES & RELATED APPAREL-0.20%
Nine West Group, Inc.(a) 31,500 1,571,062
- -----------------------------------------------------------------
Vans, Inc.(a) 68,200 1,133,825
- -----------------------------------------------------------------
Wolverine World Wide, Inc. 29,250 723,937
- -----------------------------------------------------------------
3,428,824
- -----------------------------------------------------------------
TELECOMMUNICATIONS-1.61%
ACC Corp. 59,550 2,530,875
- -----------------------------------------------------------------
ADC Telecommunications, Inc.(a) 65,000 4,444,375
- -----------------------------------------------------------------
Allen Group, Inc. 41,200 654,050
- -----------------------------------------------------------------
Andrew Corp.(a) 63,550 3,098,062
- -----------------------------------------------------------------
Billing Information Concepts(a) 69,600 1,818,300
- -----------------------------------------------------------------
Brightpoint, Inc.(a) 37,000 925,000
- -----------------------------------------------------------------
Frontier Corp. 46,000 1,334,000
- -----------------------------------------------------------------
LCI International, Inc.(a) 54,400 1,734,000
- -----------------------------------------------------------------
P-COM, Inc.(a) 50,000 1,100,000
- -----------------------------------------------------------------
PairGain Technologies, Inc.(a) 47,600 3,278,450
- -----------------------------------------------------------------
Premiere Technologies, Inc.(a) 16,000 260,000
- -----------------------------------------------------------------
Premisys Communications, Inc.(a) 18,600 930,000
- -----------------------------------------------------------------
Proxim, Inc.(a) 70,000 1,592,500
- -----------------------------------------------------------------
Tellabs, Inc.(a) 7,400 629,925
- -----------------------------------------------------------------
Teltrend, Inc.(a) 65,000 2,145,000
- -----------------------------------------------------------------
TESSCO Technologies, Inc.(a) 19,900 786,050
- -----------------------------------------------------------------
U.S. Long Distance Corp.(a) 64,200 537,675
- -----------------------------------------------------------------
27,798,262
- -----------------------------------------------------------------
TEXTILES-1.08%
Designer Holdings Ltd.(a) 200,000 3,825,000
- -----------------------------------------------------------------
Liz Claiborne, Inc. 69,000 2,915,250
- -----------------------------------------------------------------
Mohawk Industries, Inc.(a) 75,000 1,818,750
- -----------------------------------------------------------------
Nautica Enterprises, Inc.(a) 95,000 2,921,250
- -----------------------------------------------------------------
Springs Industries Inc.-Class A 31,700 1,430,463
- -----------------------------------------------------------------
St. John Knits, Inc. 50,000 2,287,500
- -----------------------------------------------------------------
Tommy Hilfiger Corp.(a) 41,700 2,168,400
- -----------------------------------------------------------------
WestPoint Stevens, Inc.(a) 50,000 1,331,250
- -----------------------------------------------------------------
18,697,863
- -----------------------------------------------------------------
TRANSPORTATION-0.21%
Hub Group, Inc.(a) 100,000 2,225,000
- -----------------------------------------------------------------
Rural/Metro Corp.(a) 25,000 912,500
- -----------------------------------------------------------------
Trico Marine Services, Inc.(a) 11,700 412,425
- -----------------------------------------------------------------
3,549,925
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TRUCKING-0.06%
USFreightways Corp. 50,000 $ 1,093,750
- -----------------------------------------------------------------
Total Domestic Common Stocks 658,020,109
- -----------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-58.63%
ARGENTINA-1.62%
Banco de Galicia y Buenos Aires
S.A. de C.V.-ADR (Banking) 354,039 6,416,957
- -----------------------------------------------------------------
Perez Companc S.A.-Class B
(Oil & Gas-Services) 1,679,000 10,662,716
- -----------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil & Gas-Services) 479,600 10,910,900
- -----------------------------------------------------------------
27,990,573
- -----------------------------------------------------------------
AUSTRALIA-0.41%
QBE Insurance Group, Ltd.
(Insurance-Multi-Line Property) 1,343,928 7,115,920
- -----------------------------------------------------------------
AUSTRIA-0.24%
VA Technologie A.G.
(Engineering & Construction) 30,000 4,195,410
- -----------------------------------------------------------------
BELGIUM-0.82%
Barco Industries(a)
(Electronic
Components/Miscellaneous) 41,000 6,743,508
- -----------------------------------------------------------------
Colruyt S.A. (Retail-Food & Drug) 8,800 3,794,806
- -----------------------------------------------------------------
UCB S.A. (Medical-Drugs) 1,650 3,636,983
- -----------------------------------------------------------------
14,175,297
- -----------------------------------------------------------------
BRAZIL-1.92%
Banco Bradesco S. A. (Banking) 925,000 7,886,899
- -----------------------------------------------------------------
Brasmotor S. A. (Furniture) 22,830 7,755,178
- -----------------------------------------------------------------
Companhia Brasileira a
Distribuicao Grupo Pao de Acucar
(Retail-Food & Drug) 218,300 4,260,186
- -----------------------------------------------------------------
Companhia Cervejaria Brahma
(Beverages-Alcoholic) 5,020 3,102,686
- -----------------------------------------------------------------
Telecomunicacoes Brasileiras
S/A-Telebras-ADR
(Telecommunications) 136,700 10,184,150
- -----------------------------------------------------------------
33,189,099
- -----------------------------------------------------------------
CANADA-2.50%
Agrium, Inc. (Chemicals) 138,800 1,856,450
- -----------------------------------------------------------------
Biovail Corp. International
(Medical-Drugs)(a) 45,000 1,316,250
- -----------------------------------------------------------------
Canadian Natural Resources Ltd.(a)
(Oil & Gas-Exploration &
Production) 345,000 8,572,228
- -----------------------------------------------------------------
CanWest Global Communications
Corp. (Electronic
Components/Miscellaneous) 355,998 3,918,050
- -----------------------------------------------------------------
Cognos, Inc. (Computer
Software/Services)(a) 300,000 9,412,500
- -----------------------------------------------------------------
Extendicare, Inc.-Class A(a)
(Insurance-Life & Health) 350,000 4,374,347
- -----------------------------------------------------------------
Intertape Polymer Group, Inc.
(Containers) 102,000 2,351,739
- -----------------------------------------------------------------
Leitch Technology Corp.(a)
(Electronic
Components/Miscellaneous) 131,400 2,647,217
- -----------------------------------------------------------------
Newbridge Networks Corp.(a)
(Computer Networking) 67,600 2,137,850
- -----------------------------------------------------------------
Potash Corp. of Saskatchewan Inc.
(Metals-Miscellaneous) 35,000 2,480,625
- -----------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Suncor, Inc.
(Oil & Gas-Exploration &
Production) 105,000 $ 4,054,432
- -----------------------------------------------------------------
43,121,688
- -----------------------------------------------------------------
CHILE-0.78%
Cia. de Telecomunicaciones de
Chile S.A.-ADR (Telephone) 67,600 6,667,050
- -----------------------------------------------------------------
Santa Isabel S.A.-ADR
(Retail-Stores) 243,300 6,842,813
- -----------------------------------------------------------------
13,509,863
- -----------------------------------------------------------------
DENMARK-0.69%
Coloplast A/S-Class B
(Medical Instruments/Products) 25,000 2,860,313
- -----------------------------------------------------------------
Falck A/S (Security & Safety
Services) 20,000 5,402,336
- -----------------------------------------------------------------
Kobenhavns Lufthavne
(Transportation) 35,000 3,643,137
- -----------------------------------------------------------------
11,905,786
- -----------------------------------------------------------------
FINLAND-1.20%
Hartwall Oy A.B.
(Beverages-Alcoholic) 50,000 1,708,931
- -----------------------------------------------------------------
Huhtamaki Group (Conglomerates) 100,000 4,348,401
- -----------------------------------------------------------------
Orion-yhtymae Oy-Class B
(Medical-Drugs) 120,000 4,061,742
- -----------------------------------------------------------------
Raision Tehtaat Oy
(Food/Processing) 44,500 2,747,519
- -----------------------------------------------------------------
Tamro A.B. Oy (Medical-Drugs) 400,000 2,910,695
- -----------------------------------------------------------------
Tietotehdas Oy-Class B
(Computer Software/Services) 74,000 4,955,634
- -----------------------------------------------------------------
20,732,922
- -----------------------------------------------------------------
FRANCE-2.27%
BERTRAND FAURE
(Automobile/Trucks Parts &
Tires) 110,000 3,765,281
- -----------------------------------------------------------------
Christian Dalloz(a) (Textiles) 3,800 1,241,271
- -----------------------------------------------------------------
Cipe France S.A. (Security &
Safety Services) 16,000 1,962,249
- -----------------------------------------------------------------
Dassault Systemes S.A.-ADR(a)
(Computer Software/Services) 46,300 2,008,263
- -----------------------------------------------------------------
Grand Optical Photoservice
(Retail-Stores) 13,200 1,918,357
- -----------------------------------------------------------------
Guilbert S.A. (Office Products) 28,000 4,452,616
- -----------------------------------------------------------------
Mecatherm
(Machinery-Miscellaneous) 3,000 592,078
- -----------------------------------------------------------------
Pathe S.A.(a)
(Advertising/Broadcasting) 14,500 3,911,100
- -----------------------------------------------------------------
Penauille Polyservices
(Security & Safety Services) 5,300 953,741
- -----------------------------------------------------------------
Primagaz Cie (Gas Distribution) 17,765 1,834,703
- -----------------------------------------------------------------
Salomon S.A. (Leisure &
Recreation) 81,840 7,331,583
- -----------------------------------------------------------------
Scor S.A. (Insurance Multi-Line
Property) 130,000 4,996,577
- -----------------------------------------------------------------
Strafor Facom S.A. (Office
Products) 40,000 3,035,697
- -----------------------------------------------------------------
Sylea (Automobile/Trucks Parts &
Tires) 10,000 1,155,990
- -----------------------------------------------------------------
39,159,506
- -----------------------------------------------------------------
GERMANY-1.46%
Continental A.G.
(Automoblie/Trucks Parts &
Tires) 185,000 3,237,256
- -----------------------------------------------------------------
Fresenius A.G.-Preferred
(Medical Instruments/Products) 26,000 5,622,689
- -----------------------------------------------------------------
Hugo Boss A.G.-Preferred
(Textiles) 1,750 2,112,388
- -----------------------------------------------------------------
Porsche A.G.(a)
(Automobile/Trucks Parts &
Tires) 6,300 4,264,065
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GERMANY-(CONTINUED)
Puma A.G. Rudolf Dassler Sport
Designs(a)
(Shoes & Related Apparel) 105,000 $ 3,102,714
- -----------------------------------------------------------------
SGL Carbon A.G. (Metals) 27,500 3,096,111
- -----------------------------------------------------------------
SKW Trostberg A.G. (Chemicals) 132,000 3,852,615
- -----------------------------------------------------------------
25,287,838
- -----------------------------------------------------------------
HONG KONG-6.58%
Asia Satellite Telecommunications
Holdings(a) Ltd.-ADR
(Telecommunications) 177,300 4,742,775
- -----------------------------------------------------------------
CDL Hotels International Ltd.
(Hotels/Motels) 6,559,000 3,393,083
- -----------------------------------------------------------------
China Hong Kong Photo Products
Holdings, Ltd. (Chemicals) 1,240,000 469,077
- -----------------------------------------------------------------
China Resource Enterprise Ltd.
(Real Estate) 7,664,000 8,623,264
- -----------------------------------------------------------------
Citic Pacific Ltd. (Banking) 1,648,000 8,013,864
- -----------------------------------------------------------------
Cosco Pacific Ltd.
(Transportation) 15,518,000 14,851,297
- -----------------------------------------------------------------
Esprit Asia Holdings Ltd.
(Retail-Stores) 7,220,000 3,128,088
- -----------------------------------------------------------------
First Pacific Co. Ltd.
(Conglomerates) 6,200,033 8,539,659
- -----------------------------------------------------------------
Goldlion Holdings Ltd.
(Retail-Stores) 3,738,000 3,045,627
- -----------------------------------------------------------------
Hang Seng Bank Ltd. (Banking) 1,213,400 14,398,160
- -----------------------------------------------------------------
Hong Kong & China Gas Company Ltd.
(Electric Power) 3,450,000 6,068,131
- -----------------------------------------------------------------
Hong Kong & China Gas Company
Ltd.,(a)
Expiring 1997-Warrants (Electric
Power) 211,000 77,772
- -----------------------------------------------------------------
JCG Holdings Ltd.
(Finance-Asset Management) 3,750,000 3,491,891
- -----------------------------------------------------------------
Manhattan Card Company Ltd.
(Finance-Asset Management) 6,330,000 3,131,353
- -----------------------------------------------------------------
National Mutual Asia Ltd.
(Insurance-Multi-Line Property) 2,644,000 2,222,653
- -----------------------------------------------------------------
New World Infrastructure(a)
(Building Materials) 4,281,000 10,657,930
- -----------------------------------------------------------------
Shanghai Industrial Holdings
Limited(a) (Conglomerates) 2,072,000 4,702,879
- -----------------------------------------------------------------
Sun Hung Kai Properties Ltd. (Real
Estate) 966,000 10,994,025
- -----------------------------------------------------------------
Varitronix International Ltd.
(Electronic
Components/Miscellaneous) 1,711,000 3,120,082
- -----------------------------------------------------------------
113,671,610
- -----------------------------------------------------------------
HUNGARY-0.16%
Gedeon Richter Rt (Medical-Drugs) 50,000 2,687,500
- -----------------------------------------------------------------
INDONESIA-1.62%
PT Bank International Indonesia
(Banking) 6,734,051 10,841,322
- -----------------------------------------------------------------
PT Hanjaya Mandala Sampoerna
(Tobacco) 1,290,000 11,990,083
- -----------------------------------------------------------------
PT Indosat (Telecommunications) 808,000 2,445,542
- -----------------------------------------------------------------
PT Indosat-ADR
(Telecommunications) 87,500 2,635,938
- -----------------------------------------------------------------
27,912,885
- -----------------------------------------------------------------
IRELAND-0.67%
CBT Group PLC-ADR(a)
(Computer Software/Services) 7,600 418,000
- -----------------------------------------------------------------
Elan Corp. PLC-ADR(a)
(Medical-Drugs) 200,000 5,550,000
- -----------------------------------------------------------------
Greencore Group PLC
(Food/Processing) 212,000 1,235,890
- -----------------------------------------------------------------
Saville Systems Ireland PLC-ADR(a)
(Computer Software/Services) 100,000 4,312,500
- -----------------------------------------------------------------
11,516,390
- -----------------------------------------------------------------
</TABLE>
FS-61
<PAGE> 290
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ISRAEL-1.46%
Blue Square-Israel Ltd.-ADR(a)
(Retail-Stores) 550,000 $ 8,662,500
- -----------------------------------------------------------------
Koor Industries Ltd.-ADR
(Telecommunications) 115,000 1,998,125
- -----------------------------------------------------------------
Tadiran Ltd.(a)
(Telecommunications) 130,000 2,990,000
- -----------------------------------------------------------------
Tadiran Ltd.-ADR
(Telecommunications) 106,000 2,782,500
- -----------------------------------------------------------------
Tecnomatix Technologies
Ltd.-ADR(a)
(Computer Software/Services) 27,500 477,813
- -----------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Medical-Drugs) 198,500 8,312,188
- -----------------------------------------------------------------
25,223,126
- -----------------------------------------------------------------
ITALY-1.15%
Bulgari S.p.A. (Retail-Stores) 263,000 4,582,303
- -----------------------------------------------------------------
Fila Holding S.p.A.-ADR
(Retail-Stores) 50,000 3,600,000
- -----------------------------------------------------------------
Parmalat Finanziaria S.p.A.
(Food/Processing) 4,550,000 6,505,570
- -----------------------------------------------------------------
Saipem S.p.A.(Oil &
Gas-Integrated) 1,000,000 5,091,628
- -----------------------------------------------------------------
19,779,501
- -----------------------------------------------------------------
JAPAN-4.95%
Aderans Co. Ltd. (Retail-Stores) 394,000 9,551,096
- -----------------------------------------------------------------
Capcom Co., Ltd.
(Computer Software/Services) 201,000 4,131,044
- -----------------------------------------------------------------
Circle K Japan Co., Ltd.
(Retail-Food & Drug) 127,000 5,298,406
- -----------------------------------------------------------------
CKD Corp. (Machinery-Heavy) 550,000 4,342,804
- -----------------------------------------------------------------
FCC Co., Ltd.
(Automobile/Trucks Parts &
Tires) 130,100 3,827,983
- -----------------------------------------------------------------
Fujitsu Denso (Electric Power) 230,000 7,575,425
- -----------------------------------------------------------------
Hokuto Corp.
(Advertising/Broadcasting) 142,500 6,207,896
- -----------------------------------------------------------------
Laox (Electronic
Components/Miscellaneous) 253,000 4,244,258
- -----------------------------------------------------------------
Nippon Thompson (Machine Tools) 710,000 5,063,634
- -----------------------------------------------------------------
Nomura Securities Co., Ltd.
(Finance-Asset Management) 501,000 8,272,627
- -----------------------------------------------------------------
Noritsu Koki Co. Ltd.
(Electronic
Components/Miscellaneous) 192,000 10,033,815
- -----------------------------------------------------------------
77 Bank (Banking) 770,000 7,236,397
- -----------------------------------------------------------------
Shohkoh Fund (Finance-Consumer
Credit) 20,600 4,324,272
- -----------------------------------------------------------------
Yamato Kogyo Co., Ltd. (Building
Materials) 537,000 5,329,674
- -----------------------------------------------------------------
85,439,331
- -----------------------------------------------------------------
MALAYSIA-3.68%
Arab Malaysian Finance Berhad
(Finance-Asset Management) 655,000 3,525,826
- -----------------------------------------------------------------
Commerce Asset Holdings Berhad
(Finance-Asset Management) 574,000 3,748,664
- -----------------------------------------------------------------
Gamuda Berhad (Engineering &
Construction) 980,000 8,029,290
- -----------------------------------------------------------------
Malayan Banking Berhad (Banking) 1,112,000 11,003,364
- -----------------------------------------------------------------
Sungei Way Holdings Berhad
(Building Materials) 2,269,000 12,932,357
- -----------------------------------------------------------------
Tan Chong Motor Holdings Berhad
(Automobile-Manufacturers) 4,840,000 8,237,483
- -----------------------------------------------------------------
UMW Holdings Berhad
(Finance-Asset Management) 2,125,000 9,756,580
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MALAYSIA-(CONTINUED)
YTL Corp. Berhad
(Engineering & Construction) 1,180,000 $ 6,351,870
- -----------------------------------------------------------------
63,585,434
- -----------------------------------------------------------------
MEXICO-1.53%
Grupo Industrial Maseca S.A. de
CV-Class B (Food/Processing) 8,547,000 10,399,958
- -----------------------------------------------------------------
Grupo Televisa S.A.-GDR(a)
(Advertising/Broadcasting) 257,000 6,746,250
- -----------------------------------------------------------------
Panamerican Beverages, Inc.-ADR
(Beverages-Soft Drinks) 213,000 9,292,125
- -----------------------------------------------------------------
26,438,333
- -----------------------------------------------------------------
NETHERLANDS-3.46%
Aalberts Industries N.V.
(Metals-Miscellaneous) 23,000 2,697,589
- -----------------------------------------------------------------
Ahrend Groep N.V. (Furniture) 105,000 5,582,012
- -----------------------------------------------------------------
Baan Co. N.V.-ADR(a)
(Computer Software/Services) 100,000 3,700,000
- -----------------------------------------------------------------
Cap Gemini N.V.
(Computer Software/Services) 160,000 4,366,122
- -----------------------------------------------------------------
Ceteco Holding N.V. (Furniture) 15,000 850,474
- -----------------------------------------------------------------
CMG PLC (Computer
Software/Services) 340,000 4,188,130
- -----------------------------------------------------------------
Getronics N.V. (Computer
Software/Services) 300,000 7,373,136
- -----------------------------------------------------------------
IHC Caland N.V. (Trucking) 114,000 6,362,822
- -----------------------------------------------------------------
International-Muller N.V.
(Conglomerates) 288,000 6,942,418
- -----------------------------------------------------------------
Koninklijke Van Ommeren N.V.
(Transportation) 122,000 5,069,252
- -----------------------------------------------------------------
Oce-Van Der Grinten N.V.-V (Office
Automation) 67,000 7,147,404
- -----------------------------------------------------------------
Ordina Beheer N.V.(a)
(Computer Software/Services) 40,768 1,782,864
- -----------------------------------------------------------------
Randstad Holdings N.V. (Business
Services) 46,400 3,752,036
- -----------------------------------------------------------------
59,814,259
- -----------------------------------------------------------------
NORWAY-0.86%
Mercantildata ASA (Computer
Software/Services) 50,000 767,929
- -----------------------------------------------------------------
Smedvig A.S.-Class A (Oil & Gas
Services) 160,000 3,598,295
- -----------------------------------------------------------------
Smedvig A.S.-Class B(a) (Oil & Gas
Services) 40,000 865,095
- -----------------------------------------------------------------
Tandberg A.S.(a)
(Telecommunications) 110,000 2,758,275
- -----------------------------------------------------------------
Tomra Systems A.S.
(Machinery-Miscellaneous) 486,000 6,893,023
- -----------------------------------------------------------------
14,882,617
- -----------------------------------------------------------------
PANAMA-0.35%
Banco Latinoamericano de
Exportaciones, S.A. (Banking) 116,000 6,061,000
- -----------------------------------------------------------------
PERU-0.13%
CPT Telefonica del Peru S.A.-Class
B (Telephone) 1,026,000 2,170,882
- -----------------------------------------------------------------
PHILIPPINES-2.54%
C & P Homes, Inc. (Homebuilding) 10,831,500 4,945,890
- -----------------------------------------------------------------
DMCI Holdings Inc.(a)
(Engineering & Construction) 7,820,000 5,653,729
- -----------------------------------------------------------------
Filinvest Land Inc.(a) (Real
Estate) 21,498,175 7,280,584
- -----------------------------------------------------------------
</TABLE>
FS-62
<PAGE> 291
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PHILIPPINES-(CONTINUED)
Ionics Circuit Inc.(a) (Electronic
Components/Miscellaneous) 4,832,000 $ 3,125,723
- -----------------------------------------------------------------
Marsman & Co., Inc.-Class B(b)
(Medical-Drugs) 6,616,000 2,039,178
- -----------------------------------------------------------------
Metro Pacific Corp.
(Conglomerates) 27,254,000 6,637,199
- -----------------------------------------------------------------
Metropolitan Bank & Trust Co.
(Banking) 313,125 6,910,674
- -----------------------------------------------------------------
Republic Glass Holdings Corp.
(Automobile/Trucks Parts &
Tires) 10,186,100 1,976,755
- -----------------------------------------------------------------
Southeast Asia Cement Holdings,
Inc.(a)
(Building Materials) 26,948,380 2,563,583
- -----------------------------------------------------------------
SM Prime Holdings (Real Estate) 12,448,200 2,652,584
- -----------------------------------------------------------------
43,785,899
- -----------------------------------------------------------------
PORTUGAL-0.82%
Cimpor Cimentos de Portugal S.A.
(Building Materials) 102,000 2,143,966
- -----------------------------------------------------------------
Estabelecimentos Jeronimo Martins
& Filho (Retail-Stores) 56,000 5,107,873
- -----------------------------------------------------------------
Portugal Telecom S.A.
(Telecommunications) 265,000 6,891,212
- -----------------------------------------------------------------
14,143,051
- -----------------------------------------------------------------
SINGAPORE-1.91%
Cerebos Pacific Ltd.
(Food/Processing) 182,000 1,408,449
- -----------------------------------------------------------------
City Developments Ltd. (Real
Estate) 789,000 6,217,891
- -----------------------------------------------------------------
DBS Land Ltd. (Real Estate) 3,030,000 9,551,438
- -----------------------------------------------------------------
Overseas Union Bank Ltd. (Banking) 1,030,000 7,020,234
- -----------------------------------------------------------------
Wing Tai Holdings Ltd. (Real
Estate) 3,600,000 8,843,450
- -----------------------------------------------------------------
33,041,462
- -----------------------------------------------------------------
SOUTH AFRICA-0.65%
De Beers Centenary A.G.
(Gold & Silver Mining) 200,000 5,903,037
- -----------------------------------------------------------------
Sasol Limited
(Oil & Gas-Exploration &
Production) 438,850 5,354,110
- -----------------------------------------------------------------
11,257,147
- -----------------------------------------------------------------
SPAIN-0.52%
Mapfre Vida (Insurance-Life &
Health) 54,000 3,470,355
- -----------------------------------------------------------------
Prosegur, CIA de Seguridad S.A.(a)
(Business Services) 400,000 3,228,967
- -----------------------------------------------------------------
Vidrala S.A. (Containers) 40,000 2,288,491
- -----------------------------------------------------------------
8,987,813
- -----------------------------------------------------------------
SWEDEN-1.78%
Allgon A.B. (Electronic
Components/Miscellaneous) 134,000 2,720,471
- -----------------------------------------------------------------
Assa Abloy A.B.
(Machinery-Miscellaneous) 115,500 1,774,032
- -----------------------------------------------------------------
Autoliv A.B.
(Automobiles/Trucks Parts &
Tires) 219,000 9,291,939
- -----------------------------------------------------------------
BT Industries A.B.
(Machinery-Miscellaneous) 72,000 1,237,283
- -----------------------------------------------------------------
Esselte A.B.-B Shares (Office
Products) 200,000 4,471,007
- -----------------------------------------------------------------
Frontec A.B.-B Shares(a)
(Computer Software/Services) 120,000 1,715,406
- -----------------------------------------------------------------
Securitas A.B. (Security & Safety
Services) 126,300 3,265,204
- -----------------------------------------------------------------
Telefonaktiebolaget L.M.
Ericsson-ADR
(Telecommunications) 73,760 2,037,620
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWEDEN-(CONTINUED)
WM-Data A.B.-Class B
(Computer Software/Services) 60,000 $ 4,288,516
- -----------------------------------------------------------------
30,801,478
- -----------------------------------------------------------------
SWITZERLAND-0.99%
Danzas Holding A.G.
(Transportation) 1,500 1,691,060
- -----------------------------------------------------------------
Disetronic Holding A.G.(a)
(Medical-Drugs) 2,000 4,351,266
- -----------------------------------------------------------------
Kouni Reisen A.G. (Leisure &
Recreation) 1,600 3,601,266
- -----------------------------------------------------------------
Saurer A.G.(a)
(Machinery-Miscellaneous) 9,500 3,990,902
- -----------------------------------------------------------------
Stratec Holding A.G.(a)
(Medical Instruments/Products) 2,600 3,383,703
- -----------------------------------------------------------------
17,018,197
- -----------------------------------------------------------------
THAILAND-1.01%
Bank of Ayudhya Ltd. (Banking) 87,475 250,468
- -----------------------------------------------------------------
Hana Microelectronics Public Co.,
Ltd.
(Electronic
Components/Miscellaneous) 646,000 3,217,964
- -----------------------------------------------------------------
Krung Thai Bank PLC (Banking) 1,687,670 4,567,532
- -----------------------------------------------------------------
Siam Commercial Bank Public Co.
Ltd. (Banking) 377,100 3,431,543
- -----------------------------------------------------------------
Thai Theparos Food Product Public
Co. Ltd. (Food/Processing) 215,500 807,227
- -----------------------------------------------------------------
Total Access Communication Public
Co. Ltd. (Telecommunications) 736,000 5,078,400
- -----------------------------------------------------------------
17,353,134
- -----------------------------------------------------------------
UNITED KINGDOM-7.90%
Aegis Group PLC
(Advertising/Broadcasting) 6,000,000 6,127,930
- -----------------------------------------------------------------
Airtours PLC (Leisure &
Recreation) 815,000 8,648,763
- -----------------------------------------------------------------
Alexon Group PLC(a)
(Retail-Stores) 555,000 1,508,545
- -----------------------------------------------------------------
Astec BSR PLC
(Electronic
Components/Miscellaneous) 1,300,000 3,247,884
- -----------------------------------------------------------------
Body Shop International PLC
(Retail-Food & Drug) 700,000 2,255,859
- -----------------------------------------------------------------
British Vita PLC (Chemicals) 1,050,000 3,913,574
- -----------------------------------------------------------------
Capital Radio PLC
(Advertising/Broadcasting) 250,000 2,360,026
- -----------------------------------------------------------------
Caradon PLC (Building Materials) 1,000,000 3,930,664
- -----------------------------------------------------------------
Carpetright PLC (Retail-Stores) 302,000 3,072,103
- -----------------------------------------------------------------
Charles Baynes PLC
(Machinery-Heavy) 345,000 749,634
- -----------------------------------------------------------------
Compass Group PLC (Restaurants) 335,000 3,320,557
- -----------------------------------------------------------------
Corporate Services Group PLC
(Business Services) 500,000 1,432,292
- -----------------------------------------------------------------
Danka Business Systems PLC-ADR
(Office Automation) 99,700 3,950,613
- -----------------------------------------------------------------
Dewhirst Group PLC (Textiles) 404,000 1,236,198
- -----------------------------------------------------------------
D.F.S. Furniture Co. PLC
(Retail-Stores) 660,000 5,859,863
- -----------------------------------------------------------------
Eurotherm PLC (Electronic
Components/Miscellaneous) 150,000 1,484,375
- -----------------------------------------------------------------
FKI PLC (Conglomerates) 1,125,000 3,845,215
- -----------------------------------------------------------------
Games Workshop Group PLC
(Leisure & Recreation) 165,000 1,407,227
- -----------------------------------------------------------------
Goode Durrant PLC (Business
Services) 214,000 1,221,688
- -----------------------------------------------------------------
Hogg Robinson PLC (Conglomerates) 800,000 3,483,073
- -----------------------------------------------------------------
Holliday Chemical Holdings PLC
(Chemicals) 675,000 1,378,784
- -----------------------------------------------------------------
</TABLE>
FS-63
<PAGE> 292
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
JBA Holdings PLC
(Computer Software/Services) 150,000 $ 1,257,324
- -----------------------------------------------------------------
Laura Ashley Holdings PLC
(Retail-Stores) 721,000 2,335,270
- -----------------------------------------------------------------
Logica PLC (Computer
Software/Services) 300,000 3,906,250
- -----------------------------------------------------------------
London Forfaiting Co. PLC
(Finance-Asset Management) 340,000 1,596,517
- -----------------------------------------------------------------
London International Group PLC
(Cosmetics & Toiletries) 2,000,000 5,078,125
- -----------------------------------------------------------------
Medeva PLC (Medical-Drugs) 325,000 1,396,484
- -----------------------------------------------------------------
MFI Furniture Group PLC
(Retail-Stores) 1,320,000 4,296,875
- -----------------------------------------------------------------
Michael Page Group PLC
(Miscellaneous) 230,000 1,576,009
- -----------------------------------------------------------------
Misys PLC (Computer
Software/Services) 500,000 7,385,254
- -----------------------------------------------------------------
Oxford Instruments PLC (Electronic
Components/Miscellaneous) 108,000 861,328
- -----------------------------------------------------------------
P & P PLC (MINI/PCs) 471,000 1,096,240
- -----------------------------------------------------------------
Parity PLC (Computer
Software/Services) 350,000 1,891,276
- -----------------------------------------------------------------
PizzaExpress PLC (Restaurants) 200,000 1,669,922
- -----------------------------------------------------------------
Powerscreen International PLC
(Machinery-Heavy) 515,000 5,096,354
- -----------------------------------------------------------------
Provident Financial PLC
(Finance-Consumer Credit) 1,000,000 7,495,117
- -----------------------------------------------------------------
Psion PLC (Computer
Software/Services) 210,000 1,449,219
- -----------------------------------------------------------------
Sage Group PLC (The)
(Computer Software/Services) 300,000 2,338,867
- -----------------------------------------------------------------
Scholl PLC (Cosmetics &
Toiletries) 200,000 883,789
- -----------------------------------------------------------------
SEMA Group PLC
(Computer Software/Services) 500,000 7,250,977
- -----------------------------------------------------------------
Spirax Sarco Engineering PLC
(Machinery-Miscellaneous) 130,000 1,544,596
- -----------------------------------------------------------------
St. Ives Group PLC (Containers) 201,000 1,586,670
- -----------------------------------------------------------------
Stagecoach Holdings PLC
(Transportation) 390,000 3,605,469
- -----------------------------------------------------------------
Taylor Woodrow PLC
(Engineering & Construction) 1,450,000 3,658,040
- -----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
TBI PLC (Real Estate) 500,000 $ 630,697
- -----------------------------------------------------------------
Wetherspoon (J.D.) PLC
(Restaurants) 105,000 2,026,855
- -----------------------------------------------------------------
136,348,391
- -----------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 1,012,303,342
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
DOMESTIC CONVERTIBLE
CORPORATE BONDS-0.29%
Cityscape Financial Corp.,
Conv. Deb., 6.00%, 05/01/06
(Finance-Consumer Credit)
(Acquired 08/06/96; cost
$718,588)(c) $ 520,000 $ 549,095
- -----------------------------------------------------------------
Eagle Hardware & Garden, Inc.,
Conv. Deb., 6.25%, 03/15/01
(Building Materials) 335,000 542,700
- -----------------------------------------------------------------
RAC Financial Group, Inc.,
Conv. Deb., 7.25%, 08/15/03
(Finance-Consumer Credit)
(Acquired 09/06/96 - 09/30/96;
cost $2,643,049)(b) 2,154,000 3,834,120
- -----------------------------------------------------------------
Total Domestic Convertible
Corporate Bonds 4,925,915
- -----------------------------------------------------------------
REPURCHASE AGREEMENTS-3.16%(d)
Daiwa Securities America, Inc.,
5.53%, 11/01/96(e) 631,659 631,659
- -----------------------------------------------------------------
Dresdner Securities, Inc.,
5.54%, 11/01/96(f) 54,000,000 54,000,000
- -----------------------------------------------------------------
Total Repurchase Agreements 54,631,659
- -----------------------------------------------------------------
TOTAL INVESTMENTS-100.19% 1,729,881,025
- -----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(0.19)% (3,347,049)
- -----------------------------------------------------------------
NET ASSETS-100.00% $ 1,726,533,976
=================================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipts
Conv. - Convertible
Deb. - Debentures
GDR - Global Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has never owned enough of the outstanding voting securities of any
issuer to have control (as defined in the Investment Company Act of 1940) of
that issuer. The market value of this security as of October 31, 1996 was
$2,039,178 which represented 0.12% of the Fund's net assets.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the securities Act of
1933, as ammended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at October 31, 1996 was
$4,383,215, which represented 0.25% of net assets.
(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% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$750,115,208. Collaterized by $733,115,000 U.S. Treasury obligations, 0% to
10.375% due 11/15/96 to 08/15/23.
(f) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$200,030,778. Collaterized by $198,651,000 U.S. Treasury obligations, 4.75%
to 9.25% due 11/30/97 to 06/30/99.
See Notes to Financial Statements.
FS-64
<PAGE> 293
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,528,249,227) $1,729,881,025
- ---------------------------------------------------------
Foreign currencies, at market value
(cost $9,212,688) 9,270,386
- ---------------------------------------------------------
Receivables for:
Investments sold 5,519,599
- ---------------------------------------------------------
Capital stock sold 15,022,002
- ---------------------------------------------------------
Dividends and interest 1,180,039
- ---------------------------------------------------------
Investment for deferred compensation
plan 8,260
- ---------------------------------------------------------
Other assets 120,698
- ---------------------------------------------------------
Total assets 1,761,002,009
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 27,020,437
- ---------------------------------------------------------
Capital stock reacquired 2,538,633
- ---------------------------------------------------------
Amount due to custodian bank 1,534,176
- ---------------------------------------------------------
Deferred compensation 8,260
- ---------------------------------------------------------
Accrued advisory fees 1,298,791
- ---------------------------------------------------------
Accrued administrative services fees 8,068
- ---------------------------------------------------------
Accrued directors' fees 1,041
- ---------------------------------------------------------
Accrued distribution fees 1,115,692
- ---------------------------------------------------------
Accrued transfer agent fees 425,715
- ---------------------------------------------------------
Accrued operating expenses 517,220
- ---------------------------------------------------------
Total liabilities 34,468,033
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $1,726,533,976
=========================================================
NET ASSETS:
Class A $ 919,318,683
=========================================================
Class B $ 807,215,293
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
CLASS A:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 58,347,321
=========================================================
CLASS B:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 51,810,099
=========================================================
CLASS A:
Net asset value and redemption price
per share $ 15.76
=========================================================
Offering price per share:
(Net asset value divided by 95.25%) $ 16.55
=========================================================
CLASS B:
Net asset value and offering price per
share $ 15.58
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,229,205 foreign
withholding tax) $ 8,040,717
- --------------------------------------------------------
Interest 3,459,264
- --------------------------------------------------------
Total investment income 11,499,981
- --------------------------------------------------------
EXPENSES:
Advisory fees 8,571,918
- --------------------------------------------------------
Administrative services fees 86,330
- --------------------------------------------------------
Directors' fees 10,321
- --------------------------------------------------------
Distribution fees-Class A 2,653,374
- --------------------------------------------------------
Distribution fees-Class B 4,217,606
- --------------------------------------------------------
Custodian fees 965,443
- --------------------------------------------------------
Transfer agent fees-Class A 1,433,553
- --------------------------------------------------------
Transfer agent fees-Class B 1,374,718
- --------------------------------------------------------
Other 422,711
- --------------------------------------------------------
Total expenses 19,735,974
- --------------------------------------------------------
Less: Expenses paid indirectly (14,962)
- --------------------------------------------------------
Net expenses 19,721,012
- --------------------------------------------------------
Net investment income (loss) (8,221,031)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities (32,146,548)
- --------------------------------------------------------
Foreign currencies (261,859)
- --------------------------------------------------------
(32,408,407)
- --------------------------------------------------------
Net unrealized appreciation of:
Investment securities 171,415,041
- --------------------------------------------------------
Foreign currencies 19,161
- --------------------------------------------------------
171,434,202
- --------------------------------------------------------
Net gain on investment securities and
foreign currencies 139,025,795
- --------------------------------------------------------
Net increase in net assets resulting from
operations $130,804,764
========================================================
</TABLE>
See Notes to Financial Statements.
FS-65
<PAGE> 294
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (8,221,031) $ (1,185,880)
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities and foreign currencies (32,408,407) 2,414,201
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and foreign currencies 171,434,202 29,786,715
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 130,804,764 31,015,036
- -------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized capital gains:
Class A (766,625) --
- -------------------------------------------------------------------------------------------------------------------------------
Class B (520,242) --
- -------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 657,118,189 146,731,096
- -------------------------------------------------------------------------------------------------------------------------------
Class B 635,669,948 101,870,873
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 1,422,306,034 279,617,005
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 304,227,942 24,610,937
- -------------------------------------------------------------------------------------------------------------------------------
End of period $1,726,533,976 $304,227,942
===============================================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,557,038,579 $272,738,461
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (14,054) --
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment securities and
foreign currencies (32,181,471) 1,232,761
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 201,690,922 30,256,720
- -------------------------------------------------------------------------------------------------------------------------------
$1,726,533,976 $304,227,942
===============================================================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Aggressive Growth Fund (the "Fund") is a series 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: Class A shares and 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 Fund's investment objective 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 following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations -- Except as provided in the next sentence, a security
listed or traded on an exchange is valued at the last sales price on the
exchange where the security is principally traded or, lacking any sales, at
the mean between the closing bid and asked prices on the day of valuation.
Exchange listed convertible bonds are valued at the mean between the closing
bid and asked prices obtained from a broker-dealer. If a mean is not
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Securities traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) are valued at the mean between the closing bid and asked prices on
FS-66
<PAGE> 295
valuation date. Securities reported on the NASDAQ National Market System are
valued at the last sales price on the valuation date or absent a last sales
price, at the mean of the closing bid and asked prices. Securities for which
market quotations are either not readily available or are questionable 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 would 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 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 forward 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. On October 31, 1996,
undistributed net investment income was increased by $8,206,977, paid-in
capital reduced by $8,488,019 and undistributed net realized gains increased
by $281,042 in order to comply with the requirements of the American
Institute of Certified Public Accountants Statement of Position 93-2. Net
assets of the Fund were unaffected by the reclassifications discussed above.
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. The Fund has a capital loss
carryforward of $32,147,412 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2004.
F. Expenses -- Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1996, AIM was
reimbursed $86,330 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended October 31, 1996, AFS was paid
$1,474,675 for such services.
The Fund received reductions in transfer agency fees of $13,093 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $1,869 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $14,962 during the year ended October
31, 1996.
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
distribution 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, pays 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. Of the total compensation payable, the Fund pays a service fee of
0.25% to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class A
shares of the Fund. The Fund, pursuant to the Class B Plan, will pay AIM
Distributors an annual rate of 1.00% of the average daily net assets
attributable to the Class B
FS-67
<PAGE> 296
shares. Of this amount, the Fund pays 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the year ended October 31, 1996, the Class A shares and
the Class B shares paid AIM Distributors $2,653,374 and $4,217,606,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $3,270,278 from the sales of the
Class A shares of the Fund during the year ended October 31, 1996. 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 year ended
October 31, 1996, AIM Distributors received commissions of $84,130 in contingent
deferred sales charges imposed on redemptions of Fund shares. Certain officers
and directors of the Company are officers and directors of AIM, AFS and AIM
Distributors.
During the year ended October 31, 1996, the Fund incurred legal fees of $4,726
for services rendered by the law firm of Kramer, Levin, Naftalis & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-AFFILIATED COMPANY TRANSACTIONS
Affiliated issuers, as defined in the 1940 Act, are issuers in which the Fund
held 5% or more of the outstanding voting securities. A summary of transactions
for each issuer who is or was an affiliate at or during the year ended October
31, 1996, were as follows:
<TABLE>
<CAPTION>
SHARE SHARE MARKET
BALANCE BALANCE VALUE
OCTOBER 31, OCTOBER 31, OCTOBER 31,
NAME OF ISSUER: 1995 1996 1996
------------------------------------------
<S> <C> <C> <C>
Marsman & Co., Inc. -- 6,616,000 $2,039,178
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
REALIZED
PURCHASES SALES GAIN DIVIDEND
COST COST LOSS INCOME
-----------------------------------------------------
<S> <C> <C> <C> <C>
Marsman & Co., Inc. $3,605,878 $ -- $ -- $15,243
-----------------------------------------------------
</TABLE>
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $1,900,000. During the year ended October 31, 1996, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.08% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1996, on a tax
basis, was $1,650,395,817 and $388,356,218, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1996, on a tax basis, is as follows.
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $264,209,277
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (62,611,540)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $201,597,737
- ----------------------------------------------------------
Cost of investments for tax purposes is $1,528,283,288.
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
Sold:
Class A 50,205,954 $748,519,743 13,970,703 $165,030,476
- --------------- ---------- -------------- ---------- ------------
Class B 45,280,451 673,914,740 8,888,670 106,907,530
- --------------- ---------- -------------- ---------- ------------
Issued as
reinvestment
of dividends:
Class A 56,549 727,221 -- --
- --------------- ---------- -------------- ---------- ------------
Class B 38,442 491,285 -- --
- --------------- ---------- -------------- ---------- ------------
Reacquired:
Class A (6,124,044) (92,128,775) (1,563,927) (18,299,380)
- --------------- ---------- -------------- ---------- ------------
Class B (2,588,161) (38,736,077) (416,562) (5,036,657)
- --------------- ---------- -------------- ---------- ------------
86,869,191 $1,292,788,137 20,878,884 $248,601,969
========== ============== ========== ============
</TABLE>
FS-68
<PAGE> 297
NOTE 8-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an agreement and plan of merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's Advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM Funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share and Class B share
outstanding during each of the years in the two-year period ended October 31,
1996 and the period September 15, 1994 (date operations commenced) through
October 31, 1994.
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 13.09 $ 10.22 $ 10.00
- ------------------------------------------------------------------------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.09)(a) --
- ------------------------------------------------------------------------- -------- -------- --------
Net gains on securities (both realized and unrealized) 2.81 2.96 0.22
- ------------------------------------------------------------------------- -------- -------- --------
Total from investment operations 2.72 2.87 0.22
- ------------------------------------------------------------------------- -------- -------- --------
Less distributions:
Distributions from net realized capital gains (0.05) -- --
- ------------------------------------------------------------------------- -------- -------- --------
Net asset value, end of period $ 15.76 $ 13.09 $ 10.22
========================================================================= ======== ======== ========
Total return(b) 20.83% 28.08% 2.20%
========================================================================= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $919,319 $186,029 $ 18,410
========================================================================= ======== ======== ========
Ratio of expenses to average net assets 1.83%(c)(d) 2.11% 2.02%(e)(f)
========================================================================= ======== ======== ========
Ratio of net investment income (loss) to average net assets (0.62)%(c) (0.68)% 0.27%(f)(g)
========================================================================= ======== ======== ========
Portfolio turnover rate 44% 64% 2%
========================================================================= ======== ======== ========
Average brokerage commission rate(h) $ 0.0155 N/A N/A
========================================================================= ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are based on average net assets of $530,674,844.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) After fee waivers and expense reimbursements. Ratio of expenses to average
net assets before fee waivers and expense reimbursements is 4.03%
(annualized) for 1994.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratio of net investment income
(loss) to average net assets before fee waivers and expense reimbursements
is (1.74)% (annualized) for 1994.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 13.02 $ 10.21 $ 10.00
- ------------------------------------------------------------------------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.17)(a) (0.14)(a) --
- ------------------------------------------------------------------------- -------- -------- --------
Net gains on securities (both realized and unrealized) 2.78 2.95 0.21
- ------------------------------------------------------------------------- -------- -------- --------
Total from investment operations 2.61 2.81 0.21
- ------------------------------------------------------------------------- -------- -------- --------
Less distributions:
Distributions net realized capital gains (0.05) -- --
- ------------------------------------------------------------------------- -------- -------- --------
Net asset value, end of period $ 15.58 $ 13.02 $ 10.21
========================================================================= ======== ======== ========
Total return(b) 20.09% 27.52% 2.10%
========================================================================= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $807,215 $118,199 $ 6,201
========================================================================= ======== ======== ========
Ratio of expenses to average net assets 2.37%(c)(d) 2.62% 2.54%(e)(f)
========================================================================= ======== ======== ========
Ratio of net investment income (loss) to average net assets (1.16)%(c) (1.19)% (0.25)%(f)(g)
========================================================================= ======== ======== ========
Portfolio turnover rate 44% 64% 2%
========================================================================= ======== ======== ========
Average brokerage commission rate(h) $ 0.0155 N/A N/A
========================================================================= ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are based on average net assets of $421,760,605.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average assets would have been the same.
(e) After fee waivers and expense reimbursements. Ratio of expenses to average
net assets before fee waivers and expense reimbursements is 4.43%
(annualized) for 1994.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratio of net investment income
(loss) to average net assets before fee waivers and expense reimbursements
is (2.14)% (annualized) for 1994.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
FS-69
<PAGE> 298
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 AIM Global Growth Fund (a portfolio of AIM
International Funds, Inc.), including the schedule of
investments, as of October 31, 1996, and the related
statement of operations for the year then ended, the
statement of changes in net assets for the two-year period
then ended and financial highlights for the two-year
period then ended and 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 audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1996, 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Growth Fund as of October 31, 1996, the results of its
operations for the year then ended, and changes in its net
assets for the two-year period then ended and the
financial highlights for the two-year period then ended
and 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 6, 1996
FS-70
<PAGE> 299
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-31.96%
ADVERTISING/BROADCASTING-0.22%
Interpublic Group of Companies, Inc. 11,000 $ 533,500
- ----------------------------------------------------------------
AEROSPACE/DEFENSE-0.36%
Boeing Co. (The) 4,000 381,500
- ----------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 20,000 472,500
- ----------------------------------------------------------------
854,000
- ----------------------------------------------------------------
AIRLINES-0.08%
Sabre Group Holdings Inc.(a) 6,100 186,050
- ----------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.10%
Chrysler Corp. 7,200 242,100
- ----------------------------------------------------------------
BANKING-0.26%
Citicorp 6,300 623,700
- ----------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-0.25%
PepsiCo Inc. 20,000 592,500
- ----------------------------------------------------------------
BIOTECHNOLOGY-0.44%
AMGEN, Inc.(a) 7,000 429,187
- ----------------------------------------------------------------
Guidant Corp. 13,500 622,688
- ----------------------------------------------------------------
1,051,875
- ----------------------------------------------------------------
BUILDING MATERIALS-0.10%
Georgia-Pacific Corp. 3,000 225,000
- ----------------------------------------------------------------
BUSINESS SERVICES-0.96%
CUC International, Inc.(a) 18,000 441,000
- ----------------------------------------------------------------
Diebold, Inc. 8,700 500,250
- ----------------------------------------------------------------
Equifax, Inc. 32,200 957,950
- ----------------------------------------------------------------
Healthcare COMPARE Corp.(a) 6,000 264,000
- ----------------------------------------------------------------
Interim Services Inc.(a) 1,000 40,000
- ----------------------------------------------------------------
Olsten Corp. 3,000 60,000
- ----------------------------------------------------------------
2,263,200
- ----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.33%
Morton International, Inc. 20,000 787,500
- ----------------------------------------------------------------
COMPUTER MINI/PCS-1.79%
COMPAQ Computer Corp.(a) 24,000 1,671,000
- ----------------------------------------------------------------
Dell Computer Corp.(a) 11,500 935,812
- ----------------------------------------------------------------
Gateway 2000, Inc.(a) 17,000 800,062
- ----------------------------------------------------------------
Sun Microsystems, Inc.(a) 13,700 835,700
- ----------------------------------------------------------------
4,242,574
- ----------------------------------------------------------------
COMPUTER NETWORKING-1.04%
Ascend Communications, Inc.(a) 14,000 915,250
- ----------------------------------------------------------------
Cabletron Systems, Inc.(a) 8,000 499,000
- ----------------------------------------------------------------
Cisco Systems, Inc.(a) 4,000 247,500
- ----------------------------------------------------------------
3Com Corp.(a) 12,000 811,500
- ----------------------------------------------------------------
2,473,250
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER PERIPHERALS-0.18%
Storage Technology Corp.(a) 9,800 $ 417,725
- ----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-3.51%
BMC Software, Inc.(a) 6,700 556,100
- ----------------------------------------------------------------
Cadence Design Systems, Inc.(a) 11,300 412,450
- ----------------------------------------------------------------
Ceridian Corp.(a) 12,000 595,500
- ----------------------------------------------------------------
Computer Associates International, Inc. 14,000 827,750
- ----------------------------------------------------------------
Computer Sciences Corp.(a) 5,200 386,100
- ----------------------------------------------------------------
Compuware Corp.(a) 15,900 838,725
- ----------------------------------------------------------------
Electronic Data Systems Corp. 15,400 693,000
- ----------------------------------------------------------------
Electronics for Imaging, Inc.(a) 700 50,400
- ----------------------------------------------------------------
First Data Corp. 5,000 398,750
- ----------------------------------------------------------------
Fiserv, Inc.(a) 11,500 441,312
- ----------------------------------------------------------------
Mechanical Dynamics, Inc.(a) 27,100 389,562
- ----------------------------------------------------------------
Microsoft Corp.(a) 3,000 411,750
- ----------------------------------------------------------------
Oracle Systems Corp.(a) 6,000 253,875
- ----------------------------------------------------------------
Parametric Technology Co.(a) 9,300 454,538
- ----------------------------------------------------------------
Sterling Commerce, Inc.(a) 32,500 914,062
- ----------------------------------------------------------------
Synopsys, Inc.(a) 5,700 256,500
- ----------------------------------------------------------------
Wallace Computer Services, Inc. 15,000 440,625
- ----------------------------------------------------------------
8,320,999
- ----------------------------------------------------------------
CONGLOMERATES-1.19%
AlliedSignal Inc. 13,000 851,500
- ----------------------------------------------------------------
Loews Corp. 5,400 446,175
- ----------------------------------------------------------------
Textron Inc. 4,200 372,750
- ----------------------------------------------------------------
Tyco International Ltd. 16,400 813,850
- ----------------------------------------------------------------
U.S. Industries, Inc.(a) 12,700 342,900
- ----------------------------------------------------------------
2,827,175
- ----------------------------------------------------------------
CONTAINERS-0.15%
Sealed Air Corp.(a) 9,000 349,875
- ----------------------------------------------------------------
COSMETICS & TOILETRIES-0.46%
Avon Products, Inc. 11,000 596,750
- ----------------------------------------------------------------
Gillette Co. (The) 6,600 493,350
- ----------------------------------------------------------------
1,090,100
- ----------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.50%
Amphenol Corp.(a) 700 13,912
- ----------------------------------------------------------------
Checkpoint Systems, Inc.(a) 24,000 537,000
- ----------------------------------------------------------------
Photon Dynamics, Inc.(a) 9,400 61,688
- ----------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 5,200 157,300
- ----------------------------------------------------------------
Waters Corp.(a) 13,500 418,500
- ----------------------------------------------------------------
1,188,400
- ----------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.19%
Bear Stearns Companies, Inc. 90 2,126
- ----------------------------------------------------------------
Franklin Resources, Inc. 5,000 352,500
- ----------------------------------------------------------------
PaineWebber Group Inc. 4,500 105,750
- ----------------------------------------------------------------
460,376
- ----------------------------------------------------------------
</TABLE>
FS-71
<PAGE> 300
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCE (CONSUMER CREDIT)-1.54%
Beneficial Corp. 3,100 $ 181,350
- ----------------------------------------------------------------
Federal Home Loan Mortgage Corp. 9,700 979,700
- ----------------------------------------------------------------
Federal National Mortgage Association 13,500 528,188
- ----------------------------------------------------------------
Finova Group, Inc. 6,000 370,500
- ----------------------------------------------------------------
Green Tree Financial Corp. 7,000 277,375
- ----------------------------------------------------------------
Student Loan Marketing Association 9,300 769,575
- ----------------------------------------------------------------
SunAmerica, Inc. 7,200 270,000
- ----------------------------------------------------------------
T. Rowe Price Associates 7,700 262,762
- ----------------------------------------------------------------
3,639,450
- ----------------------------------------------------------------
FOOD/PROCESSING-0.40%
ConAgra, Inc. 6,900 344,138
- ----------------------------------------------------------------
Dean Foods Co. 20,500 594,500
- ----------------------------------------------------------------
938,638
- ----------------------------------------------------------------
GAMING-0.17%
International Game Technology 19,500 411,937
- ----------------------------------------------------------------
HOTELS/MOTELS-0.36%
Hilton Hotels Corp. 16,000 486,000
- ----------------------------------------------------------------
Host Marriott Corp.(a) 23,000 353,625
- ----------------------------------------------------------------
839,625
- ----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.43%
Conseco Inc. 12,000 642,000
- ----------------------------------------------------------------
Equitable Companies, Inc. 16,500 387,750
- ----------------------------------------------------------------
1,029,750
- ----------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-1.31%
American International Group, Inc. 3,900 423,638
- ----------------------------------------------------------------
CIGNA Corp. 3,000 391,500
- ----------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 8,100 206,550
- ----------------------------------------------------------------
ITT Hartford Group, Inc. 7,000 441,000
- ----------------------------------------------------------------
MGIC Investment Corp. 6,300 432,338
- ----------------------------------------------------------------
Old Republic International Corp. 9,100 225,225
- ----------------------------------------------------------------
TIG Holdings, Inc. 4,200 121,275
- ----------------------------------------------------------------
Travelers Group, Inc. 15,800 857,150
- ----------------------------------------------------------------
3,098,676
- ----------------------------------------------------------------
LEISURE & RECREATION-0.40%
Coleman Company, Inc. (The)(a) 3,800 50,350
- ----------------------------------------------------------------
Harley-Davidson, Inc. 20,000 902,500
- ----------------------------------------------------------------
952,850
- ----------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.05%
Thermo Electron Corp. (a) 3,000 109,500
- ----------------------------------------------------------------
MEDICAL (DRUGS)-1.87%
Abbott Laboratories 6,000 303,750
- ----------------------------------------------------------------
American Home Products Corp. 6,500 398,125
- ----------------------------------------------------------------
AmeriSource Health Corp.(a) 2,000 84,750
- ----------------------------------------------------------------
Bristol-Myers Squibb Co. 4,000 423,000
- ----------------------------------------------------------------
Cardinal Health, Inc. 4,500 353,250
- ----------------------------------------------------------------
ICN Pharmaceuticals, Inc. 11,400 216,600
- ----------------------------------------------------------------
Johnson & Johnson 1,000 49,250
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (DRUGS)-(CONTINUED)
Merck & Co., Inc. 8,000 $ 593,000
- ----------------------------------------------------------------
Pfizer, Inc. 2,500 206,875
- ----------------------------------------------------------------
Pharmacia & UpJohn, Inc. 11,000 396,000
- ----------------------------------------------------------------
Rhone-Poulenc Rorer, Inc. 10,300 691,387
- ----------------------------------------------------------------
Schering-Plough Corp. 7,400 473,600
- ----------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 7,400 246,975
- ----------------------------------------------------------------
4,436,562
- ----------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-1.19%
Columbia/HCA Healthcare Corp. 13,650 487,988
- ----------------------------------------------------------------
HEALTHSOUTH Corp.(a) 22,000 825,000
- ----------------------------------------------------------------
Living Centers of America, Inc.(a) 5,000 116,875
- ----------------------------------------------------------------
MedPartners, Inc.(a) 23,310 492,424
- ----------------------------------------------------------------
Quorum Health Group, Inc.(a) 20,100 542,700
- ----------------------------------------------------------------
Tenet Healthcare Corp.(a) 16,900 352,788
- ----------------------------------------------------------------
2,817,775
- ----------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.08%
Baxter International Inc. 4,100 170,662
- ----------------------------------------------------------------
Becton, Dickinson & Co. 9,200 400,200
- ----------------------------------------------------------------
Innovasive Devices, Inc.(a) 24,200 223,850
- ----------------------------------------------------------------
Medtronic, Inc. 5,000 321,875
- ----------------------------------------------------------------
Stryker Corp. 22,000 654,500
- ----------------------------------------------------------------
Sybron International Corp.(a) 14,000 407,750
- ----------------------------------------------------------------
U.S. Surgical Corp. 8,500 355,938
- ----------------------------------------------------------------
2,534,775
- ----------------------------------------------------------------
NATURAL GAS PIPELINE-0.48%
Columbia Gas System, Inc. 14,000 850,500
- ----------------------------------------------------------------
Williams Companies, Inc. (The) 5,500 287,375
- ----------------------------------------------------------------
1,137,875
- ----------------------------------------------------------------
OFFICE AUTOMATION-0.02%
Xerox Corp. 1,200 55,650
- ----------------------------------------------------------------
OFFICE PRODUCTS-0.09%
Reynolds & Reynolds Co.-Class A 8,000 211,000
- ----------------------------------------------------------------
OIL & GAS (DRILLING)-0.30%
Reading & Bates Corp.(a) 17,000 488,750
- ----------------------------------------------------------------
Transocean Offshore Inc. 3,500 221,375
- ----------------------------------------------------------------
710,125
- ----------------------------------------------------------------
OIL & GAS (SERVICES)-0.40%
Louisiana Land & Exploration Co. 3,400 193,375
- ----------------------------------------------------------------
NorAm Energy Corp. 47,600 731,850
- ----------------------------------------------------------------
925,225
- ----------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-1.47%
Baker Hughes, Inc. 23,000 819,375
- ----------------------------------------------------------------
Coastal Corp. 8,400 361,200
- ----------------------------------------------------------------
Cooper Cameron Corp.(a) 2,500 159,688
- ----------------------------------------------------------------
Dresser Industries, Inc. 10,000 328,750
- ----------------------------------------------------------------
Halliburton Co. 7,000 396,375
- ----------------------------------------------------------------
Rowan Companies., Inc.(a) 25,000 559,375
- ----------------------------------------------------------------
</TABLE>
FS-72
<PAGE> 301
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL EQUIPMENT & SUPPLIES-(CONTINUED)
Schlumberger Ltd. 4,300 $ 426,238
- ----------------------------------------------------------------
Tidewater, Inc. 10,000 437,500
- ----------------------------------------------------------------
3,488,501
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.20%
Kimberly-Clark Corp. 5,000 466,250
- ----------------------------------------------------------------
PUBLISHING-0.23%
New York Times Co. 11,000 397,375
- ----------------------------------------------------------------
Times Mirror Co. (The) 3,200 148,000
- ----------------------------------------------------------------
545,375
- ----------------------------------------------------------------
RETAIL (FOOD & DRUGS)-0.50%
American Stores Co. 13,000 537,875
- ----------------------------------------------------------------
Kroger Co. (The)(a) 9,800 437,325
- ----------------------------------------------------------------
Safeway, Inc.(a) 4,600 197,225
- ----------------------------------------------------------------
1,172,425
- ----------------------------------------------------------------
RETAIL (STORES)-2.72%
Consolidated Stores Corp.(a) 4,500 173,812
- ----------------------------------------------------------------
Dayton-Hudson Corp. 12,000 415,500
- ----------------------------------------------------------------
Federated Department Stores, Inc.(a) 15,000 495,000
- ----------------------------------------------------------------
Gap, Inc. (The) 12,000 348,000
- ----------------------------------------------------------------
Home Depot, Inc. 16,800 919,800
- ----------------------------------------------------------------
Lowe's Companies, Inc. 20,800 839,800
- ----------------------------------------------------------------
Pep Boys-Manny, Moe & Jack 22,500 787,500
- ----------------------------------------------------------------
Price/Costco Inc.(a) 5,200 103,350
- ----------------------------------------------------------------
Saks Holdings, Inc.(a) 12,400 434,000
- ----------------------------------------------------------------
Staples, Inc.(a) 25,575 476,335
- ----------------------------------------------------------------
Sysco Corp. 12,500 425,000
- ----------------------------------------------------------------
Toys "R" Us, Inc.(a) 26,000 880,750
- ----------------------------------------------------------------
Viking Office Products Inc.(a) 5,000 145,625
- ----------------------------------------------------------------
6,444,472
- ----------------------------------------------------------------
SEMICONDUCTORS-0.99%
Altera Corp.(a) 10,000 620,000
- ----------------------------------------------------------------
Intel Corp. 12,000 1,318,500
- ----------------------------------------------------------------
Texas Instruments, Inc. 8,500 409,062
- ----------------------------------------------------------------
2,347,562
- ----------------------------------------------------------------
SHOES & RELATED APPAREL-0.38%
Nike Inc. -Class B 14,400 847,800
- ----------------------------------------------------------------
Nine West Group, Inc.(a) 1,200 59,850
- ----------------------------------------------------------------
907,650
- ----------------------------------------------------------------
TELECOMMUNICATIONS-1.76%
ADC Telecommunications, Inc.(a) 15,100 1,032,462
- ----------------------------------------------------------------
Andrew Corp.(a) 12,000 585,000
- ----------------------------------------------------------------
Frontier Corp. 8,200 237,800
- ----------------------------------------------------------------
Lucent Technologies Inc. 14,000 658,000
- ----------------------------------------------------------------
MFS Communications Co., Inc.(a) 11,300 566,413
- ----------------------------------------------------------------
Tellabs, Inc.(a) 3,000 255,375
- ----------------------------------------------------------------
360 Communications Co.(a) 1,500 33,938
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS-(CONTINUED)
Western Wireless Corp.-Class A(a) 13,000 $ 214,500
- ----------------------------------------------------------------
WorldCom, Inc.(a) 23,600 575,250
- ----------------------------------------------------------------
4,158,738
- ----------------------------------------------------------------
TELEPHONE-0.22%
Cincinnati Bell, Inc. 10,500 518,437
- ----------------------------------------------------------------
TEXTILES-0.36%
Fruit of the Loom, Inc.-Class A(a) 13,300 483,787
- ----------------------------------------------------------------
Liz Claiborne, Inc. 8,500 359,125
- ----------------------------------------------------------------
842,912
- ----------------------------------------------------------------
TOBACCO-0.93%
Philip Morris Companies, Inc. 7,000 648,375
- ----------------------------------------------------------------
RJR Nabisco Holdings Corp. 28,800 831,600
- ----------------------------------------------------------------
Universal Corp. 6,800 185,300
- ----------------------------------------------------------------
UST, Inc. 19,000 548,625
- ----------------------------------------------------------------
2,213,900
- ----------------------------------------------------------------
Total Domestic Common Stocks 75,685,534
- ----------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-64.12%
ARGENTINA-1.10%
Banco de Galicia y Buenos Aires S.A.
de C.V. (Banking) 28,409 514,913
- ----------------------------------------------------------------
Perez Companc S.A.-Class B
(Oil & Gas-Services) 93,000 590,609
- ----------------------------------------------------------------
YPF Socidad Anonima-ADR
(Oil & Gas-Services) 65,600 1,492,400
- ----------------------------------------------------------------
2,597,922
- ----------------------------------------------------------------
AUSTRALIA-2.38%
National Mutual Holdings Ltd.(a)
(Insurance-Multi-Line Property) 600,000 856,056
- ----------------------------------------------------------------
News Corp. Ltd. (The)-ADR
(Publishing) 48,000 852,000
- ----------------------------------------------------------------
QBE Insurance Group Ltd.
(Insurance-Multi-Line Property) 181,125 959,032
- ----------------------------------------------------------------
QNI Ltd.
(Metals-Miscellaneous) 761,700 1,533,543
- ----------------------------------------------------------------
Western Mining Corp. Holdings Ltd.
(Metals-Miscellaneous) 228,200 1,434,390
- ----------------------------------------------------------------
5,635,021
- ----------------------------------------------------------------
AUSTRIA-0.63%
OMV AG
(Oil & Gas-Services) 9,400 920,193
- ----------------------------------------------------------------
VA Technologie AG
(Engineering & Construction) 4,100 573,373
- ----------------------------------------------------------------
1,493,566
- ----------------------------------------------------------------
BELGIUM-1.52%
Barco Industries(a)
(Electronic Components/Miscellaneous) 5,700 937,512
- ----------------------------------------------------------------
Colruyt S.A.
(Retail-Food & Drug) 1,100 474,351
- ----------------------------------------------------------------
Delhaize-Le Lion S.A.
(Retail-Food & Drug) 18,500 1,035,027
- ----------------------------------------------------------------
</TABLE>
FS-73
<PAGE> 302
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BELGIUM-(CONTINUED)
UCB S.A.
(Medical-Drugs) 520 $ 1,146,201
- ----------------------------------------------------------------
3,593,091
- ----------------------------------------------------------------
BRAZIL-0.61%
Telecommuicacoes Brasileiras
S.A.-Telebras-ADR
(Telecommunications) 19,400 1,445,300
- ----------------------------------------------------------------
CANADA-2.57%
Canadian National Railway Co.
(Railroads) 21,000 577,500
- ----------------------------------------------------------------
Canadian Natural Resources Ltd.(a)
(Oil & Gas-Exploration &
Production) 48,000 1,192,658
- ----------------------------------------------------------------
Canadian Pacific Ltd.
(Transportation-Miscellaneous) 43,000 1,085,750
- ----------------------------------------------------------------
Newbridge Networks Corp.(a)
(Computer Networking) 26,000 822,250
- ----------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 7,500 488,437
- ----------------------------------------------------------------
Suncor, Inc.
(Oil & Gas-Exploration & Production) 28,000 1,081,182
- ----------------------------------------------------------------
TELUS Corp.
(Telecommunications) 54,000 848,157
- ----------------------------------------------------------------
6,095,934
- ----------------------------------------------------------------
CHILE-0.30%
Compania de Telecomunicaciones de
Chile S.A.-ADR (Telephone) 7,200 710,100
- ----------------------------------------------------------------
DENMARK-0.29%
Danisco A/S
(Food/Processing) 5,100 292,191
- ----------------------------------------------------------------
Novo-Nordisk A/S-Class B
(Medical-Drugs) 2,450 408,031
- ----------------------------------------------------------------
700,222
- ----------------------------------------------------------------
FRANCE-6.23%
AXA S.A.
(Insurance-Life & Health) 18,500 1,155,413
- ----------------------------------------------------------------
Carrefour Supermarche
(Retail-Food & Drug) 2,800 1,553,760
- ----------------------------------------------------------------
Cetelem
(Finance-Consumer Credit) 2,100 448,137
- ----------------------------------------------------------------
Compagnie Generale Des Eaux
(Water Supply) 9,700 1,159,257
- ----------------------------------------------------------------
Elf Aquitaine S.A.
(Oil & Gas-Services) 13,500 1,079,472
- ----------------------------------------------------------------
Essilor International-Compagnie
Generale d'Optique
(Medical Instruments/Products) 1,100 289,389
- ----------------------------------------------------------------
Michelin-Class B
(Automobile/Trucks Parts & Tires) 10,200 491,795
- ----------------------------------------------------------------
Pathe S.A.(a)
(Advertising/Broadcasting) 3,850 1,038,465
- ----------------------------------------------------------------
Pinault-Printemps-Redoute, S.A.
(Retail-Stores) 2,900 1,093,633
- ----------------------------------------------------------------
Rexel S.A.
(Electronic Components/Miscellaneous) 2,600 770,465
- ----------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals) 21,000 622,298
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Roussel Uclaf
(Medical-Drugs) 2,100 $ 555,756
- ----------------------------------------------------------------
Societe BIC S.A.
(Office Products) 8,050 1,207,697
- ----------------------------------------------------------------
Societe Technip
(Engineering & Construction) 6,600 576,927
- ----------------------------------------------------------------
Sodexho S.A.
(Business Services) 1,100 531,658
- ----------------------------------------------------------------
Total S.A.-Class B
(Oil & Gas-Exploration & Production) 13,100 1,024,683
- ----------------------------------------------------------------
Valeo S.A.
(Automobile/Trucks Parts & Tires) 19,400 1,164,190
- ----------------------------------------------------------------
14,762,995
- ----------------------------------------------------------------
GERMANY-3.90%
Adidas A.G.
(Shoes & Related Apparel) 18,800 1,611,358
- ----------------------------------------------------------------
Altana A.G.
(Chemicals) 1,850 1,478,143
- ----------------------------------------------------------------
Commerzbank A.G.
(Banking) 44,000 984,945
- ----------------------------------------------------------------
Continental A.G.
(Automobile/Trucks Parts & Tires) 29,600 517,961
- ----------------------------------------------------------------
Dresdner Bank A.G.
(Banking) 36,000 962,758
- ----------------------------------------------------------------
Hoechst A.G.
(Chemicals) 40,300 1,515,508
- ----------------------------------------------------------------
SGL Carbon A.G.
(Metals-Miscellaneous) 6,000 675,515
- ----------------------------------------------------------------
SKW Trostberg A.G.
(Chemicals) 17,850 520,979
- ----------------------------------------------------------------
Veba A.G.
(Electric Power) 18,000 960,024
- ----------------------------------------------------------------
9,227,191
- ----------------------------------------------------------------
HONG KONG-5.82%
Asia Satellite Telecommunications
Holdings Ltd.-ADR
(Telecommunications)(a) 24,500 655,375
- ----------------------------------------------------------------
Cheung Kong Holdings Ltd.
(Real Estate) 267,000 2,140,917
- ----------------------------------------------------------------
Citic Pacific Ltd.
(Banking) 135,000 656,476
- ----------------------------------------------------------------
Cosco Pacific Ltd.
(Transportation-Miscellaneous) 1,560,000 1,492,977
- ----------------------------------------------------------------
First Pacific Co.
(Conglomerates) 901,000 1,240,999
- ----------------------------------------------------------------
Hang Seng Bank Ltd.
(Banking) 166,500 1,975,683
- ----------------------------------------------------------------
Hong Kong & China Gas Company Ltd.
(Electric Power) 579,000 1,018,391
- ----------------------------------------------------------------
Hong Kong & China Gas Company
Ltd.-Warrants(a)
Expiring 1997 (Electric Power) 36,000 13,269
- ----------------------------------------------------------------
HSBC Holdings PLC
(Banking) 93,400 1,902,499
- ----------------------------------------------------------------
New World Infrastructure Ltd.(a)
(Building Materials) 422,000 1,050,607
- ----------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Real Estate) 105,600 1,201,831
- ----------------------------------------------------------------
</TABLE>
FS-74
<PAGE> 303
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HONG KONG-(CONTINUED)
Varitronix International Ltd.
(Electronic Components/Miscellaneous) 240,000 $ 437,650
- ----------------------------------------------------------------
13,786,674
- ----------------------------------------------------------------
INDONESIA-1.19%
PT Bank Internasional Indonesia
(Banking) 439,000 706,757
- ----------------------------------------------------------------
PT Hanjaya Mandala Sampoerna
(Tobacco) 172,000 1,598,678
- ----------------------------------------------------------------
PT Indosat
(Telecommunications) 84,500 255,753
- ----------------------------------------------------------------
PT Indosat-ADR
(Telecommunications) 9,050 272,631
- ----------------------------------------------------------------
2,833,819
- ----------------------------------------------------------------
IRELAND-0.11%
Elan Corp. PLC-ADR(a)
(Medical-Drugs) 9,200 255,300
- ----------------------------------------------------------------
ISRAEL-0.58%
ECI Telecommunications Ltd.
(Computer Networking) 14,000 280,000
- ----------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Medical-Drugs) 26,500 1,109,687
- ----------------------------------------------------------------
1,389,687
- ----------------------------------------------------------------
ITALY-2.54%
Edison S.p.A.
(Electric Power) 187,000 1,114,111
- ----------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A
(Oil & Gas-Exploration & Production) 290,000 1,387,106
- ----------------------------------------------------------------
Fila Holding S.p.A.-ADR
(Retail-Stores) 5,400 388,800
- ----------------------------------------------------------------
Istituto Mobiliare Italiano S.p.A.
(Banking) 48,700 385,748
- ----------------------------------------------------------------
Parmalat Finanziaria S.p.A
(Food/Processing) 620,000 886,473
- ----------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications) 460,000 948,504
- ----------------------------------------------------------------
Telecom Italia S.p.A.
(Telecommunications) 410,000 916,757
- ----------------------------------------------------------------
6,027,499
- ----------------------------------------------------------------
JAPAN-10.54%
Alpine Electronics Inc.
(Electronic Components/Miscellaneous) 57,000 901,146
- ----------------------------------------------------------------
Amada Co., Ltd.
(Building Materials-Tools) 89,000 766,062
- ----------------------------------------------------------------
Bridgestone Corp.
(Automobile/Trucks Parts & Tires) 82,000 1,382,811
- ----------------------------------------------------------------
Canon, Inc.
(Office Automation) 79,000 1,512,626
- ----------------------------------------------------------------
Daiichi Corp.
(Electronic Components/Miscellaneous) 28,300 668,631
- ----------------------------------------------------------------
DDI Corp.
(Telecommunications) 180 1,351,719
- ----------------------------------------------------------------
Honda Motor Co.
(Automobile-Manufacturers) 73,000 1,743,973
- ----------------------------------------------------------------
Ibiden Co. Ltd.
(Building Materials) 87,000 809,978
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Jusco Co.
(Retail-Stores) 45,000 $ 1,335,910
- ----------------------------------------------------------------
Komatsu Ltd.
(Machinery-Heavy) 139,000 1,137,833
- ----------------------------------------------------------------
Matsushita Electric Industrial Co. Ltd.
(Electronic Components-Miscellaneous) 61,000 975,100
- ----------------------------------------------------------------
Nippon Television Network
(Advertising/Broadcasting) 2,050 594,177
- ----------------------------------------------------------------
Nomura Securities Co., Ltd.
(Finance-Asset Management) 68,000 1,122,832
- ----------------------------------------------------------------
NSK Ltd.
(Metals-Miscellaneous) 92,000 609,266
- ----------------------------------------------------------------
NTT Data Communications Systems Co.
(Computer Software/Services) 470 1,391,155
- ----------------------------------------------------------------
Okuma Corp.(a)
(Machine Tools) 78,000 746,739
- ----------------------------------------------------------------
Ricoh Co., Ltd.
(Office Automation) 124,000 1,230,688
- ----------------------------------------------------------------
Shizuoka Bank
(Banking) 40,000 456,721
- ----------------------------------------------------------------
SMC
(Machinery-Miscellaneous) 6,800 440,771
- ----------------------------------------------------------------
Sony Corp.
(Electronic Components/Miscellaneous) 19,900 1,193,773
- ----------------------------------------------------------------
Sumitomo Heavy Industries, Ltd.(a)
(Machinery-Heavy) 250,000 880,506
- ----------------------------------------------------------------
TDK Corp.
(Electronic Components/Miscellaneous) 22,000 1,290,765
- ----------------------------------------------------------------
Toyota Motor Corp.
(Automobile-Manufacturers) 39,000 921,435
- ----------------------------------------------------------------
Yamaha Corp.
(Electronic Components/Miscellaneous) 48,000 729,349
- ----------------------------------------------------------------
Yamatake-Honeywell
(Airlines) 45,000 754,908
- ----------------------------------------------------------------
24,948,874
- ----------------------------------------------------------------
MALAYSIA-1.17%
Commerce Asset Holdings Berhad
(Finance-Asset Management) 93,000 607,362
- ----------------------------------------------------------------
Edaran Otomobil Nasional Berhad
(Automobile-Manufacturers) 70,000 653,869
- ----------------------------------------------------------------
Malayan Banking Berhad
(Banking) 109,000 1,078,567
- ----------------------------------------------------------------
YTL Corp. Berhad
(Engineering & Construction) 82,000 441,401
- ----------------------------------------------------------------
2,781,199
- ----------------------------------------------------------------
MEXICO-1.26%
Grupo Industrial Maseca, S.A. de
C.V.-Class B
(Food/Processing) 1,181,000 1,437,036
- ----------------------------------------------------------------
Grupo Televisa S.A.-GDR(a)
(Advertising/Broadcasting) 22,000 577,500
- ----------------------------------------------------------------
Panamerican Beverages, Inc.
(Beverages-Soft Drinks) 22,400 977,200
- ----------------------------------------------------------------
2,991,736
- ----------------------------------------------------------------
NETHERLANDS-3.32%
Akzo Nobel
(Conglomerates) 5,900 743,455
- ----------------------------------------------------------------
</TABLE>
FS-75
<PAGE> 304
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Elsevier N.V.
(Publishing) 23,000 $ 382,271
- ----------------------------------------------------------------
Getronics N.V.
(Computer Software/Services) 41,000 1,007,662
- ----------------------------------------------------------------
Gucci Group N.V.-New York Shares-ADR
(Textiles) 12,000 828,000
- ----------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food & Drug) 10,200 595,155
- ----------------------------------------------------------------
Nutricia Verenigde Bedrijven N.V.
(Food/Processing) 13,000 1,823,540
- ----------------------------------------------------------------
Oce-Van Der Grinten N.V.
(Office Automation) 7,000 746,744
- ----------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil & Gas-Services) 6,600 1,089,951
- ----------------------------------------------------------------
Ver Ned Uitgevuer Bezit N.V.
(Publishing) 15,500 281,370
- ----------------------------------------------------------------
Wolters Kluwer N.V.
(Publishing) 2,850 366,349
- ----------------------------------------------------------------
7,864,497
- ----------------------------------------------------------------
NORWAY-0.09%
UNI Storebrand A.S.(a)
(Insurance-Multi-Line Property) 35,000 205,147
- ----------------------------------------------------------------
PHILIPPINES-0.92%
C & P Homes, Inc.
(Homebuilding) 954,000 435,616
- ----------------------------------------------------------------
Filinvest Land Inc.(a)
(Real Estate) 1,031,700 349,396
- ----------------------------------------------------------------
Metro Pacific Corp.
(Conglomerates) 2,309,000 562,314
- ----------------------------------------------------------------
Metropolitan Bank & Trust Co.
(Banking) 14,375 317,256
- ----------------------------------------------------------------
Southeast Asia Cement Holdings, Inc.(a)
(Building Materials) 5,300,000 504,186
- ----------------------------------------------------------------
2,168,768
- ----------------------------------------------------------------
PORTUGAL-0.19%
Portugal Telecom S.A.(a)
(Telecommunications) 17,000 442,078
- ----------------------------------------------------------------
SINGAPORE-1.61%
Cerebos Pacific Ltd.
(Food/Processing) 82,000 634,576
- ----------------------------------------------------------------
City Developments Ltd.
(Real Estate) 129,000 1,016,613
- ----------------------------------------------------------------
DBS Land Ltd.
(Real Estate) 416,000 1,311,353
- ----------------------------------------------------------------
Overseas Union Bank Ltd.
(Banking) 125,000 851,970
- ----------------------------------------------------------------
3,814,512
- ----------------------------------------------------------------
SOUTH AFRICA-0.76%
De Beers Centenary A.G.
(Gold & Silver Mining) 28,000 826,425
- ----------------------------------------------------------------
Sasol Ltd.
(Oil & Gas-Exploration &
Production) 80,100 977,246
- ----------------------------------------------------------------
1,803,671
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPAIN-1.52%
Empresa Nacional de Electricidad, S.A.
(Electric Power) 23,100 $ 1,413,935
- ----------------------------------------------------------------
Iberdrola S.A.
(Electric Power) 77,000 817,704
- ----------------------------------------------------------------
Repsol S.A.
(Oil & Gas-Services) 8,300 270,931
- ----------------------------------------------------------------
Telefonica De Espana
(Telecommunications) 54,400 1,091,453
- ----------------------------------------------------------------
3,594,023
- ----------------------------------------------------------------
SWEDEN-1.78%
Astra AB-Class A
(Medical-Drugs) 7,550 346,746
- ----------------------------------------------------------------
Astra AB-B Shares
(Medical-Drugs) 2,500 114,056
- ----------------------------------------------------------------
Autoliv AB
(Automobile/Trucks Parts & Tires) 30,600 1,298,326
- ----------------------------------------------------------------
Hennes & Mauritz AB-B Shares
(Retail-Stores) 10,300 1,364,311
- ----------------------------------------------------------------
Securitas AB
(Security & Safety Services) 18,300 473,106
- ----------------------------------------------------------------
Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications) 22,000 607,750
- ----------------------------------------------------------------
4,204,295
- ----------------------------------------------------------------
SWITZERLAND-0.88%
Ciba-Geigy A.G.
(Chemicals) 650 800,672
- ----------------------------------------------------------------
Sandoz A.G.
(Chemicals) 700 809,098
- ----------------------------------------------------------------
Swissair A.G.(a)
(Airlines) 600 467,563
- ----------------------------------------------------------------
2,077,333
- ----------------------------------------------------------------
THAILAND-0.56%
Bank of Ayudhya Ltd.
(Banking) 11,400 32,642
- ----------------------------------------------------------------
Krung Thai Bank PLC
(Banking) 230,000 622,475
- ----------------------------------------------------------------
Siam Commercial Bank PLC Co. Ltd.
(Banking) 21,900 199,286
- ----------------------------------------------------------------
Thai Farmers Bank PLC
(Banking) 40,900 312,826
- ----------------------------------------------------------------
Thai Farmers Bank PLC-Rights(a)
(Banking) 5,163 2,695
- ----------------------------------------------------------------
Total Access Communication PLC
(Telecommunications) 20,000 138,000
- ----------------------------------------------------------------
1,307,924
- ----------------------------------------------------------------
UNITED KINGDOM-9.75%
Airtours PLC
(Leisure & Recreation) 56,000 594,271
- ----------------------------------------------------------------
Argos PLC
(Retail-Stores) 22,680 284,792
- ----------------------------------------------------------------
B.A.T. Industries PLC
(Conglomerates) 182,000 1,267,839
- ----------------------------------------------------------------
Barclays PLC
(Finance-Consumer Credit) 72,000 1,129,102
- ----------------------------------------------------------------
</TABLE>
FS-76
<PAGE> 305
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Bass PLC
(Beverages-Alcoholic) 24,000 $ 307,813
- ----------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 32,000 606,771
- ----------------------------------------------------------------
British Petroleum Co. PLC
(Oil & Gas-Services) 31,000 333,512
- ----------------------------------------------------------------
Burton Group PLC
(Retail-Stores) 473,000 1,149,011
- ----------------------------------------------------------------
Caradon PLC
(Building & Materials) 136,000 534,570
- ----------------------------------------------------------------
Compass Group PLC
(Food Processing) 59,200 586,797
- ----------------------------------------------------------------
Danka Business Systems PLC-ADR
(Office Automation) 16,100 637,962
- ----------------------------------------------------------------
Dixons Group PLC
(Retail-Stores) 164,000 1,469,434
- ----------------------------------------------------------------
FKI PLC
(Conglomerates) 155,000 529,785
- ----------------------------------------------------------------
General Electric Co. PLC
(Electronic
Components/Miscellaneous) 160,000 988,281
- ----------------------------------------------------------------
GKN PLC
(Automobile/Trucks Parts & Tires) 39,000 733,154
- ----------------------------------------------------------------
Granada Group PLC
(Leisure & Recreation) 101,400 1,458,120
- ----------------------------------------------------------------
Kingfisher PLC
(Retail-Stores) 46,800 497,402
- ----------------------------------------------------------------
Marks & Spencer PLC
(Retail-Stores) 110,000 923,828
- ----------------------------------------------------------------
Medeva PLC
(Medical-Drugs) 67,200 288,750
- ----------------------------------------------------------------
MFI Furniture Group PLC
(Retail-Stores) 355,000 1,155,599
- ----------------------------------------------------------------
Next PLC
(Retail-Stores) 77,000 701,823
- ----------------------------------------------------------------
NFC PLC
(Transportation-Miscellaneous) 325,000 1,015,625
- ----------------------------------------------------------------
Peninsular and Oriental Steam
Navigation Co. (The)
(Transportation-Miscellaneous) 56,000 550,065
- ----------------------------------------------------------------
Provident Financial PLC
(Finance-Consumer Credit) 137,400 1,029,829
- ----------------------------------------------------------------
Rentokil Group PLC
(Business Services) 100,000 671,387
- ----------------------------------------------------------------
Siebe PLC
(Electronic
Components/Miscellaneous) 75,000 1,176,757
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
SmithKline Beecham PLC-ADR
(Medical-Drugs) 7,000 $ 438,375
- ----------------------------------------------------------------
Smiths Industries PLC
(Electronic/Defense) 30,000 400,390
- ----------------------------------------------------------------
Standard Chartered PLC
(Finance-Asset Management) 41,500 447,826
- ----------------------------------------------------------------
WPP Group PLC
(Advertising/Broadcasting) 316,000 1,172,655
- ----------------------------------------------------------------
23,081,525
- ----------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 151,839,903
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(b)
<S> <C> <C>
CONVERTIBLE BONDS-0.32%
Boston Chicken Inc.,
Conv. Liquid Yield Option Notes,
(Restaurants)(c) 8.00%, 06/01/15 $2,310,000 747,863
- ----------------------------------------------------------------
U.S. DOLLAR DENOMINATED FOREIGN BONDS
& NOTES-0.45%
BERMUDA-0.11%
MBL Intl. Finance Bermuda,
Conv. Yankee Bonds, (Banking)
3.00%, 11/30/02 230,000 257,025
- ----------------------------------------------------------------
JAPAN-0.34%
Sumitomo Bank,
Conv. American Depository Notes,
(Banking)
0.75%, 05/31/01 850,000 811,750
- ----------------------------------------------------------------
Total U.S. Dollar Denominated
Foreign Bonds & Notes 1,068,775
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED FOREIGN
BONDS & NOTES
ITALY-0.47%
Pirelli S.p.A.,
Conv. Bonds, (Automobile/Trucks
Parts & Tires)
5.00%, 12/31/98 ITL 1,591,686,200 1,114,810
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS-2.73%(d)
Daiwa Securities America Inc., 5.53%,
11/01/96(e) 490,720 490,720
- ----------------------------------------------------------------
Dresdner Securities, Inc.,
5.54%,11/01/96(f) 6,000,000 6,000,000
- ----------------------------------------------------------------
Total Repurchase Agreements 6,490,720
- ----------------------------------------------------------------
TOTAL INVESTMENTS-100.05% 236,947,605
- ----------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(0.05)% (128,433)
- ----------------------------------------------------------------
NET ASSETS-100.00% $236,819,172
================================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
GDR - Global Depository Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Principal in U.S. Dollars unless otherwise indicated.
(c) Zero coupon bond. 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% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$750,115,208. Collateralized by $733,115,000 U.S. Treasury obligations, 0%
to 10.375% due 11/15/96 to 08/15/23.
(f) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$200,030,778. Collateralized by $198,651,000 U.S. Treasury obligations,
4.75% to 9.25% due 11/30/97 to 06/30/99.
See Notes to Financial Statements.
FS-77
<PAGE> 306
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$213,861,105) $ 236,947,605
- ---------------------------------------------------------
Foreign currencies, at market value
(cost $4,942,871) 4,930,741
- ---------------------------------------------------------
Receivables for:
- ---------------------------------------------------------
Investments sold 1,868,600
- ---------------------------------------------------------
Capital stock sold 1,751,250
- ---------------------------------------------------------
Dividends and interest 313,510
- ---------------------------------------------------------
Investment for deferred compensation
plan 6,352
- ---------------------------------------------------------
Other assets 93,073
- ---------------------------------------------------------
Total assets 245,911,131
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 8,304,055
- ---------------------------------------------------------
Capital stock reacquired 286,359
- ---------------------------------------------------------
Deferred compensation 6,352
- ---------------------------------------------------------
Accrued advisory fees 166,733
- ---------------------------------------------------------
Accrued administrative services fees 6,070
- ---------------------------------------------------------
Accrued distribution fees 158,740
- ---------------------------------------------------------
Accrued transfer agent fees 61,830
- ---------------------------------------------------------
Accrued operating expenses 101,820
- ---------------------------------------------------------
Total liabilities 9,091,959
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 236,819,172
=========================================================
NET ASSETS:
Class A $ 114,971,030
=========================================================
Class B $ 121,848,142
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER
SHARE:
Class A:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 8,098,028
=========================================================
Class B:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 8,673,120
=========================================================
Class A:
Net asset value and redemption price
per share $ 14.20
=========================================================
Offering price per share:
(Net asset value divided by 95.25%) $ 14.91
=========================================================
Class B:
Net asset value and offering price per
share $ 14.05
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $205,662 foreign
withholding tax) $ 1,943,751
- --------------------------------------------------------
Interest 511,628
- --------------------------------------------------------
Total investment income 2,455,379
- --------------------------------------------------------
EXPENSES:
Advisory fees 1,163,814
- --------------------------------------------------------
Administrative services fees 78,151
- --------------------------------------------------------
Directors' fees 6,855
- --------------------------------------------------------
Distribution fees -- Class A 352,082
- --------------------------------------------------------
Distribution fees -- Class B 663,802
- --------------------------------------------------------
Custodian fees 229,188
- --------------------------------------------------------
Transfer agent fees -- Class A 178,789
- --------------------------------------------------------
Transfer agent fees -- Class B 217,959
- --------------------------------------------------------
Other 127,009
- --------------------------------------------------------
Total expenses 3,017,649
- --------------------------------------------------------
Less: Expenses assumed by advisor (11,719)
- --------------------------------------------------------
Expenses paid indirectly (2,151)
- --------------------------------------------------------
Net expenses 3,003,779
- --------------------------------------------------------
Net investment income (loss) (548,400)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities (348,630)
- --------------------------------------------------------
Foreign currencies 7,538
- --------------------------------------------------------
Futures contracts (262,996)
- --------------------------------------------------------
(604,088)
- --------------------------------------------------------
Net unrealized appreciation
(depreciation) of:
Investment securities 20,104,008
- --------------------------------------------------------
Foreign currencies (71,876)
- --------------------------------------------------------
20,032,132
- --------------------------------------------------------
Net gain on investment securities, foreign
currencies and futures contracts 19,428,044
- --------------------------------------------------------
Net increase in net assets resulting from
operations $18,879,644
========================================================
</TABLE>
See Notes to Financial Statements.
FS-78
<PAGE> 307
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1996
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (548,400) $ (83,769)
- -------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities, foreign currencies and
futures contracts (604,088) 945,395
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and foreign currencies 20,032,132 2,866,448
- -------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 18,879,644 3,728,074
- -------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income -- Class A -- (2,116)
- -------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (516,173) --
- -------------------------------------------------------------------------------------------------------------------------
Class B (413,018) --
- -------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 81,693,730 18,511,217
- -------------------------------------------------------------------------------------------------------------------------
Class B 96,263,897 14,304,173
- -------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 195,908,080 36,541,348
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 40,911,092 4,369,744
- -------------------------------------------------------------------------------------------------------------------------
End of period $236,819,172 $ 40,911,092
=========================================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $214,452,461 $ 37,047,643
- -------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) 7,538 --
- -------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of investment securities, foreign
currencies and futures contracts (662,207) 874,201
- -------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 23,021,380 2,989,248
- -------------------------------------------------------------------------------------------------------------------------
$236,819,172 $ 40,911,092
=========================================================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
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: Class A shares and 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 Fund's investment objective is to provide long-term growth of capital. The
Fund seeks to achieve its objectives by investing in a portfolio of global
equity securities of selected companies which are considered by AIM to have
strong earnings momentum.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--Except as provided in the next sentence, a security
listed or traded on an exchange is valued at the last sales price on the
exchange where the security is principally traded or, lacking any sales, at
the mean between the closing bid and asked prices on the day of valuation.
Exchange listed convertible bonds are valued at the mean between the closing
bid and asked prices obtained from a broker-dealer. If a mean is not
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Securities traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) are
FS-79
<PAGE> 308
valued at the mean between the closing bid and asked prices on valuation
date. Securities reported on the NASDAQ National Market System are valued at
the last sales price on the valuation date or absent a last sales price, at
the mean of the closing bid and asked prices. Securities for which market
quotations are either not readily available or are questionable 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 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 forward 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. On October 31, 1996,
undistributed net investment income was increased by $555,938, paid-in
capital reduced by $552,809 and undistributed net realized gains reduced by
$3,129 in order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassifications discussed above.
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. The Fund has a capital loss carryforward of
$630,387 (which may be carried forward to offset future taxable capital
gains, if any) which expires, if not previously utilized, through the year
2004.
F. Stock Index Futures Contracts--The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the Fund's
basis in the contract. Risks include the possibility of an illiquid market
and that a change in the value of contracts may not correlate with changes in
the value of the securities being hedged.
G. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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 investment 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 year ended
October 31, 1996, AIM assumed expenses of the Fund in the amount of $11,719.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1996, AIM was
reimbursed $78,151 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended October 31, 1996, AFS was paid
$216,804 for such services.
The Fund received reductions in transfer agency fees of $1,895 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $256 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
FS-80
<PAGE> 309
reduction in the Fund's total expenses of $2,151 during the year ended October
31, 1996.
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
distribution 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, pays 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. Of the total compensation payable, a service fee of 0.25% is paid
to selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, pays 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 pays 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the year ended October 31, 1996, the Class A shares and
the Class B shares paid AIM Distributors $352,082 and $663,802, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $388,799 from the sales of the Class
A shares of the Fund during the year ended October 31, 1996. 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 year ended October 31,
1996, AIM Distributors received commissions of $14,106 in contingent deferred
sales charges imposed on redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, AFS and AIM
Distributors.
During the year ended October 31, 1996, the Fund incurred legal fees of $3,146
for services rendered by the law firm of Kramer, Levin, Naftalis & 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 AIM. 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-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $300,000. During the year ended October 31, 1996, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.08% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1996 was
$279,290,655 and $103,514,524, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $27,999,861
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (4,954,987)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $23,044,874
=========================================================
</TABLE>
Cost of investments for tax purposes is $213,902,731.
FS-81
<PAGE> 310
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 7,117,057 $ 94,636,553 1,836,306 $20,814,602
- ------------------------------------------------------------------ ---------- ------------ --------- -----------
Class B 7,683,810 101,786,913 1,403,515 15,741,389
- ------------------------------------------------------------------ ---------- ------------ --------- -----------
Issued as reinvestment of distributions:
Class A 36,930 453,130 171 1,642
- ------------------------------------------------------------------ ---------- ------------ --------- -----------
Class B 31,124 379,711 -- --
- ------------------------------------------------------------------ ---------- ------------ --------- -----------
Reacquired:
Class A (983,830) (13,395,953) (210,976) (2,305,027)
- ------------------------------------------------------------------ ---------- ------------ --------- -----------
Class B (441,521) (5,902,727) (128,718) (1,437,216)
- ------------------------------------------------------------------ ---------- ------------ --------- -----------
13,443,570 $177,957,627 2,900,298 $32,815,390
================================================================== ========== ============ ========= ===========
</TABLE>
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share and a Class B share
outstanding during each of the years in the two-year period ended October 31,
1996 and the period September 15, 1994 (date operations commenced) through
October 31, 1994.
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 12.32 $ 10.23 $ 10.00
- ----------------------------------------------------------------------------- --------- -------- --------
Income from investment operations:
Net investment income (loss) (0.01) (0.02) -
- ----------------------------------------------------------------------------- --------- -------- --------
Net gains on securities (both realized and unrealized) 2.11 2.11 0.23
- ----------------------------------------------------------------------------- --------- -------- --------
Total from investment operations 2.10 2.09 0.23
- ----------------------------------------------------------------------------- --------- -------- --------
Less distributions:
Dividends from net investment income - (0.004) -
- ----------------------------------------------------------------------------- --------- -------- --------
Distributions from net realized capital gains (0.22) - -
- ----------------------------------------------------------------------------- --------- -------- --------
Total distributions (0.22) (0.004) -
- ----------------------------------------------------------------------------- --------- -------- --------
Net asset value, end of period $ 14.20 $ 12.32 $ 10.23
============================================================================= ========= ======== ========
Total return(a) 17.26% 20.48% 2.30%
============================================================================= ========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 114,971 $ 23,754 $ 3,093
============================================================================= ========= ======== ========
Ratio of expenses to average net assets(b) 1.93%(c)(d) 2.12% 1.95%(e)
============================================================================= ========= ======== ========
Ratio of net investment income (loss) to average net assets(f) (0.13)%(c) (0.28)% 0.10%(e)
============================================================================= ========= ======== ========
Portfolio turnover rate 82% 79% 6%
============================================================================= ========= ======== ========
Average brokerage commission rate(g) $ 0.0234 N/A N/A
============================================================================= ========= ======== ========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers and expense reimbursements are 1.94%, 2.98%
and 5.67% (annualized), respectively for 1996, 1995 and 1994.
(c) Ratios are based on average net assets of $70,416,375.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets before fee waivers and expense
reimbursements are (0.14)%, (1.14)% and (3.63)% (annualized), respectively
for 1996, 1995 and 1994.
(g) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
F-82
<PAGE> 311
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 12.26 $ 10.22 $ 10.00
- ----------------------------------------------------------------------------- --------- -------- --------
Income from investment operations:
Net investment income (loss) (0.05) (0.04) -
- ----------------------------------------------------------------------------- --------- -------- --------
Net gains on securities (both realized and unrealized) 2.06 2.08 0.22
- ----------------------------------------------------------------------------- --------- -------- --------
Total from investment operations 2.01 2.04 0.22
- ----------------------------------------------------------------------------- --------- -------- --------
Less distributions:
Distributions from net realized capital gains (0.22) - -
- ----------------------------------------------------------------------------- --------- -------- --------
Total distributions (0.22) - -
- ----------------------------------------------------------------------------- --------- -------- --------
Net asset value, end of period $ 14.05 $ 12.26 $ 10.22
============================================================================= ========= ======== ========
Total return(a) 16.60% 19.96% 2.20%
============================================================================= ========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 121,848 $ 17,157 $ 1,277
============================================================================= ========= ======== ========
Ratio of expenses to average net assets(b) 2.48%(c)(d) 2.64% 2.51%(e)
============================================================================= ========= ======== ========
Ratio of net investment income (loss) to average net assets(f) (0.69)%(c) (0.79)% (0.47)%(e)
============================================================================= ========= ======== ========
Portfolio turnover rate 82% 79% 6%
============================================================================= ========= ======== ========
Average brokerage commission rate(g) $ 0.0234 N/A N/A
============================================================================= ========= ======== ========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers and expense reimbursements are 2.49%, 3.38%
and 6.20% (annualized), respectively for 1996, 1995 and 1994.
(c) Ratios are based on average net assets of $66,380,227.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets before fee waivers and expense
reimbursements are (0.69)%, (1.54)% and (4.16)% (annualized), respectively
for 1996, 1995 and 1994.
(g) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
NOTE 8-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an agreement and plan of merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
FS-83
<PAGE> 312
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM Global Income Fund (a portfolio of AIM
International Funds, Inc.), including the schedule of
investments, as of October 31, 1996, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years in
the two-year period then ended and the financial highlights
for each of the years in the two-year period then ended,
and 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 audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1996, 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Income Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net
assets for each of the years in the two-year period then
ended and the financial highlights for each of the years in
the two-year period then ended and 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 6, 1996
FS-84
<PAGE> 313
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES-37.45%
ADVERTISING/BROADCASTING-1.63%
SFX Broadcasting, Inc.
Sr. Sub. Notes, 10.75%
05/15/06 $ 200,000 $ 205,000
- ----------------------------------------------------------------
Sinclair Broadcast Group,
Sr. Sub. Notes, 10.00%
09/30/05 100,000 97,000
- ----------------------------------------------------------------
Time Warner Inc.,
Deb., 6.85% 01/15/26 125,000 122,333
- ----------------------------------------------------------------
Notes, 8.18% 08/15/07 200,000 205,810
- ----------------------------------------------------------------
630,143
- ----------------------------------------------------------------
AIRLINES-0.76%
Airplanes Pass Through Trust,
Sub. Bonds, 10.875% 03/15/19 230,000 250,987
- ----------------------------------------------------------------
Greenwich Air Services Inc.,
Sr. Notes, 10.50% 06/01/06 40,000 41,800
- ----------------------------------------------------------------
292,787
- ----------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.16%
CSK Auto Inc.,
Sr. Sub. Notes, 11.00%
11/01/06
(acquired 10/23/96; cost
$60,000)(b) 60,000 61,050
- ----------------------------------------------------------------
BANKING-1.74%
First Union Bancorp,
Sub. Deb., 7.50% 04/15/35 200,000 209,990
- ----------------------------------------------------------------
Royal Bank of Scotland,
Yankee Bond, 6.375% 02/01/11 500,000 463,710
- ----------------------------------------------------------------
673,700
- ----------------------------------------------------------------
BEVERAGES-1.55%
Coca Cola Enterprises,
Notes, 7.24% 06/20/20(c) 3,113,000 598,878
- ----------------------------------------------------------------
CABLE TELEVISION-2.45%
CAI Wireless Systems Inc.,
Sr. Notes, 12.25% 09/15/02 40,000 38,800
- ----------------------------------------------------------------
Comcast UK Cable,
Yankee Unsec. Sr. Disc. Deb.,
11.20% 11/15/07(d) 400,000 258,000
- ----------------------------------------------------------------
Fundy Cable Ltd.,
Yankee Bonds, 11.00% 11/15/05 30,000 31,350
- ----------------------------------------------------------------
Kabelmedia Holdings GMBH,
Yankee Unsec. Sr. Disc. Notes,
13.625% 08/01/06(d) 200,000 109,500
- ----------------------------------------------------------------
Rifkin Acquisition Partners
L.P.,
Sr. Sub. Notes, 11.125%
01/15/06 40,000 40,800
- ----------------------------------------------------------------
Telewest PLC,
Yankee Sr. Disc. Deb.,
11.00% 10/01/07(d) 50,000 31,876
- ----------------------------------------------------------------
United International Holdings
Inc.,
Sec. Sr. Disc. Notes, 11/15/99
12.99%(d) 200,000 138,000
- ----------------------------------------------------------------
Viacom Inc.,
Sr. Notes, 7.75% 06/01/05 100,000 97,053
- ----------------------------------------------------------------
Wireless One Inc.,
Units, 13.00% 10/15/03(e) 200,000 203,000
- ----------------------------------------------------------------
948,379
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CHEMICALS-1.38%
BPC Holding Corp.,
Sr. Notes, 12.50% 06/15/06 $ 100,000 $ 105,250
- ----------------------------------------------------------------
Crain Industries,
Sr. Sub. Notes, 13.50%
08/15/05 40,000 44,600
- ----------------------------------------------------------------
Laroche Industries,
Sr. Sub Notes, 13.00% 08/15/04 100,000 108,000
- ----------------------------------------------------------------
Polymer Group Inc.,
Sr. Notes, 12.25% 07/15/02 200,000 218,000
- ----------------------------------------------------------------
Sterling Chemicals Inc.,
Unsec. Sr. Sub. Notes, 11.75%
08/15/06 60,000 60,600
- ----------------------------------------------------------------
536,450
- ----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.27%
Printpack Inc.,
Sr. Sub. Notes, 10.625%
08/15/06(b)
(acquired 08/15/96-09/04/96;
cost $100,500) 100,000 103,250
- ----------------------------------------------------------------
CONSUMER NON-DURABLES-0.27%
Hines Horticulture Inc.,
Sr. Sub Notes, 11.75% 10/15/05 100,000 105,500
- ----------------------------------------------------------------
CONTAINERS-0.35%
Ivex Packaging,
Sr. Sub. Notes, 12.50%
12/15/02 10,000 10,750
- ----------------------------------------------------------------
Owens-Illinois Inc.,
Sr. Sub. Notes, 10.50%
06/15/02 50,000 52,126
- ----------------------------------------------------------------
Riverwood International,
Unsec. Sr. Sub. Notes,
10.875% 04/01/08 80,000 73,200
- ----------------------------------------------------------------
136,076
- ----------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-2.12%
Associates Corp.,
Deb., 7.95% 02/15/10 100,000 110,246
- ----------------------------------------------------------------
Household Finance Co.,
Notes, 7.125% 09/01/05 700,000 709,521
- ----------------------------------------------------------------
819,767
- ----------------------------------------------------------------
FOOD PROCESSING-0.60%
Chiquita Brands International
Inc.,
Unsec. Sr. Notes, 10.25%
11/01/06 80,000 82,400
- ----------------------------------------------------------------
International Home Foods,
Sr. Sub. Notes, 10.375%
11/01/06(b)
(acquired 10/29/96; cost
$50,000) 50,000 50,500
- ----------------------------------------------------------------
Pilgrim's Pride Corp.,
Sr. Sub. Notes, 10.875%
08/01/03 100,000 99,250
- ----------------------------------------------------------------
232,150
- ----------------------------------------------------------------
FOREIGN GOVERNMENT-0.81%
Province of Manitoba,
Yankee Bonds, 7.75% 07/17/16 300,000 314,703
- ----------------------------------------------------------------
GAMING-1.57%
Aztar Corp.,
Sr. Sub. Notes, 11.00%
10/01/02 30,000 28,200
- ----------------------------------------------------------------
Casino America Inc.,
Gtd. Sr. Notes, 12.50%
08/01/03 200,000 205,500
- ----------------------------------------------------------------
Coast Hotel & Casino,
First Mortgage Notes, 13.00%
12/15/02 70,000 75,250
- ----------------------------------------------------------------
</TABLE>
FS-85
<PAGE> 314
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
GAMING-(CONTINUED)
Harvey Casinos Resorts,
Unsec. Sr. Sub. Notes,
10.625% 06/01/06 $ 100,000 $ 104,750
- ----------------------------------------------------------------
Showboat Marina,
First Mortgage Notes, 13.50%
03/15/03 100,000 107,500
- ----------------------------------------------------------------
Trump Atlantic City,
First Mortgage Notes, 11.25%
05/01/06 90,000 85,050
- ----------------------------------------------------------------
606,250
- ----------------------------------------------------------------
HOMEBUILDING-0.14%
Continental Homes Holdings,
Sr. Notes, 10.00% 04/15/06 55,000 55,550
- ----------------------------------------------------------------
HOTELS/MOTELS-0.63%
ITT Corp. (New),
Deb., 7.375% 11/15/15 150,000 144,893
- ----------------------------------------------------------------
John Q. Hammons Hotels,
Gtd. First Mortgage Notes,
9.75% 10/01/05 100,000 100,000
- ----------------------------------------------------------------
244,893
- ----------------------------------------------------------------
LEISURE & RECREATION-0.47%
Cobblestone Golf Group,
Sr. Notes, 11.50% 06/01/03(b)
(acquired 05/29/96; cost
$100,000) 100,000 103,250
- ----------------------------------------------------------------
Icon Health & Fitness Inc.,
Sr. Sub. Notes, 13.00%
07/15/02 70,000 78,574
- ----------------------------------------------------------------
181,824
- ----------------------------------------------------------------
MACHINERY (HEAVY)-0.48%
Fairfield Manufacturing,
Sr. Sub. Notes, 11.375%
07/01/01 50,000 51,750
- ----------------------------------------------------------------
Primeco Inc.,
Sr. Sub. Notes, 12.75%
03/01/05 120,000 132,600
- ----------------------------------------------------------------
184,350
- ----------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.38%
Interlake Corp.,
Sr. Notes, 12.00% 11/15/01 40,000 42,400
- ----------------------------------------------------------------
MVE Inc.,
Sr. Sec. Notes, 12.50%
02/15/02 100,000 105,250
- ----------------------------------------------------------------
147,650
- ----------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.21%
Dynacare Inc.,
Yankee Sr. Notes, 10.75%
01/15/06 80,000 81,300
- ----------------------------------------------------------------
MEDICAL
INSTRUMENTS/PRODUCTS-0.47%
Dade International Inc.,
Sr. Sub. Notes, 11.125%
05/01/06(b)
(acquired 04/30/96-07/16/96;
cost $102,700) 100,000 107,000
- ----------------------------------------------------------------
Graphic Controls Corp.,
Sr. Sub. Notes, 12.00%
09/15/05 70,000 75,950
- ----------------------------------------------------------------
182,950
- ----------------------------------------------------------------
METALS (MISCELLANEOUS)-0.33%
Rio Algom Ltd.,
Yankee Deb., 7.05% 11/01/05 130,000 127,374
- ----------------------------------------------------------------
NATURAL GAS PIPELINE-1.56%
Ferrellgas Partners L.P.,
Sr. Notes, 9.375% 06/15/06 300,000 300,750
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NATURAL GAS PIPELINE-(CONTINUED)
Plains Resources Inc.,
Sr. Sub. Notes, 10.25%
03/15/06 $ 50,000 $ 52,000
- ----------------------------------------------------------------
Talisman Energy Inc.,
Yankee Deb., 7.125% 06/01/07 250,000 249,260
- ----------------------------------------------------------------
602,010
- ----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.27%
Benton Oil & Gas,
Sr. Notes, 11.625% 05/01/03 50,000 55,000
- ----------------------------------------------------------------
Forest Oil Corp.,
Sr. Sub. Notes, 11.25%
09/01/03 100,000 106,500
- ----------------------------------------------------------------
Mariner Energy Corp.,
Sr. Sub. Notes, 10.50%
08/01/06(b)
(acquired 08/12/96-09/04/96;
cost $110,350) 110,000 113,987
- ----------------------------------------------------------------
Maxus Energy,
Deb., 11.50% 11/15/15 170,000 178,713
- ----------------------------------------------------------------
Petroleum Heat & Power Inc.,
Sub. Deb., 12.25% 02/01/05 33,000 36,960
- ----------------------------------------------------------------
491,160
- ----------------------------------------------------------------
OIL & GAS (INTEGRATED)-0.53%
Wainoco Oil Corp.,
Sr. Sub. Notes, 12.00%
08/01/02 200,000 207,000
- ----------------------------------------------------------------
OIL & GAS (SERVICES)-0.05%
Falcon Drilling Co. Inc.,
Sr. Notes, 9.75% 01/15/01 20,000 20,500
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.59%
National Fiberstock Corp.,
Sr. Notes, 11.625% 06/15/02(b)
(acquired 06/21/96; cost
$100,000) 100,000 104,500
- ----------------------------------------------------------------
Rapp International Finance,
Gtd. Yankee Sec. Notes,
11.50% 12/15/00 50,000 52,000
- ----------------------------------------------------------------
Repap New Brunswick,
Yankee Bonds, 10.625% 04/15/05 70,000 70,700
- ----------------------------------------------------------------
227,200
- ----------------------------------------------------------------
POLLUTION CONTROL-2.16%
Norcal Waste Systems,
Sr. Notes, 12.75% 11/15/05 150,000 165,000
- ----------------------------------------------------------------
WMX Technologies Inc.,
Unsec. Notes, 7.10% 08/01/26 650,000 672,777
- ----------------------------------------------------------------
837,777
- ----------------------------------------------------------------
PUBLISHING-0.73%
News America Holdings,
Gtd. Sr. Deb., 9.25% 02/01/13 250,000 280,797
- ----------------------------------------------------------------
RAILROADS-0.19%
Johnstown America Industries
Inc.,
Sr. Sub. Notes, 11.75%
08/15/05 80,000 73,600
- ----------------------------------------------------------------
REAL ESTATE-1.32%
Finova Capital Corp.,
Notes, 7.40% 05/06/06 500,000 511,820
- ----------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.54%
Carr-Gottstein Foods Co.,
Sr. Sub. Notes, 12.00%
11/15/05 100,000 105,000
- ----------------------------------------------------------------
</TABLE>
FS-86
<PAGE> 315
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
RETAIL (FOOD & DRUG)-(CONTINUED)
Great Atlantic & Pacific,
Yankee Bonds, 7.78%
11/01/00(b)
(acquired 10/18/95; cost
$100,000) $ 100,000 $ 102,221
- ----------------------------------------------------------------
207,221
- ----------------------------------------------------------------
RETAIL (STORES)-0.93%
Loehmann's Holdings, Inc.,
Unsec. Sr. Notes, 11.875%
05/15/03 100,000 106,750
- ----------------------------------------------------------------
Samsonite Corp.,
Sr. Sub. Notes, 11.125%
07/15/05 40,000 42,400
- ----------------------------------------------------------------
Specialty Retailers Inc.,
Sr. Sub. Notes, 11.00%
08/15/03 75,000 77,062
- ----------------------------------------------------------------
United Stationer Supply Inc.,
Sr. Sub. Notes, 12.75%
05/01/05 120,000 132,000
- ----------------------------------------------------------------
358,212
- ----------------------------------------------------------------
SCHOOLS-0.28%
Herff Jones Inc.,
Sr. Sub. Notes, 11.00%
08/15/05 100,000 106,750
- ----------------------------------------------------------------
SEMICONDUCTORS-0.29%
Advanced Micro Devices,
Sec. Sr. Notes, 11.00%
08/01/03 110,000 113,850
- ----------------------------------------------------------------
STEEL-0.96%
Bayou Steel Corp.,
First Mortgage Notes, 10.25%
03/01/01 135,000 129,600
- ----------------------------------------------------------------
GS Technologies Inc.,
Sr. Notes, 12.00% 09/01/04 75,000 78,187
- ----------------------------------------------------------------
Gulf States Steel Corp.,
First Mortgage Notes, 13.50%
04/15/03 60,000 57,000
- ----------------------------------------------------------------
Oregon Steel Mills,
First Mortgage Notes, 11.00%
06/15/03 100,000 105,000
- ----------------------------------------------------------------
369,787
- ----------------------------------------------------------------
TELECOMMUNICATIONS-5.10%
Arch Communications Group,
Sr. Disc. Notes, 10.875%
03/15/08(d) 250,000 137,500
- ----------------------------------------------------------------
Celcaribe SA,
Sr. Notes, 13.50% 03/15/04(d) 500,000 419,376
- ----------------------------------------------------------------
Clearnet Communications,
Yankee Units, 14.75%
12/15/05(d)(f) 100,000 59,125
- ----------------------------------------------------------------
Omnipoint Corp.,
Sr. Notes, 11.625% 08/15/06(b)
(acquired 08/22/96; cost
$200,000) 200,000 202,000
- ----------------------------------------------------------------
PriCellular Wire,
Sr. Notes, 10.75% 11/01/04(b)
(acquired 10/30/96; cost
$40,000) 40,000 40,400
- ----------------------------------------------------------------
Pronet Inc.,
Sr. Sub. Notes, 11.875%
06/15/05 30,000 27,600
- ----------------------------------------------------------------
Sprint Spectrum L.P.,
Unsec. Sr. Notes, 11.00%
08/15/06 200,000 201,501
- ----------------------------------------------------------------
Sygnet Wireless Inc.,
Unsec. Sr. Notes, 11.50%
10/01/06 60,000 60,600
- ----------------------------------------------------------------
TCI Communications Inc.,
Notes, 8.00% 08/01/05 150,000 142,630
- ----------------------------------------------------------------
Teleport Communications,
Sr. Disc. Notes, 11.125%
07/01/07(d) 300,000 192,000
- ----------------------------------------------------------------
360 Communications Co.,
Sr. Notes, 7.50% 03/01/06 500,000 497,355
- ----------------------------------------------------------------
1,980,087
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TRANSPORTATION
(MISCELLANEOUS)-0.22%
Stena AB,
Yankee Sr. Notes, 10.50%
12/15/05 $ 80,000 $ 83,700
- ----------------------------------------------------------------
TRUCKING-0.76%
Ameritruck Distribution,
Sr. Sub. Notes, 12.25%
11/15/05 300,000 294,750
- ----------------------------------------------------------------
UTILITIES-0.67%
El Paso Electric Co.,
First Mortgage Notes, 8.90%
02/01/06 250,000 258,407
- ----------------------------------------------------------------
WATER SUPPLY-0.53%
Panda Funding Corp.,
Pooled Project Bonds, 11.625%
08/20/12(b)
(acquired 07/26/96; cost
$200,000) 200,000 206,250
- ----------------------------------------------------------------
Total U.S. Dollar
Denominated
Non-Convertible Bonds &
Notes 14,495,852
- ----------------------------------------------------------------
U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES-1.99%
AIRLINES-1.32%
Continental Airlines Inc.,
Conv. Sr. Sub. Notes, 6.75%
04/15/06(b)
(acquired 02/27/96; cost
$499,825) 500,000 511,250
- ----------------------------------------------------------------
TRANSPORTATION
(MISCELLANEOUS)-0.67%
Laidlaw Inc.,
Unsec. Unsub. Conv. Deb.,
6.00% 01/15/99 200,000 260,000
- ----------------------------------------------------------------
Total U.S. Dollar
Denominated Convertible
Bonds & Notes 771,250
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED NON-
CONVERTIBLE BONDS &
NOTES(G)-12.97%
CANADA-5.63%
Bank of Montreal
(Finance-Asset Management),
Sub. Deb., 7.92% 07/31/12 CAD 300,000 244,441
- ----------------------------------------------------------------
Bell Canada
(Telecommunications), Deb,
10.875% 10/11/04 150,000 140,880
- ----------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas),
Deb., 11.00% 10/31/00 250,000 219,650
- ----------------------------------------------------------------
Teleglobe Canada Inc.
(Telecommunications),
Deb., 8.35% 06/20/03 650,000 535,442
- ----------------------------------------------------------------
Trans-Canada Pipelines (Oil &
Gas),
Notes, 8.55% 02/01/06 500,000 418,221
- ----------------------------------------------------------------
Notes, 10.625% 10/20/09 375,000 359,694
- ----------------------------------------------------------------
Viridian Inc.
(Chemicals-Specialty), Notes,
11.00% 03/31/04 300,000 261,565
- ----------------------------------------------------------------
2,179,893
- ----------------------------------------------------------------
FRANCE-0.40%
Credit Local de France
(Finance-Consumer Credit),
Sr. Unsub. Deb., 6.00%
11/15/01 FRF 250,000 50,748
- ----------------------------------------------------------------
IBM International Finance N.V.
(Computer Mainframes),
Sr. Unsub. Deb., 10.00%
08/29/97 500,000 104,020
- ----------------------------------------------------------------
154,768
- ----------------------------------------------------------------
</TABLE>
FS-87
<PAGE> 316
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
GERMANY-3.22%
Ford Credit Europe PLC
(Finance-Consumer Credit),
Deb., 6.00% 03/30/99 DEM 200,000 $ 137,936
- ----------------------------------------------------------------
International Bank for
Reconstruction & Development
(Supranational
Organization), Unsub. Global
Bonds, 7.125% 04/12/05 475,000 329,574
- ----------------------------------------------------------------
LKB Global (Banking),
Gtd Notes, 6.00% 01/25/06 1,200,000 780,666
- ----------------------------------------------------------------
1,248,176
- ----------------------------------------------------------------
ITALY-2.33%
KFW International Finance
(Finance-Consumer Credit),
Gtd. Notes, 11.625% 11/27/98 ITL 570,000,000 402,059
- ----------------------------------------------------------------
Swedish Export Credit
(Finance-Consumer Credit)
Unsec. Unsub. Deb., 11.70%
12/04/98 700,000,000 500,867
- ----------------------------------------------------------------
902,926
- ----------------------------------------------------------------
JAPAN-0.65%
Sony Corp. (Electronic
Components/Miscellaneous),
Bonds, 1.40% 09/30/03 JPY 6,000,000 67,033
- ----------------------------------------------------------------
Toyota Motor Corp.
(Automobile-Manufacturers),
Deb., 1.20% 01/28/98 15,000,000 182,930
- ----------------------------------------------------------------
249,963
- ----------------------------------------------------------------
SWEDEN-0.29%
Credit Foncier de France
(Finance-Consumer Credit)
Sr. Unsub. Deb., 6.50%
02/22/99 SEK 750,000 113,980
- ----------------------------------------------------------------
UNITED KINGDOM-0.45%
KFW International Finance
(Finance-Consumer Credit),
Gtd. Notes, 10.625% 09/03/01 BPS 100,000 173,120
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated
Non-Convertible Bonds &
Notes 5,022,826
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES(g)-2.74%
Societe Generale (Banking),
Conv. Deb., 3.50% 01/01/00 FRF 231,000 49,292
- ----------------------------------------------------------------
JAPAN-1.51%
Glaxo Holdings PLC
(Medical-Drugs), Conv. Deb.,
4.30% 09/28/98 JPY 4,000,000 40,824
- ----------------------------------------------------------------
Jusco Co. Ltd. (Consumer
Non-Durables), Conv. Deb.,
1.20% 02/20/01 40,000,000 544,728
- ----------------------------------------------------------------
585,552
- ----------------------------------------------------------------
SWITZERLAND-1.10%
Aderans Co. Ltd. (Cosmetics &
Toiletries), Conv. Deb.,
0.875% 08/31/98 CHF 200,000 159,810
- ----------------------------------------------------------------
Yamada Denki Co. Ltd.
(Retail-Stores), Conv. Notes,
0.25% 03/31/00 300,000 265,822
- ----------------------------------------------------------------
425,632
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Convertible
Bonds & Notes 1,060,476
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED GOVERNMENT
BONDS & NOTES(g)-25.00%
AUSTRALIA-4.02%
Australian Government,
Gtd. Deb., 10.00% 02/15/06 AUD 500,000 $ 465,762
- ----------------------------------------------------------------
Gtd. Deb., 10.00% 10/15/07 500,000 472,388
- ----------------------------------------------------------------
Queensland Treasury Corp.,
Gtd. Notes, 8.875% 11/08/96 180,000 142,854
- ----------------------------------------------------------------
Treasury Corp. of Victoria,
Local Government Gtd. Deb.,
12.00% 09/22/01 500,000 474,984
- ----------------------------------------------------------------
1,555,988
- ----------------------------------------------------------------
CANADA-3.30%
British Columbia (Province of),
Deb., 9.00% 06/21/04(c) CAD 150,000 68,721
- ----------------------------------------------------------------
British Columbia Municipal
Finance Authority, Deb., 7.75%
12/01/05 500,000 404,678
- ----------------------------------------------------------------
Ontario Province,
Sr. Unsub. Deb., 8.35%
03/11/03 600,000 493,583
- ----------------------------------------------------------------
Ontario Province, STRIP, 8.18%
01/10/45(c) 15,000,000 310,588
- ----------------------------------------------------------------
1,277,570
- ----------------------------------------------------------------
DENMARK-1.82%
Kingdom of Denmark,
Deb., 8.00% 11/15/01 DKK 3,750,000 706,218
- ----------------------------------------------------------------
FRANCE-1.83%
French Treasury Bill,
Notes, 5.75% 11/12/98 FRF 3,500,000 709,413
- ----------------------------------------------------------------
GERMANY-2.03%
Bundesrepublik Deutschland,
Deb., 6.75% 07/15/04 DEM 750,000 512,554
- ----------------------------------------------------------------
Deb., 6.875% 05/12/05 400,000 273,257
- ----------------------------------------------------------------
785,811
- ----------------------------------------------------------------
NEW ZEALAND-1.35%
New Zealand Government,
Gtd. Deb., 9.00% 11/15/96 NZD 305,000 215,669
- ----------------------------------------------------------------
Gtd. Deb., 10.00% 07/15/97 425,000 304,612
- ----------------------------------------------------------------
520,281
- ----------------------------------------------------------------
SWEDEN-3.78%
Swedish Government
Bonds, 13.00% 06/15/01 SEK 3,000,000 573,270
- ----------------------------------------------------------------
Bonds, 10.25% 05/05/03 5,000,000 890,019
- ----------------------------------------------------------------
1,463,289
- ----------------------------------------------------------------
UNITED KINGDOM-6.87%
Ontario Province,
Sr. Unsub. Notes, 6.875%
09/15/00 BPS 35,000 55,101
- ----------------------------------------------------------------
United Kingdom Treasury Notes
8.00% 12/07/00 350,000 587,549
- ----------------------------------------------------------------
7.00% 11/06/01 800,000 1,290,233
- ----------------------------------------------------------------
7.50% 12/07/06 450,000 726,357
- ----------------------------------------------------------------
2,659,240
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Government
Bonds & Notes 9,677,810
- ----------------------------------------------------------------
</TABLE>
FS-88
<PAGE> 317
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS-1.63%
ADVERTISING/BROADCASTING-0.00%
Time Warner Inc., Series K Conv.
Pfd.(b)
(acquired 06/06/96; cost $775) 1 $ 832
- ----------------------------------------------------------------
ELECTRIC POWER-0.62%
Citizens Utilities Trust, $2.50
Conv. Pfd. 5,000 240,000
- ----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-1.01%
Conseco Inc., $4.28, Conv. Pfd. 4,000 390,000
- ----------------------------------------------------------------
Total Convertible Preferred
Stocks 630,832
- ----------------------------------------------------------------
WARRANTS-0.04%
CABLE TELEVISION-0.00%
Wireless One-Wt., expiring
10/19/00(h) 150 450
- ----------------------------------------------------------------
CONTAINERS-0.01%
MVE Inc.,-Wt., expiring
02/15/02(h) 100 3,000
- ----------------------------------------------------------------
LEISURE & RECREATION-0.01%
IHF Holdings-Wt., expiring
11/14/99(h) 70 2,800
- ----------------------------------------------------------------
STEEL-0.00%
Gulf States Steel-Wt., expiring
04/15/03(h) 60 300
- ----------------------------------------------------------------
TELECOMMUNICATIONS-0.02%
Clearnet Communications-Wt.,
expiring 09/15/05(h) 330 2,640
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS-(CONTINUED)
Intermedia-Wt., expiring
06/01/00(b)(h)
(acquired 05/25/95; cost $150) 150 $ 7,500
- ----------------------------------------------------------------
10,140
- ----------------------------------------------------------------
Total Warrants 16,690
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-11.01%
U.S. Treasury Notes
6.50% 05/31/01 $ 1,500,000 $ 1,525,230
- ----------------------------------------------------------------
6.625% 06/30/01 500,000 510,825
- ----------------------------------------------------------------
6.50% 08/15/05 1,200,000 1,213,488
- ----------------------------------------------------------------
6.75% 08/15/26 1,000,000 1,012,160
- ----------------------------------------------------------------
Total U.S. Treasury securities 4,261,703
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS(i)-3.62%
Daiwa Securities America Inc.,
5.53% 11/01/96(j) 400,640 400,640
- ----------------------------------------------------------------
Dresdner Securities Inc.,
5.54% 11/01/96(k) 1,000,000 1,000,000
- ----------------------------------------------------------------
Total Repurchase Agreements 1,400,640
- ----------------------------------------------------------------
TOTAL INVESTMENTS-96.45% 37,338,079
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-3.55% 1,375,691
- ----------------------------------------------------------------
NET ASSETS-100.00% $ 38,713,770
================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by note (g).
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at October 31, 1996 was
$1,713,990 which represented 4.43% of the Fund's net assets.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(d) Discounted bond at purchase. Interest rate represents coupon rate at which
the bond will accrue at a specified future date.
(e) Issued as a unit. This unit also includes 150 warrants to purchase one share
of common stock each at $11.55 per share.
(f) Issued as a unit. This unit also includes 330 warrants to purchase shares of
common stock.
(g) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(h) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(i) 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% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(j) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$750,115,208. Collateralized by $733,115,000 U.S. Treasury obligations, 0%
to 10.375% due 11/15/96 to 8/15/23.
(k) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$200,030,778. Collateralized by $198,651,000 U.S. Treasury obligations,
4.75% to 9.25% due 11/30/97 to 6/30/99.
Abbreviations:
<TABLE>
<S> <C> <C> <C> <C>
AUD Australian Dollar ITL Italian Lire
BPS British Pound Sterling JPY Japanese Yen
CAD Canadian Dollar NZD New Zealand Dollar
CHF Swiss Franc Pfd. Preferred
Conv. Convertible Sec. Secured
Deb. Debentures SEK Swedish Krona
DEM German Deutschemark Sr. Senior
Disc. Discounted Sub. Subordinated
DKK Danish Krone Unsec. Unsecured
FRF French Franc Unsub. Unsubordinated
Gtd. Guaranteed Wt. Warrant
</TABLE>
See Notes to Financial Statements.
FS-89
<PAGE> 318
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$36,405,538) $ 37,338,079
- --------------------------------------------------------
Foreign currencies, at market value (cost
$48,394) 48,572
- --------------------------------------------------------
Receivables for:
Investments sold 519,266
- --------------------------------------------------------
Capital stock sold 271,999
- --------------------------------------------------------
Forward contracts 40,843
- --------------------------------------------------------
Dividends and interest 937,904
- --------------------------------------------------------
Other assets 18,424
- --------------------------------------------------------
Total assets 39,175,087
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 330,330
- --------------------------------------------------------
Capital stock reacquired 38,094
- --------------------------------------------------------
Dividends 44,563
- --------------------------------------------------------
Accrued administrative service fees 6,429
- --------------------------------------------------------
Accrued distribution fees 24,964
- --------------------------------------------------------
Accrued transfer agent fees 7,162
- --------------------------------------------------------
Accrued operating expenses 9,775
- --------------------------------------------------------
Total liabilities 461,317
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 38,713,770
========================================================
NET ASSETS:
Class A $ 21,926,360
- --------------------------------------------------------
Class B $ 16,787,410
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 2,020,149
========================================================
Class B:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 1,548,110
========================================================
Class A:
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE $ 10.85
========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.85 divided
by 95.25%) $ 11.39
========================================================
Class B:
NET ASSET VALUE AND OFFERING PRICE PER
SHARE $ 10.84
========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,196,445
- --------------------------------------------------------
Dividends 25,703
- --------------------------------------------------------
2,222,148
- --------------------------------------------------------
EXPENSES:
Advisory fees 182,596
- --------------------------------------------------------
Administrative service fees 74,433
- --------------------------------------------------------
Directors' fees 5,763
- --------------------------------------------------------
Distribution fees-Class A 78,792
- --------------------------------------------------------
Distribution fees-Class B 103,129
- --------------------------------------------------------
Custodian fees 12,220
- --------------------------------------------------------
Transfer agent fees-Class A 31,849
- --------------------------------------------------------
Transfer agent fees-Class B 30,603
- --------------------------------------------------------
Other 59,764
- --------------------------------------------------------
Total expenses 579,149
- --------------------------------------------------------
Less: Expenses assumed by advisor (200,896)
- --------------------------------------------------------
Expenses paid indirectly (410)
- --------------------------------------------------------
Net expenses 377,843
- --------------------------------------------------------
Net investment income 1,844,305
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain on sales of:
Investment securities 243,673
- --------------------------------------------------------
Foreign currencies 174,698
- --------------------------------------------------------
418,371
- --------------------------------------------------------
UNREALIZED APPRECIATION OF:
Investment securities 496,691
- --------------------------------------------------------
Foreign currencies 46,609
- --------------------------------------------------------
543,300
- --------------------------------------------------------
Net gain on investment securities and
foreign currencies 961,671
- --------------------------------------------------------
Net increase in net assets resulting from
operations $2,805,976
========================================================
</TABLE>
See Notes to Financial Statements.
FS-90
<PAGE> 319
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,844,305 $ 570,694
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and foreign currencies 418,371 263,982
- ------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and foreign currencies 543,300 430,541
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,805,976 1,265,217
- ------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (1,175,361) (461,318)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (705,239) (139,421)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on investment securities:
Class A (122,866) --
- ------------------------------------------------------------------------------------------------------------------------------
Class B (57,565) --
- ------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 11,543,105 6,847,734
- ------------------------------------------------------------------------------------------------------------------------------
Class B 12,214,514 3,676,004
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 24,502,564 11,188,216
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 14,211,206 3,022,990
- ------------------------------------------------------------------------------------------------------------------------------
End of period $38,713,770 $14,211,206
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $37,281,153 $13,511,536
- ------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 123,655 85,635
- ------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment securities and foreign currencies 330,414 178,787
- ------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 978,548 435,248
- ------------------------------------------------------------------------------------------------------------------------------
$38,713,770 $14,211,206
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
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 Income Fund, AIM Global Aggressive Growth Fund,
AIM Global Growth Fund and AIM International Equity Fund. The Fund currently
offers two different classes of shares: Class A shares and 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 the financial statements pertains only to the Fund. The
Fund's investment objective is to provide high current income.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations-Non-convertible bonds and notes are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted price,
and may reflect appropriate factors such as institution-size trading in
similar groups of securities, developments related to special securities,
yield, quality, coupon rate, maturity, type of issue,
FS-91
<PAGE> 320
individual trading characteristics and other market data. Investment
securities for which prices are not provided by the pricing service and
which are listed or traded on an exchange are valued at the last sales price
on the exchange where the security is principally traded or, lacking any
sales on a particular day, at the mean between the closing bid and asked
prices on that day unless the Board of Directors, or persons designated by
the Board of Directors, determines that the over-the-counter quotations more
closely reflect the current market value of the security. Securities traded
in the over-the-counter market, except (i) securities priced by the pricing
service, (ii) securities for which representative exchange prices are
available, and (iii) securities reported in the NASDAQ National Market
System, are valued at the mean between representative last bid and asked
prices obtained from an electronic quotation reporting system, if such
prices are available, or from established market makers. Each security
reported in the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the mean
between the closing bid and asked price. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Fund's
officers in accordance with methods which are specifically authorized by the
Board of Directors. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value.
Generally, trading in foreign securities, as well as corporate bonds and
U.S. Government 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 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 would 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.
Outstanding contracts at October 31, 1996 were as follows:
<TABLE>
<CAPTION>
SETTLEMENT CONTRACT TO UNREALIZED
DATE DELIVER VALUE RECEIVE APPRECIATION
---------- ------------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
11/05/96 JPY 30,000,000 $ 263,495 $ 283,554 $ 20,059
12/17/96 JPY 18,000,000 158,106 165,594 7,488
12/19/96 DEM 1,400,000 927,426 929,245 1,819
01/27/97 DEM 700,000 464,874 465,735 861
01/30/97 CHF 525,000 419,153 419,161 8
02/03/97 JPY 32,000,000 281,097 291,705 10,608
---------- ---------- ----------
$2,514,151 $2,554,994 $ 40,843
========== ========== ==========
</TABLE>
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. On October 31, 1996,
undistributed net investment income was increased by $74,315, undistributed
net realized gains decreased by $86,313, and paid-in capital increased by
$11,998 in order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassifications discussed above.
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.
F. Expenses-Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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 investment 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 year ended
October 31, 1996, AIM waived fees of $182,596 and assumed expenses of $18,300.
The Fund, pursuant to a master administrative services agreement, has agreed
to pay AIM for administrative costs incurred in providing accounting services to
the Fund. During the year ended October 31, 1996, AIM was reimbursed $74,433 for
such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
reimburse A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended October 31, 1996, the Fund paid AFS
$40,282 for such services.
FS-92
<PAGE> 321
The Fund received reductions in transfer agency fees of $368 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $42 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $410 during the year ended October 31,
1996.
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
Distribution 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, of the total compensation payable, the Fund pays a service fee of
0.25% of the average daily net assets attributable to the Class A shares to
selected 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the year ended October 31, 1996, the Class A shares and
the Class B shares paid AIM Distributors $78,792 and $103,129, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $57,096 from the sales of the Class A
shares of the Fund during the year ended October 31, 1996. 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 year ended October 31, 1996,
AIM Distributors received commissions of $4,924 in contingent deferred sales
charges imposed on redemptions of Fund shares. Certain officers and directors of
the Company are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 1996, the Fund incurred legal fees of $3,047
for services rendered by the law firm of Kramer, Levin, Naftalis, & 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 AIM. 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-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $100,000. During the year ended October 31, 1996, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.08% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1996 was
$40,174,480 and $19,868,348 respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1996, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,293,370
- ------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (360,829)
- ------------------------------------------------------
Net unrealized appreciation of investment
securities $ 932,541
======================================================
Investments have the same cost for tax and financial statement purposes.
</TABLE>
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
- ----------------------------------------------------------------------
Class A 1,609,644 $17,019,341 760,598 $ 7,840,532
- ----------------------------------------------------------------------
Class B 1,313,279 13,876,204 388,091 4,010,514
- ----------------------------------------------------------------------
Issued as
reinvestment
of dividends:
Class A 92,969 985,383 23,999 250,917
- ----------------------------------------------------------------------
Class B 58,431 618,362 11,879 124,099
- ----------------------------------------------------------------------
Reacquired:
Class A (613,922) (6,461,619) (118,603) (1,243,715)
- ----------------------------------------------------------------------
Class B (215,814) (2,280,052) (43,933) (458,609)
- ----------------------------------------------------------------------
2,244,587 $23,757,619 1,022,031 $10,523,738
======================================================================
</TABLE>
FS-93
<PAGE> 322
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share and Class B share
outstanding during each of the years in the two-year period ended October 31,
1996 and the period September 15, 1994 (dates operations commenced) through
October 31, 1994.
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
---------- ------- ------ ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.74 $10.02 $10.00 $10.73 $10.01 $10.00
- --------------------------------------------------------------------------------------- ---------------------------------
Income from investment operations:
Net investment income 0.79(a) 0.79 0.08 0.74(a) 0.74 0.07
- --------------------------------------------------------------------------------------- ---------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.25 0.75 0.01 0.24 0.75 0.01
- --------------------------------------------------------------------------------------- ---------------------------------
Total from investment operations 1.04 1.54 0.09 0.98 1.49 0.08
- --------------------------------------------------------------------------------------- ---------------------------------
Less distributions:
Dividends from investment income (0.81) (0.82) (0.07) (0.75) (0.77) (0.07)
- --------------------------------------------------------------------------------------- ---------------------------------
Distributions from net realized capital gains (0.12) -- -- (0.12) -- --
- --------------------------------------------------------------------------------------- ---------------------------------
Total distributions (0.93) (0.82) (0.07) (0.87) (0.77) (0.07)
- --------------------------------------------------------------------------------------- ---------------------------------
Net asset value, end of period $10.85 $10.74 $10.02 $10.84 $10.73 $10.01
======================================================================================= =================================
Total return(b) 10.22% 16.07% 0.93% 9.66% 15.56% 0.79%
======================================================================================= =================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,926 $10,004 $2,661 $16,787 $4,207 $362
======================================================================================= =================================
Ratio of expenses to average net assets(c) 1.25%(d)(e) 1.25% 1.25%(f) 1.75%(d)(e) 1.74% 1.73%(f)
======================================================================================= =================================
Ratio of net investment income to average net
assets(c) 7.27%(d) 7.38% 6.01%(f) 6.77%(d) 6.88% 3.59%(f)
======================================================================================= =================================
Portfolio turnover rate 83% 128% 6% 83% 128% 6%
======================================================================================= =================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and expense reimbursements. The ratios of expenses and net
investment income to average net assets before fee waivers and expense
reimbursements were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------- --------------------------
NET INVESTMENT NET INVESTMENT
EXPENSES INCOME EXPENSES INCOME
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
1996 2.02% 6.51% 2.53% 6.00%
--------------------------------------------------------------------------------------------------
1995 3.03% 5.59% 3.57% 5.05%
--------------------------------------------------------------------------------------------------
1994 5.61% 1.65% 22.09% (16.77)%
--------------------------------------------------------------------------------------------------
</TABLE>
(d) Ratios are based on average net assets of $15,758,345 for Class A shares and
$10,312,948 for Class B shares.
(e) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have remained the same
for both Class A shares and Class B shares.
(f) Annualized.
NOTE 8-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an Agreement and Plan of Merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM Funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
FS-94
<PAGE> 323
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 AIM International Equity Fund (a portfolio
of AIM International Funds, Inc.), including the schedule
of investments, as of October 31, 1996, the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and financial highlights
for each of the years in the four-year period then ended
and the period November 5, 1991 (date operations
commenced) through October 31, 1992. These financial
statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1996, 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
International Equity Fund as of October 31, 1996, the
results of its operations for the year then ended, the
changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights
for each of the years in the four-year period then ended
and the period November 5, 1991 (date operations
commenced) through October 31, 1992, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
December 6, 1996
FS-95
<PAGE> 324
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN STOCKS &
OTHER EQUITY INTERESTS-90.94%
ARGENTINA-1.50%
Banco de Galicia y Buenos Aires
S.A. de C.V.- ADR (Banking) 278,280 $ 5,043,825
- -----------------------------------------------------------------
Perez Companc S.A.-Class B
(Oil & Gas-Services) 878,000 5,575,858
- -----------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil & Gas-Services) 508,200 11,561,550
- -----------------------------------------------------------------
22,181,233
- -----------------------------------------------------------------
AUSTRALIA-2.91%
National Mutual Holdings Ltd.(a)
(Insurance-Multi-Line Property) 3,770,000 5,378,884
- -----------------------------------------------------------------
News Corp. Ltd. (The)-ADR
(Publishing) 508,000 9,017,000
- -----------------------------------------------------------------
QBE Insurance Group, Ltd.
(Insurance-Broker) 1,540,276 8,155,553
- -----------------------------------------------------------------
QNI Ltd.
(Metals-Miscellaneous) 5,230,400 10,530,450
- -----------------------------------------------------------------
Western Mining Corp. Holding Ltd.
(Metals-Miscellaneous) 1,571,100 9,875,414
- -----------------------------------------------------------------
42,957,301
- -----------------------------------------------------------------
AUSTRIA-0.69%
OMV A.G.
(Oil & Gas-Exploration & Production) 66,000 6,460,932
- -----------------------------------------------------------------
VA Technologie A.G.
(Engineering & Construction) 27,000 3,775,869
- -----------------------------------------------------------------
10,236,801
- -----------------------------------------------------------------
BELGIUM-1.82%
Barco Industries(a)
(Electronic Components/Miscellaneous) 41,000 6,743,508
- -----------------------------------------------------------------
Colruyt S.A.
(Retail-Food & Drug) 14,600 6,295,928
- -----------------------------------------------------------------
Delhaize-Le Lion S.A.
(Retail-Food & Drug) 124,000 6,937,480
- -----------------------------------------------------------------
UCB S.A.
(Medical-Drugs) 3,100 6,833,119
- -----------------------------------------------------------------
26,810,035
- -----------------------------------------------------------------
BRAZIL-0.89%
Telecomunicacoes Brasileiras
S/A-Telebras-ADR
(Telecommunications) 177,000 13,186,500
- -----------------------------------------------------------------
CANADA-3.25%
Canadian National Railway Co.
(Railroads) 128,000 3,520,000
- -----------------------------------------------------------------
Canadian Natural Resources Ltd.(a)
(Oil & Gas-Exploration &
Production) 335,000 8,323,758
- -----------------------------------------------------------------
Canadian Pacific Ltd.
(Transportation-Miscellaneous) 307,000 7,751,750
- -----------------------------------------------------------------
Newbridge Networks Corp.(a)
(Computer Networking) 188,000 5,945,500
- -----------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 124,700 8,121,087
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Suncor, Inc.
(Oil & Gas-Exploration &
Production) 190,000 $ 7,336,596
- -----------------------------------------------------------------
TELUS Corp.
(Telecommunications) 445,000 6,989,442
- -----------------------------------------------------------------
47,988,133
- -----------------------------------------------------------------
CHILE-0.41%
Cia. de Telecomunicaciones de Chile
S.A.-ADR (Telephone) 62,100 6,124,612
- -----------------------------------------------------------------
DENMARK-0.77%
Danisco A/S
(Food/Processing) 79,300 4,543,279
- -----------------------------------------------------------------
Novo Nordisk A/S-Class B
(Medical-Drugs) 41,200 6,861,587
- -----------------------------------------------------------------
11,404,866
- -----------------------------------------------------------------
FRANCE-8.56%
AXA S.A.
(Insurance-Life & Health) 121,000 7,557,027
- -----------------------------------------------------------------
Carrefour Supermarche
(Retail-Stores) 18,700 10,376,900
- -----------------------------------------------------------------
Cetelem
(Finance-Consumer Credit) 22,400 4,780,127
- -----------------------------------------------------------------
Compagnie Francaise d'Etudes
et de Construction Technip
(Engineering & Construction) 59,000 5,157,379
- -----------------------------------------------------------------
Compagnie Generale des Eaux
(Water Supply) 62,000 7,409,682
- -----------------------------------------------------------------
Elf Aquitaine S.A.
(Oil & Gas-Services) 90,000 7,196,479
- -----------------------------------------------------------------
Essilor International-Compagnie
Generale d'Optique
(Medical Instruments/Products) 24,940 6,561,232
- -----------------------------------------------------------------
Michelin-Class B
(Automobile/Truck Parts & Tires) 134,000 6,460,831
- -----------------------------------------------------------------
Pathe S.A.(a)
(Advertising/Broadcasting) 25,500 6,878,142
- -----------------------------------------------------------------
Pinault-Printemps-Redoute, S.A.
(Retail-Food & Drug) 34,800 13,123,599
- -----------------------------------------------------------------
Rexel S.A.
(Transportation-Miscellaneous) 23,200 6,874,914
- -----------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals) 130,000 3,852,323
- -----------------------------------------------------------------
Roussel-Uclaf
(Medical-Drugs) 24,000 6,351,491
- -----------------------------------------------------------------
Societe BIC S.A.
(Office Products) 51,500 7,726,259
- -----------------------------------------------------------------
Sodexho S.A.
(Business Services) 20,000 9,666,504
- -----------------------------------------------------------------
Total S.A.-Class B
(Oil & Gas-Exploration &
Production) 111,000 8,682,425
- -----------------------------------------------------------------
Valeo S.A.
(Automobile/Truck Parts & Tires) 128,500 7,711,257
- -----------------------------------------------------------------
126,366,571
- -----------------------------------------------------------------
</TABLE>
FS-96
<PAGE> 325
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
GERMANY-4.58%
Adidas A.G.
(Shoes & Related Apparel) 130,000 $ 11,142,367
- -----------------------------------------------------------------
Altana A.G.
(Chemicals) 13,350 10,666,601
- -----------------------------------------------------------------
Commerzbank A.G.
(Banking) 295,000 6,603,605
- -----------------------------------------------------------------
Continental A.G.
(Automobile/Truck Parts & Tires) 285,000 4,987,124
- -----------------------------------------------------------------
Dresdner Bank A.G.
(Banking) 240,000 6,418,383
- -----------------------------------------------------------------
Hoechst A.G.
(Chemicals) 280,500 10,548,385
- -----------------------------------------------------------------
SGL Carbon A.G.
(Metals-Miscellaneous) 50,500 5,685,585
- -----------------------------------------------------------------
SKW Trostberg A.G.
(Chemicals) 116,000 3,385,631
- -----------------------------------------------------------------
Veba A.G.
(Electric Services) 155,000 8,266,871
- -----------------------------------------------------------------
67,704,552
- -----------------------------------------------------------------
HONG KONG-7.90%
Asia Satellite Telecommunications
Holdings Ltd.-ADR(a)
(Telecommunications) 174,500 4,667,875
- -----------------------------------------------------------------
Cheung Kong Holdings Ltd.
(Real Estate) 1,795,000 14,393,058
- -----------------------------------------------------------------
Citic Pacific Ltd.
(Banking) 1,212,000 5,893,691
- -----------------------------------------------------------------
Cosco Pacific Ltd.
(Transportation-Miscellaneous) 14,908,000 14,267,505
- -----------------------------------------------------------------
First Pacific Co. Ltd.
(Conglomerates) 7,017,908 9,666,165
- -----------------------------------------------------------------
Hang Seng Bank Ltd.
(Banking) 1,151,100 13,658,910
- -----------------------------------------------------------------
Hong Kong & China Gas Company Ltd.
(Electric Power) 6,028,000 10,602,519
- -----------------------------------------------------------------
Hong Kong & China Gas Company Ltd.,
Expiring 1997-Warrants(a)
(Electric Power) 369,000 136,009
- -----------------------------------------------------------------
HSBC Holdings PLC
(Banking) 864,000 17,599,131
- -----------------------------------------------------------------
New World Infrastructure Ltd.(a)
(Building Materials) 4,126,000 10,272,044
- -----------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Real Estate) 1,118,100 12,725,072
- -----------------------------------------------------------------
Varitronix International Ltd.
(Electronic Components/
Miscellaneous) 1,529,000 2,788,197
- -----------------------------------------------------------------
116,670,176
- -----------------------------------------------------------------
INDONESIA-1.87%
PT Bank International Indonesia
(Banking) 6,284,267 10,117,203
- -----------------------------------------------------------------
PT Hanjaya Mandala Sampoerna
(Tobacco) 1,380,000 12,826,600
- -----------------------------------------------------------------
PT Indosat
(Telecommunications) 933,000 2,823,874
- -----------------------------------------------------------------
PT Indosat-ADR
(Telecommunications) 63,500 1,912,937
- -----------------------------------------------------------------
27,680,614
- -----------------------------------------------------------------
IRELAND-0.30%
Elan Corp. PLC-ADR(a)
(Medical-Drugs) 158,800 4,406,700
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ISRAEL-0.53%
Teva Pharmaceutical Industries
Ltd.-ADR
(Medical-Drugs) 186,800 $ 7,822,250
- -----------------------------------------------------------------
ITALY-3.17%
Edison S.p.A.
(Electric Power) 1,210,000 7,208,952
- -----------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Exploration &
Production) 2,050,000 9,805,405
- -----------------------------------------------------------------
Istituto Mobiliare Italiano S.p.A.
(Banking) 533,450 4,225,402
- -----------------------------------------------------------------
Parmalat Finanziaria S.p.A.
(Food/Processing) 4,550,000 6,505,570
- -----------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications) 3,800,000 7,835,465
- -----------------------------------------------------------------
Telecom Italia S.p.A.
(Telecommunications) 5,000,000 11,179,960
- -----------------------------------------------------------------
46,760,754
- -----------------------------------------------------------------
JAPAN-16.20%
Alpine Electronics Inc.
(Electronic Components/
Miscellaneous) 472,000 7,462,123
- -----------------------------------------------------------------
Amada Co., Ltd.
(Building Materials-Tools) 876,000 7,540,117
- -----------------------------------------------------------------
Bridgestone Corp.
(Automobile/Truck Parts & Tires) 685,000 11,551,535
- -----------------------------------------------------------------
Canon, Inc.
(Office Automation) 680,000 13,020,069
- -----------------------------------------------------------------
Daiichi Corp.
(Electronic Components/
Miscellaneous) 286,900 6,778,455
- -----------------------------------------------------------------
DDI Corp.
(Telecommunications) 1,700 12,766,238
- -----------------------------------------------------------------
Honda Motor Co.
(Automobile Manufacturers) 610,000 14,572,922
- -----------------------------------------------------------------
Ibiden Co., Ltd.
(Building Materials) 710,000 6,610,162
- -----------------------------------------------------------------
Jusco Co.
(Retail-Stores) 358,000 10,627,904
- -----------------------------------------------------------------
Komatsu Ltd.
(Machinery-Heavy) 1,298,000 10,625,234
- -----------------------------------------------------------------
Matsushita Electric Industrial Co. Ltd.
(Electronic Components/
Miscellaneous) 569,000 9,095,604
- -----------------------------------------------------------------
Nippon Television Network
(Advertising/Broadcasting) 26,530 7,689,517
- -----------------------------------------------------------------
Nomura Securities Co., Ltd.
(Finance-Asset Management) 642,000 10,600,852
- -----------------------------------------------------------------
NSK Ltd.
(Metals-Miscellaneous) 1,015,000 6,721,795
- -----------------------------------------------------------------
NTT Data Communications Systems Co.
(Computer Software/Services) 4,500 13,319,573
- -----------------------------------------------------------------
Okuma Corp.(a)
(Machine Tools) 871,000 8,338,589
- -----------------------------------------------------------------
Ricoh Co., Ltd.
(Office Automation) 1,095,000 10,867,770
- -----------------------------------------------------------------
Shizuoka Bank
(Banking) 430,000 4,909,754
- -----------------------------------------------------------------
SMC
(Machinery-Miscellaneous) 100,000 6,481,929
- -----------------------------------------------------------------
Sony Corp.
(Electronic Components/
Miscellaneous) 190,100 11,403,829
- -----------------------------------------------------------------
Sumitomo Heavy Industries, Ltd.(a)
(Machinery-Heavy) 2,355,000 8,294,366
- -----------------------------------------------------------------
TDK Corp.
(Electronic Components/
Miscellaneous) 211,000 12,379,606
- -----------------------------------------------------------------
</TABLE>
FS-97
<PAGE> 326
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Toyota Motor Corp.
(Automobile-Manufacturers) 459,000 $ 10,844,583
- -----------------------------------------------------------------
Yamaha Corp.
(Electronic Components/
Miscellaneous) 566,000 8,600,237
- -----------------------------------------------------------------
Yamatake-Honeywell
(Airlines) 481,000 8,069,123
- -----------------------------------------------------------------
239,171,886
- -----------------------------------------------------------------
MALAYSIA-1.92%
Commerce Asset Holdings Berhad
(Finance-Asset Management) 1,129,000 7,373,244
- -----------------------------------------------------------------
Edaran Otomobil Nasional Berhad
(Automobile Manufacturers) 618,000 5,772,729
- -----------------------------------------------------------------
Malayan Banking Berhad
(Banking) 1,032,000 10,211,755
- -----------------------------------------------------------------
YTL Corp. Berhad
(Engineering & Construction) 581,000 3,127,489
- -----------------------------------------------------------------
YTL Corp. Berhad, Warrants-expiring
1997(a)
(Engineering & Construction) 405,000 1,859,489
- -----------------------------------------------------------------
28,344,706
- -----------------------------------------------------------------
MEXICO-1.61%
Grupo Industrial Maseca S.A. de
CV-Class B
(Food/Processing) 9,461,000 11,512,109
- -----------------------------------------------------------------
Grupo Televisa S.A.-GDR(a)
(Advertising/Broadcasting) 138,000 3,622,500
- -----------------------------------------------------------------
Panamerican Beverages, Inc.
(Beverages-Soft Drinks) 199,100 8,685,737
- -----------------------------------------------------------------
23,820,346
- -----------------------------------------------------------------
NETHERLANDS-4.99%
Akzo Nobel
(Conglomerates) 49,500 6,237,461
- -----------------------------------------------------------------
Elsevier N.V.
(Publishing) 383,000 6,365,651
- -----------------------------------------------------------------
Getronics N.V.
(Computer Software/Services) 292,000 7,176,519
- -----------------------------------------------------------------
Gucci Group N.V.-New York Shares-ADR
(Textiles) 90,000 6,210,000
- -----------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food & Drug) 142,000 8,285,495
- -----------------------------------------------------------------
Nutricia Verenigde Bedrijven N.V.
(Food/Processing) 87,000 12,203,690
- -----------------------------------------------------------------
Oce-Van Der Grinten N.V.-V
(Office Automation) 60,000 6,400,660
- -----------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil & Gas-Services) 44,500 7,348,913
- -----------------------------------------------------------------
Ver Ned Uitgevuer Bezit N.V.
(Publishing) 332,000 6,026,758
- -----------------------------------------------------------------
Wolters Kluwer N.V.
(Publishing) 58,000 7,455,531
- -----------------------------------------------------------------
73,710,678
- -----------------------------------------------------------------
NORWAY-0.30%
UNI Storebrand A.S.(a)
(Insurance-Multi-line Property) 750,000 4,396,001
- -----------------------------------------------------------------
PHILIPPINES-2.19%
C & P Homes, Inc.
(Homebuilding) 14,560,500 6,648,630
- -----------------------------------------------------------------
Filinvest Land Inc.(a)
(Real Estate) 21,584,500 7,309,819
- -----------------------------------------------------------------
Metro Pacific Corp.
(Conglomerates) 33,845,000 8,242,314
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
PHILIPPINES-(CONTINUED)
Metropolitan Bank & Trust Co.
(Banking) 342,800 $ 7,565,601
- -----------------------------------------------------------------
Southeast Asia Cement Holdings,
Inc.(a)
(Building Materials) 26,967,460 2,565,398
- -----------------------------------------------------------------
32,331,762
- -----------------------------------------------------------------
PORTUGAL-0.39%
Portugal Telecom S.A.(a)
(Telecommunications) 220,000 5,721,006
- -----------------------------------------------------------------
SINGAPORE-2.20%
Cerebos Pacific Ltd.
(Food/Processing) 528,000 4,086,049
- -----------------------------------------------------------------
City Developments Ltd.
(Real Estate) 1,155,000 9,102,236
- -----------------------------------------------------------------
DBS Land Ltd.
(Real Estate) 2,810,000 8,857,934
- -----------------------------------------------------------------
Overseas Union Bank Ltd.
(Banking) 1,539,000 10,489,457
- -----------------------------------------------------------------
32,535,676
- -----------------------------------------------------------------
SOUTH AFRICA-0.88%
De Beers Centenary A.G.
(Gold & Silver Mining) 195,000 5,755,461
- -----------------------------------------------------------------
Sasol Ltd.
(Oil & Gas-Exploration & Production) 590,700 7,206,729
- -----------------------------------------------------------------
12,962,190
- -----------------------------------------------------------------
SPAIN-1.86%
Empresa Nacional de Electricidad,
S.A. (Electric Power) 163,000 9,977,115
- -----------------------------------------------------------------
Iberdrola S.A.
(Electric Power) 745,000 7,911,556
- -----------------------------------------------------------------
Repsol S.A.
(Oil & Gas-Services) 59,250 1,934,059
- -----------------------------------------------------------------
Telefonica de Espana
(Telecommunications) 380,000 7,624,123
- -----------------------------------------------------------------
27,446,853
- -----------------------------------------------------------------
SWEDEN-2.78%
Astra AB-Class A
(Medical-Drugs) 73,300 3,344,131
- -----------------------------------------------------------------
Autoliv AB
(Automobile/Truck Parts & Tires) 400,000 16,971,577
- -----------------------------------------------------------------
Hennes & Mauritz AB-B shares
(Retail-Stores) 74,000 9,801,846
- -----------------------------------------------------------------
Securitas AB
(Security & Safety Services) 267,000 6,902,687
- -----------------------------------------------------------------
Telefonaktiebolaget L.M.
Ericsson-ADR (Telecommunications) 144,280 3,985,735
- -----------------------------------------------------------------
41,005,976
- -----------------------------------------------------------------
SWITZERLAND-1.13%
Ciba-Geigy Ltd.
(Chemicals) 5,200 6,405,380
- -----------------------------------------------------------------
Sandoz A.G.
(Chemicals) 5,500 6,357,199
- -----------------------------------------------------------------
Swissair A.G.(a)
(Airlines) 5,000 3,896,361
- -----------------------------------------------------------------
16,658,940
- -----------------------------------------------------------------
THAILAND-1.26%
Bank of Ayudhya Ltd.
(Banking) 120,150 344,026
- -----------------------------------------------------------------
Krung Thai Bank PLC
(Banking) 1,502,920 4,067,522
- -----------------------------------------------------------------
</TABLE>
FS-98
<PAGE> 327
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
THAILAND-(CONTINUED)
Siam Commercial Bank Public Co. Ltd.
(Banking) 375,500 $ 3,416,984
- -----------------------------------------------------------------
Thai Farmers Bank PLC
(Banking) 573,600 4,387,213
- -----------------------------------------------------------------
Thai Farmers Bank PLC-Rights(a)
(Banking) 72,450 37,818
- -----------------------------------------------------------------
Total Access Communication Public
Co. Ltd.
(Telecommunications) 931,000 6,423,900
- -----------------------------------------------------------------
18,677,463
- -----------------------------------------------------------------
UNITED KINGDOM-14.08%
Airtours PLC
(Leisure & Recreation) 390,000 4,138,672
- -----------------------------------------------------------------
Argos PLC
(Retail-Stores) 653,333 8,203,880
- -----------------------------------------------------------------
Barclays PLC
(Finance-Consumer Credit) 500,000 7,840,983
- -----------------------------------------------------------------
Bass PLC
(Beverages-Alcoholic) 650,000 8,336,589
- -----------------------------------------------------------------
B.A.T. Industries PLC
(Conglomerates) 1,285,000 8,951,497
- -----------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 425,000 8,058,675
- -----------------------------------------------------------------
British Petroleum Co. PLC
(Oil & Gas-Services) 840,000 9,037,109
- -----------------------------------------------------------------
Burton Group PLC
(Retail-Stores) 3,140,000 7,627,686
- -----------------------------------------------------------------
Caradon PLC
(Building Materials) 1,800,000 7,075,195
- -----------------------------------------------------------------
Compass Group PLC
(Food/Processing) 970,000 9,614,746
- -----------------------------------------------------------------
Dixons Group PLC
(Retail-Stores) 1,370,000 12,275,147
- -----------------------------------------------------------------
FKI PLC
(Conglomerates) 1,110,000 3,793,945
- -----------------------------------------------------------------
General Electric Co. PLC
(Electronic
Components/Miscellaneous) 1,140,000 7,041,504
- -----------------------------------------------------------------
GKN PLC
(Automobile/Truck Parts & Tires) 530,000 9,963,379
- -----------------------------------------------------------------
Granada Group PLC
(Leisure & Recreation) 590,000 8,484,131
- -----------------------------------------------------------------
Kingfisher PLC
(Retail-Stores) 326,000 3,464,811
- -----------------------------------------------------------------
Marks & Spencer PLC
(Retail-Stores) 850,000 7,138,672
- -----------------------------------------------------------------
Medeva PLC
(Medical-Drugs) 1,490,000 6,402,344
- -----------------------------------------------------------------
MFI Furniture Group PLC
(Retail-Stores) 2,300,000 7,486,979
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Next PLC
(Retail-Stores) 1,010,000 9,205,729
- -----------------------------------------------------------------
NFC PLC
(Transportation-Miscellaneous) 2,350,000 $ 7,343,750
- -----------------------------------------------------------------
Peninsular & Oriental Steam
Navigation Co. (The)
(Transportation-Miscellaneous) 725,000 7,121,379
- -----------------------------------------------------------------
Provident Financial PLC
(Finance-Consumer Credit) 942,400 7,063,398
- -----------------------------------------------------------------
Rentokil Group PLC
(Business Services) 975,000 6,546,021
- -----------------------------------------------------------------
Siebe PLC
(Electronic Components/
Miscellaneous) 370,000 5,805,339
- -----------------------------------------------------------------
Smiths Industries PLC
(Electronics/Defense) 256,000 3,416,667
- -----------------------------------------------------------------
Standard Chartered PLC
(Finance-Asset Management) 645,000 6,960,205
- -----------------------------------------------------------------
WPP Group PLC
(Advertising/Broadcasting) 2,575,000 9,555,664
- -----------------------------------------------------------------
207,954,096
- -----------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 1,343,038,677
=================================================================
PRINCIPAL
AMOUNT(b)
FOREIGN CONVERTIBLE BONDS-1.26%
ITALY-0.48%
Pirelli S.p.A., Conv. Bonds,
5.00%, 12/31/98
(Automobile/Truck Parts & Tires) ITL 10,062,964,600 7,048,055
- ------------------------------------------------------------------
JAPAN-0.78%
MBL International Finance
Bermuda, Conv. Yankee Bonds,
3.00%, 11/30/02
(Financial Services) 4,780,000 5,341,650
- ------------------------------------------------------------------
Sumitomo Bank, Conv. American
Depository Notes,
0.75%, 05/31/01
(Banking) 6,500,000 6,207,500
- ------------------------------------------------------------------
11,549,150
- ------------------------------------------------------------------
Total Foreign Convertible
Bonds 18,597,205
- ------------------------------------------------------------------
REPURCHASE AGREEMENTS-6.38%(c)
Daiwa Securities America Inc.,
5.53%, 11/01/96(d) 121,642 121,642
- ------------------------------------------------------------------
SBC Capital Markets, Inc.,
5.55%, 11/01/96(e) 94,000,000 94,000,000
- ------------------------------------------------------------------
Total Repurchase Agreements 94,121,642
- ------------------------------------------------------------------
TOTAL INVESTMENTS-98.58% 1,455,757,524
- ------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.42% 20,991,944
- ------------------------------------------------------------------
NET ASSETS-100.00% $ 1,476,749,468
==================================================================
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
Conv. -- Convertible
GDR -- Global Depository Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Principal in U.S. Dollars unless otherwise indicated.
(c) 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% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$750,115,208. Collateralized by $733,115,000 U.S. Treasury obligations, 0%
to 10.375% due 11/15/96 to 08/15/23.
(e) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$700,107,917. Collateralized by $691,506,000 U.S. Treasury obligations, 0%
to 9.125% due 11/30/96 to 10/31/01.
See Notes to Financial Statements.
FS-99
<PAGE> 328
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value
(cost $1,260,825,376) $1,455,757,524
- ---------------------------------------------------------
Foreign currencies, at market value
(cost $36,976,366) 36,821,259
- ---------------------------------------------------------
Receivables for:
Investments sold 11,444,676
- ---------------------------------------------------------
Capital stock sold 9,947,233
- ---------------------------------------------------------
Dividends and interest 2,711,321
- ---------------------------------------------------------
Investment for deferred compensation plan 17,703
- ---------------------------------------------------------
Other assets 81,081
- ---------------------------------------------------------
Total assets 1,516,780,797
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 35,604,954
- ---------------------------------------------------------
Capital stock reacquired 1,649,363
- ---------------------------------------------------------
Deferred compensation 17,703
- ---------------------------------------------------------
Accrued advisory fees 1,117,595
- ---------------------------------------------------------
Accrued administrative services fees 8,031
- ---------------------------------------------------------
Accrued directors' fees 946
- ---------------------------------------------------------
Accrued distribution fees 580,743
- ---------------------------------------------------------
Accrued transfer agent fees 322,318
- ---------------------------------------------------------
Accrued operating expenses 729,676
- ---------------------------------------------------------
Total liabilities 40,031,329
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $1,476,749,468
=========================================================
NET ASSETS:
Class A $1,108,394,906
=========================================================
Class B $ 368,354,562
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER
SHARE:
Class A:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 72,108,763
=========================================================
Class B:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 24,337,966
=========================================================
Class A:
Net asset value and redemption price
per share $ 15.37
=========================================================
Offering price per share:
(Net asset value divided by 94.50%) $ 16.26
=========================================================
Class B:
Net asset value and offering price per
share $ 15.13
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $2,703,027 foreign
withholding tax) $ 16,488,363
- --------------------------------------------------------
Interest 3,504,142
- --------------------------------------------------------
Total investment income 19,992,505
- --------------------------------------------------------
EXPENSES:
Advisory fees 10,384,642
- --------------------------------------------------------
Administrative services fees 94,250
- --------------------------------------------------------
Directors' fees 11,727
- --------------------------------------------------------
Distribution fees-Class A 2,684,486
- --------------------------------------------------------
Distribution fees-Class B 2,034,652
- --------------------------------------------------------
Custodian fees 929,674
- --------------------------------------------------------
Transfer agent fees-Class A 1,810,548
- --------------------------------------------------------
Transfer agent fees-Class B 590,277
- --------------------------------------------------------
Other 638,489
- --------------------------------------------------------
Total expenses 19,178,745
- --------------------------------------------------------
Less: Advisory fees waived (299,147)
- --------------------------------------------------------
Expenses paid indirectly (17,187)
- --------------------------------------------------------
Net expenses 18,862,411
- --------------------------------------------------------
Net investment income 1,130,094
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain on sales of:
Investment securities 43,787,593
- --------------------------------------------------------
Foreign currencies 41,811
- --------------------------------------------------------
43,829,404
- --------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 98,797,523
- --------------------------------------------------------
Foreign currencies (335,775)
- --------------------------------------------------------
98,461,748
- --------------------------------------------------------
Net gain on investment securities and
foreign currencies 142,291,151
- --------------------------------------------------------
Net increase in net assets resulting from
operations $143,421,246
========================================================
</TABLE>
See Notes to Financial Statements.
FS-100
<PAGE> 329
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,130,094 $ 468,936
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and foreign currencies 43,829,404 19,301,818
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and foreign currencies 98,461,748 8,812,756
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 143,421,246 28,583,510
- -------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (295,965) (2,166,421)
- -------------------------------------------------------------------------------------------------------------------------------
Class B -- (19,050)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized capital gains:
Class A (18,468,041) (23,092,160)
- -------------------------------------------------------------------------------------------------------------------------------
Class B (1,875,276) (287,957)
- -------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 350,398,961 (54,671,896)
- -------------------------------------------------------------------------------------------------------------------------------
Class B 296,841,074 45,389,211
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 770,021,999 (6,264,763)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 706,727,469 712,992,232
- -------------------------------------------------------------------------------------------------------------------------------
End of period $1,476,749,468 $706,727,469
===============================================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,238,126,321 $590,886,286
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,113,111 237,171
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment securities
and foreign currencies 42,949,270 19,504,994
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 194,560,766 96,099,018
- -------------------------------------------------------------------------------------------------------------------------------
$1,476,749,468 $706,727,469
===============================================================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM International Equity Fund (the "Fund") is a series 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 International Equity Fund, AIM Global Aggressive Growth
Fund, AIM Global Growth Fund and AIM Global Income Fund. The Fund currently
offers two different classes of shares: Class A shares and 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 Fund's investment objective is to provide long-term growth of capital. The
Fund seeks to achieve its objective by investing in a diversified portfolio of
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--Except as provided in the next sentence, a security
listed or traded on an exchange is valued at the last sales price on the
exchange where the security is principally traded or, lacking any sales, at
the mean between the closing bid and asked prices on the day of valuation.
Exchange listed convertible bonds are valued at the mean between the closing
bid and asked prices obtained from a broker-dealer. If a mean is not
available, as is the case in some foreign markets, the
FS-101
<PAGE> 330
closing bid will be used absent a last sales price. Securities traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market System) are valued at the mean between the closing bid and
asked prices on valuation date. Securities reported on the NASDAQ National
Market System are valued at the last sales price on the valuation date or
absent a last sales price, at the mean of the closing bid and asked prices.
Securities for which market quotations are either not readily available or
are questionable 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 would 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 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 forward 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. On October 31, 1996,
undistributed net investment income was increased by $41,811 and
undistributed net realized gains reduced by $41,811 in order to comply with
the requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
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.
F. Organizational Costs--Organizational costs of $23,098 were borne by the Fund.
Such costs are amortized to operations over sixty months. Prior to full
amortization of the organizational costs, the proceeds of any redemption of
the shares related to the Fund's initial formation (10,000 Class A shares)
will be reduced by a pro rata share of such unamortized organizational
expenses. The pro rata share of organizational expenses will be calculated by
dividing the number of initial shares redeemed by the remaining number of
initial shares outstanding at the time of the redemption and multiplying the
result by the unamortized organizational expenses.
G. Expenses--Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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 investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of
the first $1 billion of the Fund's average daily net assets, plus 0.90% of the
Fund's average daily net assets in excess of $1 billion. AIM is currently
voluntarily waiving a portion of its advisory fees paid by the Fund to AIM to
the extent necessary to reduce the fees paid by the Fund at net asset levels
higher than those currently incorporated in the present advisory fee schedule.
Under the voluntary waiver, AIM will receive a fee calculated at the annual rate
of 0.95% of the first $500 million of the Fund's average daily net assets, plus
0.90% of the Fund's average daily net assets in excess of $500 million to and
including $1 billion, plus 0.85% of the Fund's average daily net assets in
excess of $1 billion. The waiver of fees is voluntary and the Board of Directors
of the Company would be advised of any decision by AIM to discontinue the
waiver. During the year ended October 31, 1996, AIM waived fees of $299,147.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1996, AIM was
reimbursed $94,250 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Fund. During the year ended October 31, 1996,
the Fund paid AFS $1,170,699 for such services.
FS-102
<PAGE> 331
The Fund received reductions in transfer agency fees of $15,590 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $1,597 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $17,187 during the year ended October
31, 1996.
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
distribution 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, pays AIM Distributors at an annual rate of 0.30% 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. Of the compensation payable, the Fund pays a service fee of 0.25%
to selected dealers and financial institutions, who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, pays AIM Distributors 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the year ended October 31, 1996, the Class A shares and
the Class B shares paid AIM Distributors $2,684,486 and $2,034,652,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,489,975 from sales of the Class A
shares of the Fund during the year ended October 31, 1996. 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 year ended October 31, 1996,
AIM Distributors received commissions of $39,753 in contingent deferred sales
charges imposed on redemptions of Fund shares. Certain officers and directors of
the Company are officers and directors of AIM, AFS and AIM Distributors.
During the year ended October 31, 1996, the Fund incurred legal fees of $5,247
for services rendered by the law firm of Kramer, Levin, Naftalis & 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 AIM. 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-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $10,800,000. During the year ended October 31, 1996, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.08% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1996 was
$1,253,564,886 and $666,195,047, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $227,690,078
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (33,057,825)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $194,632,253
==========================================================
Costs of investments for tax purposes is $1,261,125,271.
</TABLE>
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 41,055,911 $ 601,559,902 19,941,452 $ 256,345,253
- --------------- ----------- ------------- ----------- -------------
Class B 21,641,528 313,690,762 3,764,258 49,112,660
- --------------- ----------- ------------- ----------- -------------
Issued as
reinvestment
of dividends:
Class A 1,305,811 17,576,215 1,330,022 15,787,364
- --------------- ----------- ------------- ----------- -------------
Class B 130,593 1,741,975 24,816 294,807
- --------------- ----------- ------------- ----------- -------------
Reacquired:
Class A (18,205,834) (268,737,156) (25,762,596) (326,804,513)
- --------------- ----------- ------------- ----------- -------------
Class B (1,270,776) (18,591,663) (310,613) (4,018,256)
- --------------- ----------- ------------- ----------- -------------
44,657,233 $ 647,240,035 (1,012,661) $ (9,282,685)
=========== ============= =========== =============
</TABLE>
FS-103
<PAGE> 332
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
each of the years in the four-year period ended October 31, 1996 and the period
November 5, 1991 (date operations commenced) through October 31, 1992 and for a
Class B share outstanding during each of the years in the two-year period ended
October 31, 1996 and the period September 15, 1994 (date sales commenced)
through October 31, 1994.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 13.65 $ 13.50 $ 12.18 $ 8.88 $ 8.61(a)
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.04(b) 0.01 0.02 0.02 0.03
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Net gains on securities (both realized and
unrealized) 2.07 0.62 1.31 3.29 0.26
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Total from investment operations 2.11 0.63 1.33 3.31 0.29
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Less distributions:
Dividends from net investment income (0.01) (0.04) (0.01) (0.01) (0.02)
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Distributions from capital gains (0.38) (0.44) -- -- --
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Total distributions (0.39) (0.48) (0.01) (0.01) (0.02)
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Net asset value, end of period $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88
============================================== =========== ========== ========== ========= =========
Total return(c) 15.79% 5.24% 10.94% 37.36% 3.36%
============================================== =========== ========== ========== ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,108,395 $ 654,764 $ 708,159 $ 372,282 $ 122,663
============================================== =========== ========== ========== ========= =========
Ratio of expenses to average net assets(d) 1.58%(e)(f) 1.67% 1.64% 1.78% 1.80%(g)
============================================== =========== ========== ========== ========= =========
Ratio of net investment income to average net
assets(h) 0.25%(e) 0.10% 0.22% 0.28% 0.30%(g)
============================================== =========== ========== ========== ========= =========
Portfolio turnover rate 66% 68% 67% 62% 41%
============================================== =========== ========== ========== ========= =========
Average brokerage commission rate(i) $ 0.0192 N/A N/A N/A N/A
============================================== =========== ========== ========== ========= =========
</TABLE>
(a) Net asset value at the beginning of the period has been restated to reflect
a 1.1619 for 1 stock split, effected in the form of a dividend, on May 21,
1992.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers and expense reimbursements are 1.60%, 1.68%
and 1.89% (annualized), respectively for 1996, 1995 and 1992.
(e) Ratios are based on average net assets of $894,828,456.
(f) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been
1.57%.
(g) Annualized.
(h) After fee waivers and expense reimbursements. Ratios of net investment
income to average net assets before fee waivers and expense reimbursements
are 0.22%, 0.09% and 0.22% (annualized), respectively for 1996, 1995 and
1992.
(i) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
<TABLE>
<CAPTION>
1996 1995 1994
---------- --------- ---------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 13.54 $ 13.49 $ 13.42
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Income from investment operations:
Net investment income (loss) (0.07) (a) (0.09) (0.01)
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Net gains on securities (both realized and unrealized) 2.04 0.61 0.08
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Total from investment operations 1.97 0.52 0.07
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Less distributions:
Dividends from net investment income -- (0.03) --
- ----------------------------------------------------------------------------------- --------- --------- ---------
Distributions from capital gains (0.38) (0.44) --
- ----------------------------------------------------------------------------------- --------- --------- ---------
Total distributions (0.38) (0.47) --
- ----------------------------------------------------------------------------------- --------- --------- ---------
Net asset value, end of period $ 15.13 $ 13.54 $ 13.49
=================================================================================== ========= ========= =========
Total return(b) 14.88% 4.35% 0.52%
=================================================================================== ========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 368,355 $ 51,964 $ 4,833
=================================================================================== ========= ========= =========
Ratio of expenses to average net assets(c) 2.35% (d)(e) 2.55% 2.53%(f)
=================================================================================== ========= ========= =========
Ratio of net investment income (loss) to average net assets(g) (0.53)% (d) (0.78)% (0.67)%(f)
=================================================================================== ========= ========= =========
Portfolio turnover rate 66% 68% 67%
=================================================================================== ========= ========= =========
Average brokerage commission rate(h) $ 0.0192 N/A N/A
=================================================================================== ========= ========= =========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(c) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers are 2.37% and 2.56%, respectively for 1996 and
1995.
(d) Ratios are based on average net assets of $203,465,249.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets before fee waivers are (0.55%) and
(0.79)%, respectively for 1996 and 1995.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
NOTE 8-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an agreement and plan of merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
FS-104
<PAGE> 333
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
(1) Class A shares and Class B shares of AIM Asian
Growth Fund
In Part A: None
In Part B: None
In Part C: None
(2) Class A shares and Class B shares of AIM European
Development Fund
In Part A: None
In Part B: None
In Part C: None
(3) Class A shares and Class B shares of AIM Global Aggressive
Growth Fund, AIM Global Growth Fund; and AIM Global Income
Fund
In Part A: Financial Highlights
In Part B: (1) Reports of Independent Auditors
(2) Schedules of Investments as of
October 31, 1996 (audited), and April
30, 1997 (unaudited)
(3) Statements of Assets and Liabilities
as of October 31, 1996 (audited), and
April 30, 1997 (unaudited)
(4) Statements of Operations for the year
ended October 31, 1996 (audited), and
April 30, 1997 (unaudited)
(5) Statements of Changes in Net Assets
for the years ended October 31, 1996
and 1995 (audited), and April 30,
1997 (unaudited)
In Part C: None
(4) Class A shares and Class B shares of AIM International
Equity Fund
In Part A: Financial Highlights
In Part B: (1) Report of Independent Auditors
(2) Schedule of Investments as of October
31, 1996 (audited), and April 30,
1997 (unaudited)
(3) Statement of Assets and Liabilities
as of October 31, 1996 (audited), and
April 30, 1997 (unaudited)
(4) Statement of Operations for the year
ended October 31, 1996 (audited), and
April 30, 1997 (unaudited)
(5) Statement of Changes in Net Assets
for the years ended October 31, 1996
and 1995 (audited), and April 30,
1997 (unaudited)
In Part C: None
______________________
C-1
<PAGE> 334
(b) Exhibits
Exhibit
Number Description
(1) (a) - Articles of Incorporation of Registrant were filed as an
Exhibit to Registrant's Registration Statement on December 19,
1991.
(b) - Articles of Amendment, dated May 21, 1992, were filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993.
(c) - Articles of Amendment, dated May 21, 1992, were filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993.
(d) - Articles Supplementary, dated June 29, 1994, to Articles of
Incorporation of Registrant were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on August 17, 1994.
(e) - Articles Supplementary, dated August 4, 1994, to Articles of
Incorporation of Registrant were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on August 17, 1994.
(f) - Articles of Amendment, dated November 14, 1994, were filed
electronically as an Exhibit to Post- Effective Amendment No. 9
on February 28, 1996.
(g) - Articles of Restatement, dated November 14, 1994, were filed
electronically as an Exhibit to Post- Effective Amendment No. 9
on February 28, 1996, and are hereby incorporated by reference.
(h) - Articles Supplementary to Articles of Incorporation of
Registrant, dated June 12, 1997, are filed herewith
electronically.
(2) (a) - By-Laws of Registrant were filed as an Exhibit to Registrant's
Registration Statement on December 19, 1991, and were filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 28, 1996.
(b) - First Amendment, dated March 14, 1995, to By-Laws of Registrant
was filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996.
(c) - Amended and Restated By-Laws, dated effective December 11,
1996, were filed electronically as an Exhibit to Post-Effective
Amendment No. 10 on February 24, 1997, and are hereby
incorporated by reference.
(3) - Voting Trust Agreements - None.
(4) (a) - Specimen Certificate for AIM International Equity Fund was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 1 on February 23, 1993.
(b) - Specimen Certificates for Class A shares and Class B shares of
AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM
Global Income Fund and AIM International Equity Fund were filed
as Exhibits to Registrant's Post-Effective Amendment No. 7 on
February 23, 1995, and were filed electronically as an Exhibit
to Post-Effective Amendment No. 9 on February 28, 1996, and are
hereby incorporated by reference.
C-2
<PAGE> 335
(5) (a) - (1) Investment Advisory Agreement, dated as of November 8,
1991, between Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Registrant's Registration Statement on December
19, 1991.
(2) Investment Advisory Agreement, dated as of October 18,
1993, between Registrant on behalf of its AIM International
Equity Fund and A I M Advisors, Inc. was filed as an Exhibit to
Registrant's Post- Effective Amendment No. 3 on February 24,
1994, and was filed electronically as an Exhibit to Post-
Effective Amendment No. 9 on February 28, 1996.
(3) Master Investment Advisory Agreement, dated as of July 1,
1994, between A I M Advisors, Inc. and Registrant on behalf of
its AIM Global Aggressive Growth Fund, AIM Global Growth Fund
and AIM Global Income Fund was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 6 on September 2,
1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(4) Master Investment Advisory Agreement, dated February 28,
1997, between A I M Advisors, Inc. and Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 11
on May 16, 1997, and is hereby incorporated by reference.
(5) Form of Amendment No. 1 to Master Investment Advisory
Agreement between A I M Advisors, Inc. and Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 11
on May 16, 1997, and is hereby incorporated by reference.
(b) - (1) Form of Master Sub-Advisory Agreement between A I M
Advisors, Inc. and INVESCO Global Asset Management Limited was
filed electronically as an Exhibit to Post-Effective Amendment
No. 11 on May 16, 1997, and is hereby incorporated by
reference.
(6) (a) - (1) Distribution Agreement, dated December 11, 1991, between
Registrant and A I M Distributors, Inc. was filed as an
Exhibit to Registrant's Registration Statement on December 19,
1991.
- (2) Distribution Agreement, dated October 18, 1993, between
Registrant and A I M Distributors, Inc. was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 3 on February 24,
1994.
- (3) Master Distribution Agreement, dated September 10, 1994,
between Registrant (on behalf of the portfolios' Class A
shares) and A I M Distributors, Inc. was filed as an Exhibit to
Registrant's Post- Effective Amendment No. 7 on February 23,
1995, and was filed electronically as an Exhibit to Post-
Effective Amendment No. 9 on February 28, 1996.
- (4) Master Distribution Agreement, dated September 10, 1994,
between the Registrant (on behalf of the portfolios' Class B
shares) and A I M Distributors, Inc. was filed as an Exhibit to
Registrant's Post- Effective Amendment No. 7 on February 23,
1995.
- (5) Amended and Restated Master Distribution Agreement, dated
May 2, 1995, between the Registrant (on behalf of the
portfolios' Class B shares) and A I M Distributors, Inc. was
electronically filed as an Exhibit to Post-Effective Amendment
No. 8 on December 1, 1995.
- (6) (i) Master Distribution Agreement, dated February 28, 1997,
between Registrant (on behalf of the portfolios' Class A
shares) and A I M Distributors, Inc. was filed electronically
as an Exhibit to Post-Effective Amendment No. 11 on May 16,
1997, and is hereby incorporated by reference.
C-3
<PAGE> 336
- (6) (ii)Form of Amendment No. 1 to Master Distribution
Agreement between Registrant (on behalf of the portfolios'
Class A shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
11 on May 16, 1997, and is hereby incorporated by reference.
- (7) (i) Master Distribution Agreement, dated February 28, 1997,
between Registrant (on behalf of the portfolios' Class B
shares) and A I M Distributors, Inc. was filed electronically
as an Exhibit to Post-Effective Amendment No. 11 on May 16,
1997, and is hereby incorporated by reference.
- (7) (ii) Form of Amendment No. 1 to Master Distribution
Agreement between Registrant (on behalf of the portfolios'
Class B shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
11 on May 16, 1997, and is hereby incorporated by reference.
- (8) Form of Amended and Restated Master Distribution Agreement
between Registrant (on behalf of the portfolios' Class A and
Class C shares) and A I M Distributors, Inc. is filed herewith
electronically.
(b) - (1) Form of Selected Dealer Agreement between A I M
Distributors, Inc. and selected dealers is filed
herewith electronically.
(c) - (1) Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks is filed herewith electronically.
(7) (a) - Retirement Plan for Registrant's Non-Affiliated Directors was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 4 on June 29, 1994.
(b) - Retirement Plan for Registrant's Non-Affiliated Directors
effective as of March 8, 1994, as restated September 18, 1995,
was filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996 and is hereby incorporated
by reference.
(c) - Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 4 on June 29, 1994.
(d) - Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors as approved December 5, 1995, was
filed electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 28, 1996, and is hereby incorporated by
reference.
(8) (a) - Custodian Agreement between Registrant and State Street Bank
and Trust Company, dated as of November 8, 1991, was filed as
an Exhibit to Registrant's Registration Statement on December
19, 1991, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996, and is
hereby incorporated by reference.
(b) - Amendment, dated July 1, 1994, to Custodian Agreement between
Registrant and State Street Bank and Trust Company dated
November 8, 1991 was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2, 1994, and was
filed electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 28, 1996, and is hereby incorporated by
reference.
C-4
<PAGE> 337
(c) - Amendment No. 2, dated September 19, 1995, to the Custodian
Contract, dated November 8, 1991, was filed electronically as
an Exhibit to Post-Effective Amendment No. 9 on February 28,
1996, and is hereby incorporated by reference.
(d) - Form of Amendment No. 3 to the Custodian Contract, dated
November 8, 1991, between Registrant and State Street Bank and
Trust Company was filed electronically as an Exhibit to
Post-Effective Amendment No. 11 on May 16, 1997, and is hereby
incorporated by reference.
(e) - Subcustodian Agreement with Texas Commerce Bank, dated
September 9, 1994, among Texas Commerce Bank National
Association, State Street Bank and Trust Company, A I M Fund
Services, Inc. and Registrant was filed electronically as an
Exhibit to Post-Effective Amendment No. 9 on February 28, 1996,
and is hereby incorporated by reference.
(9) (a) - (1) Transfer Agency Agreement between Registrant and The
Shareholder Services Group, Inc., dated May 15, 1992, was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993.
- (2) Amendment, dated May 15, 1992, to Transfer Agency
Agreement between Registrant and The Shareholder Services
Group, Inc., dated May 15, 1992, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1 on February 23,
1993.
- (3) Form of Amendment No. 2 to Transfer Agency Agreement
between Registrant and The Shareholder Services Group, Inc.,
dated May 15, 1992, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2, 1994.
- (4) Amendment No. 3, dated July 1, 1994, to Transfer Agency
Agreement between Registrant and The Shareholder Services
Group, Inc., dated May 15, 1992, was filed as an Exhibit to
Registrant's Post- Effective Amendment No. 6 on September 2,
1994.
- (5) Transfer Agency and Service Agreement, dated as of
November 1, 1994, between the Registrant and A I M Fund
Services, Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 7 on February 23, 1995, and was
filed electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 28, 1996, and is hereby incorporated by
reference.
- (5) (i) Form of Amendment No. 1 to the Transfer Agency and
Service Agreement, dated as of November 1, 1994, between the
Registrant and A I M Fund Services, Inc., is filed herewith
electronically.
- (6) (i) Remote Access and Related Services Agreement, dated as
December 23, 1994, between the Registrant and The Shareholder
Services Group, Inc. was filed as an Exhibit to Post-Effective
Amendment No. 7 on February 23, 1995, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 28, 1996, and is hereby incorporated by reference.
- (6) (ii)Amendment No. 1, dated October 4, 1995, to the Remote
Access and Related Services Agreement, dated December 23, 1994,
between the Registrant and First Data Investor Services Group
(formerly The Shareholder Services Group, Inc.) was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 28, 1996, and is hereby incorporated by reference.
- (6) (iii) Addendum No. 2, dated October 12, 1995, to the Remote
Access and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group
(formerly The Shareholder Services Group, Inc.) was filed
electronically as
C-5
<PAGE> 338
an Exhibit to Post-Effective Amendment No. 9 on February 28,
1996, and is hereby incorporated by reference.
(6) (iv) Amendment No. 3, dated as of February 1, 1997, to the
Remote Access and Related Services Agreement, dated December 23,
1994, between the Registrant and First Data Investor Services
Group (formerly The Shareholder Services Group, Inc.) is filed
herewith electronically.
(b) - (1) Administrative Services Agreement, dated December 10,
1991, between the Registrant and A I M Advisors, Inc. was filed
as an Exhibit to Registrant's Registration Statement on
December 19, 1991.
- (2) Administrative Services Agreement, dated as of October 18,
1993, between A I M Advisors, Inc. and Registrant, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 3 on
February 24, 1994, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 9 on February 28, 1996.
- (3) Master Administrative Services Agreement, dated as of July
1, 1994, between A I M Advisors, Inc. and Registrant on behalf
of its AIM Global Aggressive Growth Fund, AIM Global Growth
Fund and AIM Global Income Fund was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 6 on September 2,
1994, and was filed electronically as an Exhibit Post-Effective
Amendment No. 9 on February 28, 1996.
- (4) (i) Administrative Services Agreement, dated as of October
18, 1993, between A I M Advisors, Inc. on behalf of
Registrant's portfolios, and A I M Fund Services, Inc., was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 3 on February 24, 1994.
- (4) (ii) Amendment No. 1, dated May 11, 1994, to Administrative
Services Agreement, dated October 18, 1993, between A I M
Advisors, Inc., on behalf of Registrant's portfolios, and A I M
Fund Services, Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 4 on June 29, 1994.
- (4) (iii) Amendment No. 2, dated July 1, 1994, to Administrative
Services Agreement, dated October 18, 1993, between A I M
Advisors, Inc., on behalf of Registrant's portfolios and
classes, and A I M Fund Services, Inc. was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 6 on September 2,
1994.
- (4) (iv) Amendment No. 3, dated September 16, 1994, to the
Administrative Services Agreement, dated October 18, 1993,
between A I M Advisors, Inc., on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc. was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 7 on
February 23, 1995.
- (5) (i) Administrative Services Agreement, dated as of February
28, 1997, between A I M Advisors, Inc. and Registrant was
filed as an Exhibit to Post-Effective Amendment No. 11 on May
16, 1997, and is hereby incorporated by reference.
- (5) (ii) Form of Amendment No. 1 to Administrative Services
Agreement between A I M Advisors, Inc. and Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 11
on May 16, 1997, and is hereby incorporated by reference.
(c) - (1) Accounting Services Agreement, dated as of November 5,
1991, between the Registrant and State Street Bank and Trust
Company was filed as an Exhibit to Registrant's Pre-Effective
Amendment No. 2 on April 2, 1992, and was filed electronically
as an Exhibit to Post-Effective Amendment No. 9 on February 28,
1996.
- (2) Amendment No. 1, dated July 1, 1994, to Accounting
Services Agreement, dated as of November 5, 1991, between the
Registrant and State Street Bank and Trust Company was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 6 on
September 2, 1994, and
C-6
<PAGE> 339
was filed electronically as an Exhibit to Post-Effective
Amendment No 9 on February 28, 1996.
(d) - (1) Shareholder Sub-Accounting Services Agreement among the
Registrant, First Data Investor Services Group (formerly The
Shareholder Services Group, Inc.), Financial Data Services,
Inc. and Merrill Lynch, Pierce, Fenner & Smith, Inc., was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 9 on February 28, 1996, and is
hereby incorporated by reference.
- (2) Notice of Addition of Funds to Shareholder Sub-Accounting
Services Agreement, dated February 1, 1993, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 10 on February 24, 1997, and is
hereby incorporated by reference.
- (3) Form of Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement among the Registrant, First
Data Investor Services Group, Inc., Financial Data Services,
Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated was
filed electronically as an Exhibit to Post-Effective Amendment
No. 11 on May 16, 1997, and is hereby incorporated by
reference.
(10) - Opinion and Consent of Spengler Carlson Gubar Brodsky &
Frischling was filed as an Exhibit to Registrant's Registration
Statement on December 19, 1991, and is hereby incorporated by
reference.
(11) (a) - Consent of Ballard Spahr Andrews & Ingersoll is filed herewith
electronically.
(b) - Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(12) - Financial Statements - None.
(13) - (1) Agreement Concerning Initial Capitalization of the
Registrant's AIM Global Aggressive Growth Fund, AIM Global
Growth Fund and AIM Global Income Fund, dated as of July 1,
1994, was filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 7 on February 23, 1995, and was
filed electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 28, 1996, and is hereby incorporated by
reference.
- (2) Form of Agreement Concerning Initial Capitalization of the
Registrant's AIM Asian Growth Fund and AIM European
Development Fund was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 11 on May 16, 1997,
and is hereby incorporated by reference.
(14) (a) - (1) Form of Registrant's IRA Documents was filed as an Exhibit
to Registrant's Registration Statement on December 19, 1991.
- (2) Revised Form of Registrant's IRA Documents was filed as
Post-Effective Amendment No. 2 on August 16, 1993, and is
hereby incorporated by reference.
(b) - Revised Form of Registrant's Simplified Employee Pension -
Individual Retirement Accounts Contribution Agreement was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 2 on
August 16, 1993, and is hereby incorporated by reference.
(c) - Forms of Registrant's Money Purchase Pension and Profit Sharing
Plan (and applicable Adoption Agreements) and Registrant's
Profit Sharing/401(k) Trust were filed as an Exhibit to
C-7
<PAGE> 340
Registrant's Registration Statement on December 19, 1991, and
are hereby incorporated by reference.
(d) - Revised Form of Registrant's 403(b) Plan is filed herewith
electronically.
(15) (a) - (1) Registrant's Distribution Plan was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1 on February 23,
1993.
- (2) Distribution Plan, and related forms of agreements, on
behalf of the Registrant's AIM International Equity Fund, dated
September 27, 1993, were filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on February 24, 1994.
- (3) Master Distribution Plan, and related forms of agreements,
for Registrant's Class A shares were filed as Exhibits to
Registrant's Post-Effective Amendment No. 7 on February 23,
1995.
- (4) Master Distribution Plan, and related forms of agreements,
for Registrant's Class B shares were filed as Exhibits to
Registrant's Post-Effective Amendment No. 7 on February 23,
1995.
- (5) Amended Master Distribution Plan, dated September 10,
1994, for Registrant's Class A shares was electronically filed
as an Exhibit to Post-Effective Amendment No. 8 on December 1,
1995.
- (6) Amended Master Distribution Plan, dated September 10,
1994, for Registrant's Class B shares was electronically filed
as an Exhibit to Post-Effective Amendment No. 8 on December 1,
1995.
- (7) Amended and Restated Master Distribution Plan, dated as of
September 10, 1994, as amended as of September 10, 1994, and as
amended and restated as of May 2, 1995, for Registrant's Class
B shares was electronically filed as an Exhibit to
Post-Effective Amendment No. 8 on December 1, 1995.
- (8) Amended and Restated Master Distribution Plan, dated
as of September 10, 1994, as amended as of September 10,
1994, and amended and restated as of June 30, 1997, for
Registrant's Class A shares is filed herewith electronically.
- (8) (i) Amendment No. 1 to Amended and Restated Master
Distribution Plan for Registrant's Class A shares was filed
electronically as an Exhibit to Post-Effective Amendment No. 11
on May 16, 1997, and is hereby incorporated by reference.
- (9) Second Amended and Restated Master Distribution Plan,
dated as of September 10, 1994, as amended September 10, 1994,
and as amended and reinstated as of May 2, 1995, and amended and
restated as of June 30, 1997, for Registrant's Class B shares is
filed herewith electronically.
- (9) (i) Form of Amendment No. 1 to Amended and Restated Master
Distribution Plan for Registrant's Class B shares was filed
electronically as an Exhibit to Post-Effective Amendment No. 11
on May 16, 1997, and is hereby incorporated by reference.
- (10) Form of Second Amended and Restated Master Distribution
Plan, dated as of September 10, 1994, as amended as of
September 10, 1994, as amended and restated as
C-8
<PAGE> 341
of June 30, 1997, and as amended and restated as of August 2,
1997, for Registrant's Class A and Class C shares is filed
herewith electronically.
(b) - (1) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is filed
herewith electronically.
(c) - (1) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is
filed herewith electronically.
(d) - (1) Form of Agency Pricing Agreement (for Class A and C
Shares) to be used in connection with Registrant's Master
Distribution Plan is filed herewith electronically.
- (2) Form of Service Agreement for Certain Retirement Plans
(for the Institutional Classes) to be used in connection with
Registrant's Master Distribution Plan was filed electronically
as an Exhibit to Post-Effective Amendment No 9 on February 28,
1996.
(e) - (1) Forms of Service Agreement for Brokers for Bank Trust
Departments and for Bank Trust Departments to be used in
connection with Registrant's Master Distribution Plan are
filed herewith electronically.
(16) (a) - Schedule of Performance Quotations - Schedule of Performance
Quotations on behalf of Registrant's AIM International Equity
Fund was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 1 on February 23, 1993, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 28, 1996, and hereby incorporated by reference.
(b) - Schedule of Performance Quotations - Schedule of Performance
Quotations on behalf of Registrant's AIM Global Aggressive
Growth Fund, AIM Global Growth Fund and AIM Global Income Fund
was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 4 on June 29, 1994, and was filed electronically
as an Exhibit to Post-Effective Amendment No. 9 on February 28,
1996, and is hereby incorporated by reference.
(18) - Rule 18f-3 Plan, effective as of July 1, 1997, is filed
herewith electronically.
(27) - Financial Data Schedule - None.
Item 25. Persons Controlled by or under Common Control with Registrant
Furnish a list or diagram of all persons directly or indirectly controlled
by or under common control with the Registrant and as to each such person
indicate (1) if a company the state or other sovereign power under the laws of
which it is organized, and (2) the percentage of voting securities owned or
other basis of control by the person, if any, immediately controlling it.
Not Applicable
C-9
<PAGE> 342
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a specified date
within 90 days prior to the date of filing, the number of record holders of
each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders
as of May 1, 1997
-------------------------------
Title of Class Class A Class B Class C
-------------- ------- ------- -------
<S> <C> <C> <C>
AIM Asian Growth Fund -0- -0- -0-
AIM European Development Fund -0- -0- -0-
AIM Global Aggressive Growth Fund 117,464 110,044 -0-
AIM Global Growth Fund 14,740 17,471 -0-
AIM Global Income Fund 2,323 2,165 -0-
AIM International Equity Fund 77,081 42,696 -0-
</TABLE>
Item 27. Indemnification
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any director,
officer, affiliated person or underwriter for their own protection.
Pursuant to the Maryland General Corporation Law and the Registrant's
Charter and By-Laws, the Registrant may indemnify any person who was or is
a director, officer, employee or agent of the Registrant to the maximum
extent permitted by the Maryland General Corporation Law. The specific
terms of such indemnification are reflected in the Registrant's Charter
and By-Laws, which are incorporated herein as part of this Registration
Statement. No indemnification will be provided by the Registrant to any
director or officer of the Registrant for any liability to Registrant or
shareholders to which such director or officer would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereby, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy and
will be governed by the final adjudication of such issue. Insurance
coverage is provided under a joint Mutual Fund and Investment Advisory
Professional Directors and Officers Liability Policy, issued by ICI Mutual
Insurance Company, with a $15,000,000 limit of liability.
C-10
<PAGE> 343
Item 28. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and each
director, officer or partner of any such investment advisor, is or has been, at
any time during the last two fiscal years, engaged for his own account or in
the capacity of director, officer, employee, partner or trustee.
The only employment of a substantial nature of the Advisor's directors and
officers is with the Advisor and its affiliated companies. Reference is
also made to the caption "Management--Investment Advisor" of the
Prospectus which comprises Part A of the Registration Statement, and to
the caption "Management" of the Statement of Additional Information which
comprises Part B of the Registration Statement, and to Item 29(b) of this
Part C.
Item 29. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal underwriter,
also acts as a principal underwriter to the following investment
companies:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM Investment Securities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
(b)
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Charles T. Bauer Chairman of the Chairman of the
Board of Directors Board of Directors
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President President & Director
& Director
W. Gary Littlepage Senior Vice President None
& Director
James L. Salners Senior Vice President & None
Director
John Caldwell Senior Vice President None
</TABLE>
- --------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-11
<PAGE> 344
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
Marilyn M. Miller First Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Ofelia M. Mayo Vice President, Assistant Assistant Secretary
Secretary & General Counsel
Melville B. Cox Vice President & Vice President
Chief Compliance Officer
Mary K. Coleman Vice President None
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
Carol F. Relihan Vice President Senior Vice President
& Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
B.J. Thompson Vice President None
Robert D. Van Sant, Jr. Vice President None
David E. Hessel Assistant Vice President, None
Controller & Assistant
Treasurer
Luke Beausoleil Assistant Vice President None
Tisha Christopher Assistant Vice President None
</TABLE>
- --------------------
*11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-12
<PAGE> 345
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Glenda Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri L. Fielder Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Wayne W. LePlante Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neal Assistant Vice President None
Terri L. Ransdell Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Christopher T. Simutis Assistant Vice President None
Gary K. Wendler Assistant Vice President None
Nicholas D. White Assistant Vice President None
Norman W. Woodson Assistant Vice President None
David L. Kite Assistant General Counsel & Assistant Secretary
Assistant Secretary
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
(c) Not Applicable
- --------------------
*11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-13
<PAGE> 346
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, maintains physical possession of each such account, book or
other document of the Registrant at its principal executive offices,
except for those maintained by the Registrant's Custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
and the Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund
Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739.
Item 31. Management Services
Furnish a summary of the substantive provisions of any management-related
service contract not discussed in Part A or Part B of this Form (because the
contract was not believed to be of interest to a purchaser of securities of the
Registrant) under which services are provided to the Registrant, indicating the
parties to the contract, the total dollars paid and by whom, for the last three
fiscal years.
Not Applicable
Item 32. Undertakings
(b) The Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six
months from the actual date AIM Asian Growth Fund and AIM European
Development Fund shares are sold to the public.
(c) The Registrant undertakes to furnish each person to whom a prospectus
is delivered a copy of the applicable Fund's latest annual report to
shareholders, upon request and without charge.
C-14
<PAGE> 347
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 4th day of
August, 1997.
REGISTRANT: AIM INTERNATIONAL FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
---------------------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C>
/S/ CHARLES T. BAUER Chairman & Director August 4, 1997
------------------------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Director & President August 4, 1997
----------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Director August 4, 1997
------------------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Director August 4, 1997
------------------------------------------
(Owen Daly II)
/s/ JACK FIELDS Director August 4, 1997
------------------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Director August 4, 1997
------------------------------------------
(Carl Frischling)
/s/ JOHN F. KROEGER Director August 4, 1997
------------------------------------------
(John F. Kroeger)
/s/ LEWIS F. PENNOCK Director August 4, 1997
------------------------------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Director August 4, 1997
------------------------------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Director August 4, 1997
------------------------------------------
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President & August 4, 1997
------------------------------------------ Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 348
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
1(h) Articles Supplementary to Articles of Incorporation of
Registrant dated June 12, 1997
6(a)(8) Form of Amended and Restated Master Distribution Agreement,
between Registrant (on behalf of the portfolios' Class A and
Class C shares) and A I M Distributors, Inc.
6(b)(1) Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers
6(c)(1) Form of Bank Selling Group Agreement between A I M Distributors,
Inc. and banks
9(a)(5)(i) Form of Amendment No. 1 to the Transfer Agency and Service
Agreement, dated as of November 1, 1994, between Registrant and
A I M Fund Services, Inc.
9(a)(6)(iv) Amendment No. 3, dated as of February 1, 1997, to the Remote
Access and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group
(formerly The Shareholder Services Group, Inc.)
11(a) Consent of Ballard Spahr Andrews & Ingersoll
11(b) Consent of KPMG Peat Marwick LLP
14(d) Revised form of Registrant's 403(b) Plan
15(a)(8) Amended and Restated Master Distribution Plan, dated as
of September 10, 1994, as amended as of September 10, 1994, and
amended and restated as of June 30, 1997, for Registrant's Class
A shares
15(a)(9) Second Amended and Restated Master Distribution Plan,
dated as of September 10, 1994, as amended as of September 10,
1994, as amended and restated as of May 2, 1995, and as amended
and restated as of June 30, 1997, for Registrant's Class B shares
15(a)(10) Form of Second Amended and Restated Master Distribution Plan,
dated as of September 10, 1994, as amended as of September 10,
1994, as amended and restated as of June 30, 1997, and as amended
and restated as of August 2, 1997, for Registrant's Class A and
Class C shares
15(b)(1) Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan
15(c)(1) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan
15(d)(1) Form of Agency Pricing Agreement (for Class A and Class C
Shares) to be used in connection with Registrant's Master
Distribution Plan
15(e)(1) Forms of Service Agreement for Brokers for Bank Trust
Departments and for Bank Trust Departments to be used in
connection with Registrant's Master Distribution Plan
18 Multiple Class Plan (Rule 18f-3)
</TABLE>
<PAGE> 1
EXHIBIT 1(h)
AIM INTERNATIONAL FUNDS, INC.
ARTICLES SUPPLEMENTARY
AIM INTERNATIONAL FUNDS, INC., a Maryland corporation registered as an
open-end investment company under the Investment Company Act of 1940 having its
principal office in the State of Maryland in Baltimore City (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to Section 2-105(c) of the Maryland General
Corporation Law, the Board of Directors of the Corporation hereby increases the
aggregate number of shares of common stock which the Corporation shall have the
authority to issue from 2,000,000,000 to 4,000,000,000 shares with a par value
of $.001 each.
SECOND: Immediately prior to the filing of these Articles
Supplementary, the Corporation had authority to issue 2,000,000,000 shares with
a par value of $.001 each. Of these shares:
(a) two hundred million (200,000,000) shares have been
classified as AIM International Equity Fund Class A Shares, two
hundred million (200,000,000) shares have been classified as AIM
Global Aggressive Growth Fund Class A Shares, two hundred million
(200,000,000) shares have been classified as AIM Global Growth Fund
Class A Shares, and two hundred million (200,000,000) shares have been
classified as AIM Global Income Fund Class A Shares;
<PAGE> 2
(b) two hundred million (200,000,000) shares have been
classified as AIM International Equity Fund Class B Shares, two
hundred million (200,000,000) shares have been classified as AIM
Global Aggressive Growth Fund Class B Shares, two hundred million
(200,000,000) shares have been classified as AIM Global Growth Fund
Class B Shares, and two hundred million (200,000,000) shares have been
classified as AIM Global Income Fund Class B Shares; and
(c) 400,000,000 shares were unclassified.
THIRD: All the shares of common stock of the Corporation, both
classified and unclassified, collectively had an aggregate par value of
$2,000,000.
FOURTH: As of the filing of these Article Supplementary, the
Corporation shall have authority to issue 4,000,000,000 shares with a par value
of $.001 each. Of the 4,000,000,000 shares:
(a) two hundred million (200,000,000) shares are
classified as AIM International Equity Fund Class A Shares, two
hundred million (200,000,000) shares are classified as AIM Global
Aggressive Growth Fund Class A Shares, two hundred million
(200,000,000) shares are classified as AIM Global Growth Fund Class A
Shares, two hundred million (200,000,000) shares are classified as AIM
Global Income Fund Class A Shares, two hundred million (200,000,000)
shares are classified as AIM Asia-Pacific Growth Fund Class A Shares
and two hundred million (200,000,000) shares are classified as AIM
European Capital Growth Fund Class A Shares (which
<PAGE> 3
classified shares shall be referred to herein collectively as "Class A
Shares," and holders of such Class A Shares shall be referred to
herein as "Class A Shareholders");
(b) two hundred million (200,000,000) shares are
classified as AIM International Equity Fund Class B Shares, two
hundred million (200,000,000) shares are classified as AIM Global
Aggressive Growth Fund Class B Shares, two hundred million
(200,000,000) shares are classified as AIM Global Growth Fund Class B
Shares, two hundred million (200,000,000) shares are classified as AIM
Global Income Fund Class B Shares, two hundred million (200,000,000)
shares are classified as AIM Asia-Pacific Growth Fund Class B Shares,
and two hundred million (200,000,000) shares are classified as AIM
European Capital Growth Fund Class B Shares (which classified shares
shall be referred to herein collectively as the "Class B Shares," and
holders of such Class B Shares shall be referred to herein as "Class B
Shareholders");
(c) two hundred million (200,000,000) shares are
classified as AIM International Equity Fund Class C Shares, two
hundred million (200,000,000) shares are classified as AIM Global
Aggressive Growth Fund Class C Shares, two hundred million
(200,000,000) shares are classified as AIM Global Growth Fund Class C
Shares, two hundred million (200,000,000) shares are classified as AIM
Global Income Fund Class C Shares, two hundred million (200,000,000)
shares are classified as AIM Asia-Pacific Growth Fund Class C Shares,
and two hundred million (200,000,000) shares are classified as AIM
European Capital Growth Fund Class C Shares (which classified shares
shall be referred to herein collectively as the "Class C Shares," and
holders of such Class C Shares shall be referred to herein as "Class C
Shareholders"); and
<PAGE> 4
(d) 400,000,000 shares were unclassified.
FIFTH: Unissued shares of common stock (both classified and
unclassified) may be classified and reclassified by the Board of Directors.
SIXTH: All the shares of common stock of the Corporation, both
classified and unclassified, collectively have an aggregate par value of
$4,000,000.
SEVENTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the Class A Shares as set forth in ARTICLE FIFTH,
paragraph (b) of the Corporation's Charter, and in the provisions of the
Charter relating to stock of the Corporation generally, remain unchanged.
EIGHTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the Class B Shares as set forth in ARTICLE FIFTH,
paragraph (b) of the Corporation's Charter and in the provisions of the Charter
relating to stock of the Corporation generally, remain unchanged.
NINTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the Class C Shares are set forth in ARTICLE FIFTH,
paragraph (b) of the Corporation's Charter and shall be subject to all
provisions of the Charter relating to stock of the Corporation generally.
<PAGE> 5
TENTH: The Board of Directors of the Corporation has
authorized the additional shares and classified the shares of AIM
Asia-Pacific Growth Fund, AIM European Capital Growth Fund and the
Class C shares of AIM International Equity Fund, AIM Global Aggressive
Growth Fund, AIM Global Growth Fund and AIM Global Income Fund, under
authority contained in the Charter of the Corporation.
The undersigned President acknowledges these Articles Supplementary to
be the corporate act of the Corporation and states that to the best of his
knowledge, information and belief, the matters and facts set forth in these
Articles with respect to authorization and approval are true in all material
respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, AIM INTERNATIONAL FUNDS, INC. has caused these
Articles Supplementary to be executed in its name and on its behalf by its
President and witnessed by its Assistant Secretary on June 12, 1997.
AIM INTERNATIONAL FUNDS, INC.
Witness:
/s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
- --------------------------- ---------------------------
Assistant Secretary President
<PAGE> 1
EXHIBIT 6(a)(8)
FORM OF
AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM INTERNATIONAL FUNDS, INC.
(CLASS A AND C SHARES)
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT made as of the 2nd day of August, 1997, by and between
AIM INTERNATIONAL FUNDS, INC., a Maryland corporation (the "Company"), with
respect to the series of shares of its common stock set forth on Appendix A to
this agreement (the "Portfolios") and the shares, other than the Class B
shares, representing the Portfolios (hereinafter referred to as the "Class A
and Class C Shares") and A I M DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged,
the parties hereto agree as follows:
FIRST: The Company on behalf of the Class A and Class C Shares hereby
appoints the Distributor as its exclusive agent for the sale of the Class A and
Class C Shares to the public directly and through investment dealers and
financial institutions in the United States and throughout the world.
SECOND: The Company shall not sell any Class A and Class C Shares
except through the Distributor and under the terms and conditions set forth in
paragraph FOURTH below. Notwithstanding the provisions of the foregoing
sentence, however:
(A) the Company may issue Class A and Class C Shares to any other
investment company or personal holding company, or to the shareholders thereof,
in exchange for all or a majority of the shares or assets of any such company;
and
(B) the Company may issue Class A and Class C Shares at their net
asset value in connection with certain classes of transactions or to certain
categories of persons, in accordance with Rule 22d-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"), provided that any such
category is specified in the then current prospectus of the applicable Class A
and Class C Shares.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Class A and Class C Shares and agrees that it will use its
best efforts to sell such shares; provided, however, that:
-1-
<PAGE> 2
(A) the Distributor may, and when requested by the Company on behalf
of the Class A and Class C Shares shall, suspend its efforts to effectuate such
sales at any time when, in the opinion of the Distributor or of the Company, no
sales should be made because of market or other economic considerations or
abnormal circumstances of any kind; and
(B) the Company may withdraw the offering of the Class A and Class C
Shares (i) at any time with the consent of the Distributor, or (ii) without
such consent when so required by the provisions of any statute or of any order,
rule or regulation of any governmental body having jurisdiction. It is
mutually understood and agreed that the Distributor does not undertake to sell
any specific amount of the Class A and Class C Shares. The Company shall have
the right to specify minimum amounts for initial and subsequent orders for the
purchase of Class A and Class C Shares.
FOURTH:
(A) The public offering price of Class A Shares (the "offering
price") shall be the net asset value per share plus a sales charge, if any.
Net asset value per share shall be determined in accordance with the provisions
of the then current prospectus and statement of additional information of the
Portfolios. The sales charge shall be established by the Distributor, may
reflect scheduled variations in, or the elimination of, sales charges on sales
of Class A Shares either generally to the public, or to any specified class of
investors or in connection with any specified class of transactions, in
accordance with Rule 22d-1 and as set forth in the then current prospectus and
statement of additional information of the Portfolios. The Distributor shall
apply any scheduled variation in, or elimination of, the selling commission
uniformly to all offerees in the class specified.
The public offering price of the Class C shares shall be the net asset
value per share of the applicable Class C shares. Net asset value per share
shall be determined in accordance with the provisions of the then current
prospectus and statement of additional information of the applicable Fund.
The Distributor may establish a schedule of contingent deferred sales charges
to be imposed at the time of redemption of the Shares, and such schedule shall
be disclosed in the current prospectus of each Fund. Such schedule of
contingent deferred sales charges may reflect variations in or waivers of such
charges on redemptions of Class C shares, either generally to the public or to
any specified class of shareholders and/or in connection with any specified
class of transactions, in accordance with applicable rules and regulations and
exemptive relief granted by the Securities and Exchange Commission, and as set
forth in the Funds' current prospectus(es). The Distributor and the Company
shall apply any then applicable scheduled variation in or waiver of contingent
deferred sales charges uniformly to all shareholders and/or all transactions
belonging to a specified class.
(B) The Portfolios shall allow directly to investment dealers and
other financial institutions through whom Class A Shares are sold such portion
of the sales charge as may be payable to them and specified by the Distributor
up to but not exceeding the amount of the total sales charge. The difference
between any commissions so payable and the total sales charges included in the
offering price shall be paid to the Distributor.
The Distributor may pay to investment dealers and other financial
institutions through whom Class C shares are sold, such sales commission as the
Distributor may specify from time to time. Payment of any such sales
commissions shall be the sole obligation of the Distributor.
-2-
<PAGE> 3
(C) No provision of this Agreement shall be deemed to prohibit any
payments by a Portfolio to the Distributor or by a Portfolio or the Distributor
to investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
on behalf of each Portfolio pursuant to Rule 12b-1 under the 1940 Act.
FIFTH: The Distributor shall act as agent of the Company on behalf of
each Portfolio in connection with the sale and repurchase of Class A and Class
C Shares. Except with respect to such sales and repurchases, the Distributor
shall act as principal in all matters relating to the promotion of the sale of
Class A and Class C Shares and shall enter into all of its own engagements,
agreements and contracts as principal on its own account. The Distributor
shall enter into agreements with investment dealers and financial institutions
selected by the Distributor, authorizing such investment dealers and financial
institutions to offer and sell Class A and Class C Shares to the public upon
the terms and conditions set forth therein, which shall not be inconsistent
with the provisions of this Agreement. Each agreement shall provide that the
investment dealer and financial institution shall act as a principal, and not
as an agent, of the Company on behalf of the Portfolios.
SIXTH: The Portfolios shall bear:
(A) the expenses of qualification of Class A and Class C Shares for
sale in connection with such public offerings in such states as shall be
selected by the Distributor, and of continuing the qualification therein until
the Distributor notifies the Company that it does not wish such qualification
continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the Portfolios' prospectuses and statements of
additional information (including supplements thereto) relating to public
offerings made by the Distributor pursuant to this Agreement (which shall not
include those prospectuses and statements of additional information, and
supplements thereto, to be distributed to shareholders of each Portfolio), and
any other promotional or sales literature used by the Distributor or furnished
by the Distributor to dealers in connection with such public offerings, and
expenses of advertising in connection with such public offerings.
(B) The Distributor may be reimbursed for all or a portion of such
expenses, or may receive reasonable compensation for distribution related
services, to the extent permitted by a distribution plan adopted by the Company
on behalf of the Portfolios pursuant to Rule 12b-1 under the 1940 Act.
EIGHTH: The Distributor will accept orders for the purchase of Class
A and Class C Shares only to the extent of purchase orders actually received
and not in excess of such orders, and it will not avail itself of any
opportunity of making a profit by expediting or withholding orders. It is
mutually understood and agreed that the Company may reject purchase orders
where, in the judgment of the Company, such rejection is in the best interest
of the Company.
-3-
<PAGE> 4
NINTH: The Company, on behalf of the Portfolios, and the Distributor
shall each comply with all applicable provisions of the 1940 Act, the
Securities Act of 1933 and of all other federal and state laws, rules and
regulations governing the issuance and sale of Class A and Class C Shares.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company on behalf of the Portfolios agrees to indemnify the
Distributor against any and all claims, demands, liabilities and expenses which
the Distributor may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Portfolios, or any omission to state a material fact therein, the omission of
which makes any statement contained therein misleading, unless such statement
or omission was made in reliance upon, and in conformity with, information
furnished to the Company or Portfolio in connection therewith by or on behalf
of the Distributor. The Distributor agrees to indemnify the Company and the
Portfolios against any and all claims, demands, liabilities and expenses which
the Company or the Portfolios may incur arising out of or based upon any act or
deed of the Distributor or its sales representatives which has not been
authorized by the Company or the Portfolios in its prospectus or in this
Agreement.
(B) The Distributor agrees to indemnify the Company and the Portfolios
against any and all claims, demands, liabilities and expenses which the Company
or the Portfolios may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Portfolios, or any omission to state a material fact therein if such statement
or omission was made in reliance upon, and in conformity with, information
furnished to the Company or the Portfolios in connection therewith by or on
behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the Portfolios' transfer
agent(s), or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Articles of Incorporation, or to
any applicable statute or regulation.
TWELFTH: This Agreement shall become effective as of the date hereof,
shall continue in force and effect until February 28, 1999, and shall continue
in force and effect from year to year thereafter, provided, that such
continuance is specifically approved at least annually (a)(i) by the Board of
Directors of the Company or (ii) by the vote of a majority of the Portfolios'
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act),
and (b) by vote of a majority of the Company's directors who are not parties to
this Agreement or "interested persons" (as defined in Section 2(a)(19) of the
1940 Act) of any party to this Agreement cast in person at a meeting called for
such purpose.
-4-
<PAGE> 5
THIRTEENTH:
(A) This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Directors of the Company or by vote of
a majority of the outstanding voting securities of each Portfolio, or by the
Distributor, on sixty (60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be 11 Greenway Plaza, Suite 100, Houston,
Texas 77046.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM INTERNATIONAL FUNDS, INC.
By:
---------------------------------
Name: Robert H. Graham
Title: President
Attest:
- ------------------------------
Name:
Title:
A I M DISTRIBUTORS, INC.
By:
---------------------------------
Name: Michael J. Cemo
Title: President
Attest:
- ------------------------------
Name:
Title:
-5-
<PAGE> 6
APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM INTERNATIONAL FUNDS, INC.
CLASS A SHARES
AIM Asia-Pacific Growth Fund
AIM European Capital Growth Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
CLASS C SHARES
AIM Asia-Pacific Growth Fund
AIM European Capital Growth Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
-6-
<PAGE> 1
EXHIBIT 6(b)(1)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole descretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
consession as disclosed in the CDSC Fund's then current prospectus. With
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
7/97
<PAGE> 2
6 Sales and exchages of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concesssion
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospecutus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representaion, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
7/97
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
7/97
<PAGE> 5
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Fund, AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Shares.
**For all Funds sold with CDSC (includes Class B and Class C shares) except for
AIM Constellation Fund, which offers only Class C shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 1
EXHIBIT 6(c)(1)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
7/97
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
7/97
<PAGE> 4
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Management Fund, AIM Cash Reserve Shares, AIM
Limited Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Shares.
**For all Funds sold with CDSC (includes Class B and Class C shares) except for
AIM Constellation Fund, which offers only Class C shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 1
EXHIBIT 9(a)(5)(i)
AMENDMENT NO. 1
TRANSFER AGENCY AND SERVICE AGREEMENT
The Transfer Agency and Service Agreement (the "Agreement"), dated
November 1, 1994, by and between AIM International Funds, Inc., a Maryland
corporation and A I M Fund Services, Inc., a Delaware corporation, is hereby
amended as follows (terms used herein but not otherwise defined herein have the
meaning ascribed them in the Agreement):
1) Section 1 of the Fee Schedule to the Agreement is hereby deleted in
its entirety and replaced with the following:
" 1. For performance by the Transfer Agent pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Transfer
Agent an annualized fee for shareholder accounts that are open during
any monthly period as set forth below, and an annualized fee of $.70
per shareholder account that is closed during any monthly period.
Both fees shall be billed by the Transfer Agent monthly in arrears on
a prorated basis of 1/12 of the annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------- ----------
<S> <C>
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividend 17.15
Class A Daily Accrual 19.65
Class B 19.65
Class C 19.65"
</TABLE>
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: August 2, 1997
AIM INTERNATIONAL FUNDS, INC.
Attest: By:
------------------------------ -----------------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest: By:
------------------------------ -----------------------------------
Assistant Secretary John Caldwell
President
(SEAL)
<PAGE> 1
EXHIBIT 9(a)(6)(iv)
AMENDMENT NUMBER 3 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of February 1, 1997 is made to the Remote
Access and Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on the attached
Exhibit 1 hereof, (the "Fund") and The Shareholder Services Group, Inc., now
known as First Data Investor Services Group, Inc. ("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree that as of the date first referenced above, the
Agreement shall be amended as follows:
1. All references to "THE SHAREHOLDER SERVICES GROUP, INC." are hereby
deleted and replaced with "FIRST DATA INVESTOR SERVICES GROUP, INC." and all
references to "TSSG" are hereby deleted and replaced with "FDISG".
2. Delete the second sentence from Section 3(c) and replace with the
following:
"The Fund will pay to FDISG the amount so billed by Federal Funds Wire
within fifteen (15) business days after the Fund's receipt of the
invoice."
3. Section 4(b) of the Agreement is hereby deleted in its entirety and
replaced with the following new Section 4(b):
"FDISG agrees to provide to the Fund at its facilities located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046, 12 Greenway Plaza,
Houston, Texas 77046, 301 Congress Street, Suite 1700, Austin, Texas
78701 and 12503 East Euclid Drive, Suite 250, Englewood, CO 80111 or
at such other locations as may be mutually agreed upon in writing by
FDISG and the Fund (the "Fund Facility") remote access to the use of
information processing capabilities of the FDISG System as it may be
modified from time to time by FDISG."
4. Section 12 of the Agreement is hereby amended by adding the following
new Sections 12(c), through 12(i):
"(c) FDISG shall retain title to and ownership of the FDISG System,
including any and all data bases, computer programs, screen
formats, report formats, interactive design techniques,
derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents,
copyrights, trade secrets, and
<PAGE> 2
other related legal rights utilized in connection with the
services provided by FDISG to the Fund hereunder other than
shareholder account and transaction information which shall
remain the exclusive property of the Fund.
(d) FDISG hereby grants to the Fund and the Fund accepts a limited
license to the FDISG System for the sole and limited purpose
of having FDISG provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or
interpreted otherwise and subject to Section 15 such license
shall immediately terminate with the termination of this
Agreement.
(e) The transmission of account inquiry and transaction
information, including but not limited to maintenances,
exchanges, purchases and redemptions, shall be limited to
direct entry to the FDISG System by means of on-line mainframe
terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of
information to the FDISG System is strictly prohibited without
the prior written consent of FDISG.
(f) FDISG warrants that the FDISG System shall include, at no
additional cost to the Fund, design and performance
capabilities so that prior to, during, and after the calendar
year 2000, the FDISG System will not malfunction, produce
invalid or incorrect results, or abnormally cease to function
due to the year 2000 date change. In connection with the
foregoing, FDISG agrees to provide the Fund with periodic
quarterly updates with respect to FDISG compliance with this
provision.
(g) Other than CPU Authorization Passwords, FDISG represents and
warrants to the Fund the software products provided by FDISG
hereunder (the "Products") do not contain any "back door" or
concealed access devices, any block or protection feature
which prevents the Fund from making additional copies of such
Products as permitted by this Agreement or any "self-help"
code, "Unauthorized Code", "software locks" or any other
similar devices which, upon the occurrence of a certain date
or event, the passage of a certain amount of time, or taking
of any action (or failure to take action) by or on behalf of
FDISG, will cause such Products or any software or system with
such Products are used to be destroyed, erased, damaged, or
otherwise made inoperable. "Unauthorized Code" shall mean any
virus, Trojan horse, worm, or other software routines designed
to permit unauthorized access: to disable, or otherwise harm
software, hardware, or data; or to perform any other such
actions.
(h) Provided the Fund gives FDISG reasonable written notice,
reasonable assistance, including assistance from the Fund's
employees, agents, affiliates and to the extent possible
independent contractors (collectively, "FUND'S AGENTS"), and
sole authority to defend or settle the action, then FDISG
shall do the following ("INFRINGEMENT INDEMNIFICATION"): (a)
defend or settle, at its expense, any action brought against
the Fund or the Fund's Agents to the extent the action is
based on a claim that the Fund's use of the FDISG System
infringes a duly issued United
<PAGE> 3
States' patent or copyright or violates a third party's
proprietary trade secrets or other similar intellectual
property rights ("INFRINGEMENT"); and (b) pay damages and
costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no
Infringement Indemnification obligation if the alleged
Infringement is based upon the Fund's use of the FDISG System
with equipment or software not furnished or approved by FDISG
or if such claim arises from FDISG's compliance with the Fund's
designs, or from the Fund's modifications of the Software.
The Infringement Indemnification states FDISG's entire
liability for Infringement and shall be the Fund's sole and
exclusive remedy for such claims.
(i) Within sixty (60) days after the execution of this Amendment,
FDISG and the Fund shall enter into an escrow agreement
relating to the source code for (i) the FDISG proprietary
software used in connection with the FDISG System (as defined
in Section 1 of the Agreement: (ii) the "Software" (as that
term is defined in Schedule G), including the Third Party
Software set forth in Sections 2.1.1 and 2.1.2 of Exhibit 1 of
Schedule G; and (iii) the "FDISG Software" as that term is
defined in Schedule H (collectively, the "Source Code")
substantially in the form attached as Exhibit 2 of this
Amendment Number 3 ("Exhibit 2"). Promptly after signing the
escrow agreement, FDISG shall forward the agreement to the
escrow agent with a copy of the Source Code to be deposited
into escrow. FDISG agrees to update the Source Code held by
the escrow agent on a quarterly basis. The Fund shall be
responsible and pay for all fees of the escrow agent. The
Source Code may be released to the Fund only if (i) FDISG
ceases to do business, makes an assignment for the benefit of
creditors, becomes insolvent (as revealed by its books and
records or otherwise), is generally unable to pay its debts as
such debts become due, or commences, or has commenced against
it a case under any chapter of state or federal bankruptcy
laws; and FDISG fails to cure any such event within sixty (60)
days after receiving notice from the Fund; and (ii) the Fund
has paid all amounts due to FDISG under this Agreement. Upon
receipt of the Source Code from the escrow agent, the Fund
shall a have license to use the Software solely as set forth
herein for the remaining current term of the Agreement subject
to Section 15, which use shall be expanded to include the
right to modify the software solely in connection with support,
maintenance and operation of the software and not for any
other purpose or person."
5. Sections 14(a) and (b) of the Agreement are hereby deleted from the
Agreement and replaced with the following new Sections 14(a) and (b):
(a) This Agreement which became effective as of December 23, 1994
is hereby extended effective February 1, 1997 and shall
continue through January 31, 2000 (the "Initial Term"). Upon
the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or FDISG provides
written notice to the other of its intent not to
<PAGE> 4
renew. Such notice must be received not less than one-hundred
and eighty (180) days prior to the expiration of the Initial
Term or the then current Renewal Term.
(b) Notwithstanding the foregoing Section 14(a), in the event the
Fund provides notice of its intent to terminate as set forth in
Section 14(a), the Fund may extend the term of the Agreement
for up to an additional one-hundred and eighty (180) days (the
"Extension Period") by providing FDISG with written notice of
its intent to do so. Such notice must be received no later
than one-hundred and eighty (180) days prior to the expiration
of the Initial Term. During the Extension Period, the Fund may
terminate this Agreement at any time on thirty (30) days
written notice.
6. Section 15 is hereby amended by adding the following sentence to the
end of the paragraph:
"FDISG agrees to provide reasonable, supervised system access until
the Fund's conversion to another provider is complete".
7. Section 23(a) is hereby amended by deleting the information regarding
notices and inserting the following
To: The AIM Family of Funds
c/o A I M Fund Services, Inc.
Eleven Greenway Plaza, Suite 100
Houston, Texas 77046
Attention: John Caldwell, President
with copy to:
Fund Legal Counsel at same address
Attention: Carol F. Relihan, Senior Vice President &
General Counsel
To: First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 02109
Attention: President
with copy to : General Counsel (same address)
8. Section 23 is hereby amended by adding the following new sub-section
(k):
"(k) Notwithstanding the indemnity provided by the Fund in Section
8(g), FDISG agrees to use commercially reasonable efforts to
maintain a Disaster Recovery Plan, at no cost to the Fund,
designed to minimize the impact of any unforeseen business
interruption or outage that renders the FDISG System or FDISG
Facility inoperable, a summary of which is attached hereto as
Schedule I."
<PAGE> 5
9. Schedule C is hereby deleted in its entirety and replaced with the
attached revised Schedule C.
10. Exhibit 1 and Exhibit 2 of Schedule D are hereby deleted in their
entirety.
11. Schedule F is hereby deleted in its entirety and replaced with the
attached revised Schedule F.
12. Addendum Number 2 to the Agreement is hereby deleted in its entirety
and the new revised Schedule D - Out of Pocket Expenses as referenced in
Section 3(b) is hereby added to the Agreement.
13. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary IMPRESS Plus software and system in
accordance with the terms of and as more fully described in IMPRESS Plus
Software and Support Terms annexed hereto as Schedule G and incorporated
herein.
14. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary Accounting Control Environment +
("ACE +") software in accordance with the terms of and as more fully described
in the ACE + Software and Support Terms annexed hereto as Schedule H and
incorporated herein.
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant or other agent of either
party is authorized to make any representation, warranty, or other promises not
expressly contained herein with respect to the subject matter hereof.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 attached hereto as may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
-------------------------------------
Title: President
----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ GERALD G. KOKOS
-------------------------------------
Title: Executive Vice President
----------------------------------
<PAGE> 7
EXHIBIT 1
LIST OF FUNDS
<TABLE>
<S> <C>
AIM EQUITY FUNDS, INC.
Portfolios: Classes:
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
AIM FUNDS GROUP
Portfolios: Classes:
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B, and
AIM Cash Reserve Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes:
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
AIM INVESTMENT SECURITIES FUNDS
Portfolios: Classes:
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes:
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 8
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number __________
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this ______ day of _____ 1997, by and among
Data Securities International, Inc. ("DSI"), a Delaware corporation, First Data
Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 9
Agreement, DSI shall request the initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
2
<PAGE> 10
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of
3
<PAGE> 11
one or more of its officers, selected by DSI, whose identity shall be
available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
4
<PAGE> 12
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction means an officer of Depositor
warrants that a release condition has not occurred or has been cured.
DSI shall send a copy of the instruction by certified mail or
commercial express mail service to Preferred Registrant. DSI shall
notify both Depositor and Preferred Registrant that there is a dispute
to be resolved pursuant to Section 25. Upon receipt of Contrary
Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to
Section 25, order by a court of competent jurisdiction, or termination
by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit,
5
<PAGE> 13
to the Preferred Registrant filing for release following receipt of
any fees due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
6
<PAGE> 14
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not
7
<PAGE> 15
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement. For any
service not listed on the Fee and Services Schedule, DSI shall provide
a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
8
<PAGE> 16
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By: FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name:
------------------------------- By:
Title: ---------------------------------
------------------------------ Name:
-------------------------------
Title:
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
</TABLE>
<PAGE> 17
SCHEDULE A
LIST OF FUNDS
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
</TABLE>
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 18
EXHIBIT A
DESIGNATED CONTACT
Account Number: __________
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
[Company Name/Address] ------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
Invoice Contact:
- ---------------------------------------- --------------------------------
Designated Contact:
---------------------
Telephone:
------------------------------
Facsimile:
------------------------------
State of Incorporation:
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO:
-----------------------------------------------
First Data Investor Services Group, Inc.
4400 Computer Drive -----------------------------------------------
Westborough, MA 01581
-----------------------------------------------
-----------------------------------------------
Designated Contact: Invoice Contact:
--------------------- -------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 19
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number:
--------------------------------------------------------
Depositor Company Name:
--------------------------------------------------------
DEPOSIT TYPE:
Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS:
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS:
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler:
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: Version:
----------------- ------------------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By: By:
--------------------------------------- ---------------------------------------
Print Name: Print Name:
------------------------------- -------------------------------
Date: Date of Acceptance:
------------------------------------- -----------------------
ISE: EXHIBIT B#:
--------- ---------------
</TABLE>
<PAGE> 20
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following fees:
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
January 31, 2000, the Fund shall pay FDISG an annualized fee for shareholder
accounts open during any monthly period ("Open Account Fee") as follows:
<TABLE>
<CAPTION>
Account Volume Fee
<S> <C>
1-1.5 million $3.60/shareholder account
Exceeding 1.5 million $2.25/shareholder account
</TABLE>
The Fund also shall pay FDISG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and Closed Account Fees hereafter collectively referred to as
"Shareholder Account Fees"). The Shareholder Account Fees shall be billed by
FDISG monthly in arrears on a prorated basis of 1/12 of the annualized fee for
all such accounts.
FDISG will provide a credit to the Shareholder Account Fees of one million
dollars in the years 1998 and 1999. The credit shall be applied as a reduction
of $83,333.33 on each monthly fee bill in 1998 and 1999.
In addition, on January 1 of the years 1998, 1999, and 2000 the Shareholder
Account fees may be increased by FDISG in an amount equal to the lesser of (i)
the cumulative percentage increase in the Consumer Price Index for all Urban
Consumers (CPI-U) U.S. City Average, All Items (unadjusted - (1982-84 + 100),
published by the U.S. Department of Labor, or (ii) seven percent (7%) of the
Shareholder Account Fees charged by FDISG to the Fund for the preceding twelve
(12) month period.
In return for the Shareholder Account Fees, FDISG agrees to provide the
following to the Fund:
o Remote Access to FDISG's FSR System
o License for 512 IMPRESS Plus software installations valued at 2.5
million dollars. Includes six weeks of technical and user training
(train-the-trainer).
o License for up to 10 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H
o Dedicated Programming Support equivalent to I Systems Manager, 4
Programmers, and 2 Business Systems Analysts
o Implementation of a Separate FSR processing cycle by September 15,
1997, as more fully described in the attached Exhibit 3 of this
Schedule C.
o Implementation of the core TA system functionality identified in
Exhibit 1 of this Schedule C.
<PAGE> 21
o Implementation of IWT functionality as identified in Exhibit 2 of this
Schedule C
o Continued use of FDISG's Price/Rate Transmission (PRAT) application.
The PRAT Application will accept prices and dividend rates from the
Fund Accounting Department of the Fund electronically and post them to
the FDISG Pricing System. The PRAT application will run interconnected
via Local Area Network hardware and software.
II. DEDICATED PROGRAMMING SUPPORT
FDISG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. FDISG agrees to
use reasonable efforts to make dedicated programming support available for all
projects required by the Fund. The amount of the resources required and the
projects to be worked on shall be determined jointly based upon joint periodic
review of project requirements; however, the Fund will decide the priorities
which will be assigned to each project and will determine what projects the
dedicated resources are to work on. All enhancements, improvements,
modifications or new features added to the FDISG System shall be, and shall
remain, the confidential, exclusive property of, and proprietary to, FDISG. The
parties agree to use best efforts to ensure that all enhancements to FDISG's
System, whether made by the Dedicated Team or otherwise, shall be made in a
manner that will not adversely effect the operational efficiency or
functionality of the FDISG System. Request for software changes may be
initiated by those representatives of the Fund identified in Exhibit 4 of this
Schedule C. The Fund will use its best efforts to notify FDISG in writing of
requests for software changes within 72 hours of an initial verbal request.
FDISG reserves the right to stop work on a request for which written
specifications have not been received.
a. SUPPORT PROVIDED TO THE FUND PERFORMED IN GROUPS OTHER
THAN THE DEDICATED PROGRAMMING TEAM
1. Coding to correct deficiencies in the system, unless such
deficiencies are included in item (II)(b)(9) below in which
event the Fund will be charged for such services. A system
deficiency is defined as a system process which does not
operate according to the design of the computer application or
system specifications. To correct system deficiencies, FDISG
will, at its own expense, expend whatever resources are
necessary to analyze the deficiency and apply an appropriate
remedy, in the form of corrected application code as
expeditiously as possible. An alternate process, in the form
of a functional work around, may be a suitable substitute for
the actual system fix, if the level of effort to develop the
system fix is deemed to be impractical or the elapsed time to
develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be
mutually agreed upon by the parties.
FDISG will evaluate all reported referrals, to validate
deficiency status or reclassify as a system enhancement, based
on the above definition.
2. Simple Maintenance determined to be core processing.
<PAGE> 22
3. FDISG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes;
provided, however, FDISG will make such changes to the extent
that they are technically and commercially practical and are
within the scope of the software functions, capabilities and
database. FDISG agrees to use good faith in determining
whether such changes are technically and commercially
reasonable and agrees to negotiate with the Fund in good faith
to resolve any such issues.
b. EXAMPLES OF ACTIVITY TO BE PROVIDED TO THE FUND WHICH WILL
BE PERFORMED BY THE DEDICATED PROGRAMMING TEAM:
1. Customized form output (i.e., statements, confirmation
statements, commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial
funds being live.
8. Clean-up/Recovery project resulting from Fund error or causes
beyond the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to
code developed and currently maintained by the dedicated
teams.
10. Customization of existing functions specific to the Fund
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. Such
exclusivity would extend for a period of nine (9) months from the date
the enhancement is placed into the production libraries. Software
exclusivity would be waived if the Fund accepts either of the
following conditions:
a) If prior to implementation, FDISG or other FDISG clients agree
to share in the expense of the enhancements.
b) At any time during the 9 months following implementation,
FDISG or other FDISG clients agree to share the expense for
the enhancements.
Access and Capability. The Funds' dedicated programmers will have
access and capability to update any part of the System. However,
depending on the skill set of the programmers, as well as the scope of
the requested enhancement, it may be in the best interest of both the
Fund and FDISG to utilize non-dedicated programmers to address
<PAGE> 23
certain enhancements. In addition, because many programs are shared by
multiple clients, some enhancements may require approval from those
clients. These enhancements should be handled on an item by item
basis.
III. ADDITIONAL FEES
a. If the Fund chooses to use resources in addition to the
Dedicated Programming Team to accomplish work as outlined in
Section II.b, the following rates will apply:
<TABLE>
<CAPTION>
Annual Hourly
------ ------
<S> <C> <C>
Programmer $100,000 $135/hr
Business Systems Analyst $ 90,000 $100/hr
Acceptance Tester $ 85,000 $ 90/hr
</TABLE>
These rates apply to development and customization on all
software covered under this agreement (i.e. core TA system,
IMPRESS Plus, ACE+).
b. IMPRESS Plus Maintenance and Support Fees - The Fund will be
billed a monthly fee of $64,000 (fee based on $1500 per
workstation per year for 512 workstation license). Billing to
commence on the earlier of a) first production usage of
IMPRESS Plus software or b) August 1, 1997. Maintenance and
Support Fees include:
o All third party software maintenance charges from
software licensed in Exhibit 1 of Schedule G
o Full IMPRESS Plus applications support (bug fixes,
application assistance, etc.)
o Remote Dial-in IMPRESS Plus application support (if
needed)
o Subsequent interim and major releases for all
licensed IMPRESS Plus products
o 7x24 Help Desk Support for IMPRESS Plus applications
o Full support through First Data for third party
applications licensed in Exhibit 1 of Schedule G
o Participation in IMPRESS Plus User Group
c. IMPRESS Plus Installation Fees - Billable to the Fund at
$135/hr. (Estimate for 512 IMPRESS Plus workstations is 1100
hours). Installation includes:
o IMPRESS Plus application installation
o IMPRESS Plus third party software installation
o Network Design Assistance
o Hardware Configuration Assistance
o Workflow analysis
<PAGE> 24
o Project Management
o Post Installation Support
d. On each anniversary date of this Agreement, FDISG may adjust
the hourly and annual rates to reflect salary increases
and/or to maintain competitive rates in attracting qualified
personnel. Such annual increase will not exceed seven percent
(7%).
e. IMPRESS Plus Maintenance and Support and EMPRESS Plus
Installation Fees do not include the following:
o Hardware
o Network and Server Software not listed in Exhibit 1
of Schedule G
o Customization or application integration
o Support for IMPRESS Plus applications customized or
built by the Fund (see Section 3 of Exhibit 3 of
Schedule G)
o Installation, Integration and On-going Support of
hardware, network, and software components not
included in Schedule G
o Travel Expenses for install and support staff for
on-site visits (billed separately per Schedule D)
o Application Source Code
f. IMPRESS Plus Maintenance and Support and IMPRESS Plus
Installation Fees for Separate Test or Training System.
Maintenance and Support Fees - The Fund will be billed a
monthly fee of $2,666.66 (based on $1000 per workstation per
year with a minimum 32 workstation license). Billing to
commence on first production usage of IMPRESS Plus software in
the Training or Test environment. Maintenance and Support
includes items listed in Section III.b above.
Installation Fees - Billable to the Fund at $135/hr. (Estimate
for 32 IMPRESS Plus workstations is 200 hours). Installation
includes items listed in Section III.c above.
<PAGE> 25
g. Fees for IMPRESS Plus workstations in excess of 512:
<TABLE>
<CAPTION>
o Number of workstations ordered One-time License Fee
<S> <C>
32 $1300/workstation
64 $1000/workstation
128 waived
256 waived
</TABLE>
o Maintenance and Support - $1500 per workstation per
year; billable on first production usage of IMPRESS
Plus software; includes items listed in Section III.b
above
o Installation Fees - Billable to the Fund at $135/hr;
includes items listed in Section III.c above
The Fund agrees to pay a minimum of 18 months Maintenance and
Support for each workstation in excess of 512.
<PAGE> 26
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOI SYSTEMMATIC Specs
1 26610 DEFAULT/RECALCULATION PROBLEM Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
*Recalc does not include all
purchases applied to the LOI.*
Dealer comm credit not posted in
recalc.* No adjustment code to
adjust underwriter. * Trades
outside LOI period included in
recalc.* No ability to turn off
systematic recalc.
====================================================================================================================================
====================================================================================================================================
PRODUCE CHECKS ON NT2 ACCOUNTS Specs
2 19164 WITH DIRECT REDEMPTIONS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Checks should be produced for
direct reds on NT2 accounts.
Transactions post to history, yet
no checks are produced. Update
DRDM0750 to allow.
====================================================================================================================================
====================================================================================================================================
3 25276 WIRE ORDER PROCESSING PROBLEM Specs
Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Wire order cancel/replacements
(OPR/OPC) do not update master
controls if not double Qc'd. If not
double Qc'd both trades appear
as new purchase orders.
====================================================================================================================================
====================================================================================================================================
Specs
4 24262 CERTIFICATE REPORT MISSING DATA Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
PFSR135D-R12 does not include
the work of several days in 1996.
Unable to reconcile certificate
issues without adhocs to identify
missing data.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 27
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NSCC REPORT PNSC802D - Specs
INCORRECT COMMISSIONS ON Received
5 26768 SPLIT REPS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
This report overestimates the
commission paid to split reps.
NSCC regulation requires
settlement by this report,
resulting in overpayments.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC REJECT REPORT PNSCSPSD- Specs
R01 - MULTI PAGE REJECT RECEIVED
6 26769 DELETIONS AND TRUNCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC rejects for a dealer that
run for more than one page are
dropping accounts, resulting in
inconsistancies from one page to
the next. Also truncation pro-
blems with Settlement Value,
Commission Amount and Fund Owes
Dealer amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ONLINE EDIT PREVENTING USE OF Specs
7 26772 CDSC EXEMPT OPTION 3. Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Exempt option 3 grosses up
CDSC on SWiPs, ensuring
consistent dollar amount
swips. For funds allowing
CDSC-free SWIPs, edit pre-
venting a shareholder
redeeming an amount
greater than 12% annually
from having a SWIP with a set
dollar amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 28
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOIMNT DELETING Specs
BROKER CLIENT Received
8 23849 NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Systematic completion
of an LOI removes the
Broker Client Number
form the account in
error. Absence of the
BRCN causes problems
for the dealer.
Maintenance journals
are reviewed to
identify these accounts
and re-add the BRCN.
====================================================================================================================================
====================================================================================================================================
NET INDICATOR NOT Specs
CARRYING TO QC SCREEN Received
9 26155 AND NO MISMATCH WARNING
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When entering a wire
order redemption as a
"net" amount trade, the
net indicator is not
carried forward in the
QC process, and does not
provide a mismatch
warning. The trade then
processes as "gross",
the default.
====================================================================================================================================
====================================================================================================================================
ASSIGNMENT OF CLOSED Specs
11 26770 ACCOUNTS ON QA RECORD Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
If a QA record is
manually created and
the master account is
not designated, FSR
assigns the first
account entered. If
this account is
closed, a consolidated
statement will not
print. Results in
additional phone calls
andduplicate statement
requests.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REASSIGNMENT OF MASTER ACCOUNT Specs
12 26771 NUMBER Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When a master account closes
AIM would like the master
account status to be reassigned
systematically to an open account
within the QA cluster. Currently
this is a time consuming manual
process.
====================================================================================================================================
====================================================================================================================================
Specs
13 26611 DIVIDEND CONTROL REPORT PROBLEMS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
The Dividend and Capital Gain
reports do not match the
summary reports.
====================================================================================================================================
====================================================================================================================================
DUPLICATE STATEMENTS BY DBR NOT Specs
14 26612 AVAILABLE Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
AFS would like the ability to
request duplicate statements by
dealer, dealer/branch,
dealer/branch/rep. Current
functionality is by fund/account.
====================================================================================================================================
====================================================================================================================================
PAC'S NOT RUNNING ON CAPITAL Specs
16 26154 DEVELOPMENT ACCOUNTS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts opened via merger
subscription with converted PAC
information, when the PAC is
turned on, do not run. Deletion
and reestablishment of the PAC
data does not resolve the issue.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 30
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUNDSERV REDEMPTION SHOWS
INCORRECT SHARE AMOUNT ON Specs
17 25763 HISTORY Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Several examples of FundSERV
reds where the less than the
full amount of shares appear
redeemed in the line of
history, but the account is
left with a zero balance. The
correct amount is paid through
the NSCC. Control balancing
problems result.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
EXHIBIT 2 OF SCHEDULE C
IWT FUNCTIONALITY
<TABLE>
<CAPTION>
- ---------------------------- ----------------------------
NEW ACCOUNT FINANCIALS
- ---------------------------- ----------------------------
<S> <C>
CASHIERING REPORT
- ---------------------------- ----------------------------
ACCOUNT OPTIONS EXCEPTION WAIVER
- ---------------------------- ----------------------------
AUTO EXCHANGE ENHANCED QC
- ---------------------------- ----------------------------
BANK ADDRESS
- ---------------------------- ----------------------------
AIP FINANCIAL QC
- ---------------------------- ----------------------------
BANK WIRE IMBALANCE REPORT
- ---------------------------- ----------------------------
BENEFICIARY INTERNAL ASSET MOVE
- ---------------------------- ----------------------------
CHECKWRITING EXCHANGE
- ---------------------------- ----------------------------
DIVIDENDS/CAPGAIN TRANSFER
- ---------------------------- ----------------------------
SWP PURCHASES
- ---------------------------- ----------------------------
TELEPHONE RED REDEMPTIONS
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
ACCOUNT SEARCH
- ---------------------------- ----------------------------
ACCOUNT SETUP
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
DEALER
- ---------------------------- ----------------------------
DEALER OFFICE REP LIST
- ---------------------------- ----------------------------
DEALER ALPHA SEARCH
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
FINANCIAL INQUIRY
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
GROUP MASTER ADD
- ---------------------------- ----------------------------
LOI/ROA
- ---------------------------- ----------------------------
ACCOUNT LINK/UNLINK
- ---------------------------- ----------------------------
IWT ACCOUNT LIST
- ---------------------------- ----------------------------
PROCESSED ITEM LIST
- ---------------------------- ----------------------------
</TABLE>
<PAGE> 32
EXHIBIT 3 OF SCHEDULE C
AIM SEPARATE CYCLE OVERVIEW
This project removes AIM from all FSR regions, files, jobstreams, control
cards, etc. and establishes them with their own. It will allow AIM to have more
control over their processing and removes any unexpected complications caused
by dependency on the activities of other management companies.
VOLUME
o 1700+ Jobstreams (JCL, Procs, and Control Cards) to evaluate
o Approximately 70% of these will qualify for processing
(create new AIM and modify FSR)
o * Files to convert
o * GDGs
o * additional Tapes/Cartridges
o * additional DASD required
o * additional Tape Mounts
* These figures are currently being researched.
AFFECTED AREAS/DEPARTMENTS
o AIM Client Services - John Corey
o Atest - Kathy McNeil, Steve Carlson
o BOSS Application - Tom Farnsworth (B)
o Capacity Planning - Ron Larue
o Corporate Actions - Joe Viens
o DASD - John Dryer, Janet Rose (B)
o Database Administration (DBA) for On-line - Steve Powers (B)
o DCX - Linda Messore, Ann Stadtherr
o ESG - Connie Ciulla, Arthur Roy
o Express Delivery - Don Morgan
o FSR - Tom Woislow, Bill VonHandorf, Bill Quigley, Bob Reilly,
Ray Bennison
o NSCC - Carl Damelio
o Print Mail - Helene Grunes (B)
o Tape Operations - Don Chappell
o SCE - Ed Oelerich, Ellen Rhode
o Tax/CBA - Ed Boyle
o Transmissions - Frank Pitzi
Because of the large volume of work to be done and the number of departments
involved we are developing a "phased in" development and implementation
approach. This will cause the least impact to both our client and our own
internal departments. It will require tight project management and dedicated
point people both from AIM and our own departments. Each phase will migrate up
through test, acceptance and production.
<PAGE> 33
PHASE 1 - START-UP FILES
The foundation of this approach is to create six basic files with an AIM
high-level qualifier on a daily basis from the FSR system which can be used by
jobs which read them but not update them (see Phase 2). They would be deleted
at the beginning of the next day's cycle and recreated by the FSR cycle. These
files are:
P03AIM.PRIV.MASTER.DATE
P03AIM.PRIV.BATCH.DATE
P03AIM.PRIV.MASTER.FUND
P03AIM.PRIV.BATCH.FUND
P03AIM.PRIV.TRANS.ACCEPT1
P03AIM.PRIV.TRANS.DIVIDEND
The first four files would be copied from FSR files to AIM files in a new
temporary AIM job which would run daily.
The last two files, trans.accept1 and trans.dividend, currently exist with
different names in FSR. Job PFSR13DD (FSR/FED WIRE) now creates
P03FSR.TEMP.XMITOUT.ACCEPT1.AIM which contains all accept records for AIM. Job
PFSR13ED (FSR/FED WIRE) now creates P03FSR.TEMP.XMITOUT.DIV.AIM which contains
all dividend records for AIM. These files are input to AIM transmission jobs
(PFSRXCGD and PFSRXCLD) and the FSR/POST BACKUPS job (PFSR71HD).
We would rename P03FSR.PRIV.TRANS.ACCEPT1 and P03FSR.PRIV.TRANS.DIVIDEND to
P03AIM.PRIV.TRANS.ACCEPT1 and P03AIM.PRIV.TRANS.DIVIDEND in jobs PFSR13DD and
PFSR13ED. We would rename the transmission jobs to PAIMxxxx modify them
replacing FSR references with AIM, set up the appropriate schedule and move
them up the regions. We would place an override in PFSR71HD which would now
reference the PO3AIM file for backup. Once tested and QA'd by us and AIM we
would replace the FSR transmission jobs with the new AIM jobs.
RESULT OF PHASE 1
We now have three production jobs running in the AIM region and we have set up
the 6 basic AIM files which will be the basis for Phase 2.
<PAGE> 34
PHASE 2 - REPORTS, TRANSMISSIONS, AND AIM-ONLY JOBS
This phase involves converting jobs which do not update any of the master files.
They may read them and create temporary files but updating will wait for phase
3. Phase 2 jobstreams will include mainly report and transmission jobs as well
as any AIM-only jobs. We will be adding new schedule entries (CA-7) for AIM and
modifying existing FSR schedules where needed paying special attention to
triggers, requirements and dependencies. We will add new Express Delivery
entries for AIM reports and delete the AIM entries from the FSR system.
The actual migration of reports and transmission files from the FSR cycle to
the AIM cycle will be on a specific schedule. As we introduce reports to the
AIM cycle they will be available in SAR from both FSR and AIM cycles for a week
to allow AIM to review them. They will then be turned off in SAR for FSR. We
will provide AIM with a report schedule each week to aid this process.
Transmission files will be tested using record counts and selective file
compares. AIM-only jobs will also parallel for a week where feasible.
An example of a Phase 2 job is PFSR143D (FSR/AUTOEX). This job reads the batch
fund file, the batch date file and the trans.accept1 file to produce reports.
All these files are available in the AIM region.
Phase 2 work to be done described in a programmer's template includes (but is
not limited to):
Copy and rename the JCL jobs.
Modify procs and/or control cards if necessary for the test/acpt/prod
regions.
Verify that JCL, procs and control cards follow our current standards.
Create high-level overrides for FSR read-only files.
Change Express Delivery for AIM output and set up the FSR RID entry to
be deleted in n days.
Schedule the new AIM jobs with the same requirements and dependencies
as the FSR jobs but using the appropriate high level qualifier. This
requires tight control on the status of all jobs.
Change the schedules of any jobs which are dependent upon the FSR job
to be dependent upon the new AIM job. Note: this will not be the case
with all AIM jobs.
Move it up the regions testing at appropriate points.
Review the output (First Data and AIM).
After a week inhibit AIM output from FSR jobs from going to SAR. Only
AIM output from AIM jobs will be available in SAR.
The key to the success of this phase is an aggressive implementation schedule
and active participation by AIM representatives in checking and validating the
output.
RESULT OF PHASE 2
We now have report-only jobs (not associated with the actual updating of
files), most of the transmission jobs and all AIM-only jobs which are not
associated with updating files in AIM production. All converted reports and
files have been signed off by AIM. These AIM activities are also being
processed in FSR. We have gone as far as possible without updating files.
<PAGE> 35
PHASE 3 - ANCILLARY FILES AND SYSTEMS
This phase includes updating ancillary files and their associated jobstreams.
Examples of this type may include Bluesky, history, cert or check files, etc.
These files are not mainstream and tend to be localized in how they are
updated. In order to qualify for Phase 3 the Management Company must be the
high order sort key field.
There are two approaches we will use depending upon the main file's on-line
considerations. The first approach involves converting the main file once along
with all associated jobs and the other involves splitting out AIM from FSR at
the start of the cycle, updating it in AIM jobs and merging it back in FSR at
the end. Either approach will involve multiple jobs per master file.
For example, The Bluesky File is only used by 3 jobs: PFSRS07D which creates
the batch file, PFSR190D which updates the file and does an AIM-only extract,
and PFSR194D which does reports. In this case, we would split the FSR Bluesky
File into AIM-only and all other. The FSR Bluesky subsystem would then be
cloned for AIM and the result would be two separate Bluesky subsystems. Online
would access the appropriate Bluesky file.
Other subsystems may be too routed in our core to fully separate out and would
be better served breaking out AIM at the beginning of its cycle, updating in
AIM-only jobs and remerging it at the end of the cycle. Any special jobs used
for splitting out files or merging them after update will have to be backed out
in Phase 4.
All activities described in Phase 2 apply here as well.
RESULT OF PHASE 3
We have now isolated and converted any subsystems not bound to core processing.
Most AIM reports and transmissions are being produced in the AIM region. We are
updating some master files and have done everything possible surrounding the
core without touching it. We are ready for Phase 4.
<PAGE> 36
PHASE 4 - THE CORE
This phase deals with updates to our core master files, our functional
processes, converting large volume files (ShareA and its splits, history, lots,
global, etc.) and includes all jobstreams that have not yet been converted.
Additionally, it includes backing out any special split or merge jobs as well
as special overrides introduced in earlier phases. This will be the largest
phase. On-line will now access all AIM-only files.
Many of the activities done in the previous phases will be performed here as
well. Because so many programs interact with the core modules there is no easy
way to break this activity up. As always we will need our AIM partners to help
in the QA activities for this hefty stage.
It is possible to combine Phases 3 and 4 if it were felt to be desirable.
However, it is our intention to have all peripheral completed before attacking
the core so there will be no unnecessary distractions. Additionally, for
development contention reasons, we would like to turn these modules over as
expeditiously as possible.
All AIM-related activities, programs, control cards, overrides, splits, merges,
etc. will be removed from all FSR jobs.
RESULT OF PHASE 4
All AIM processing is now contained in its own region and runs under its own
schedule. On-line accesses AIM-only files. FSR no longer has any AIM
processing relationship with the exception of any files which are to be merged
from both regions for transmission or system reasons.
<PAGE> 37
EXHIBIT 4 of SCHEDULE C
AUTHORIZED PERSONS REQUESTING SYSTEM MODIFICATIONS
---------------------------------------------------
John Caldwell
President, A I M Fund Services, Inc.
---------------------------------------------------
Joseph Charpentier
Assistant Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Tony D. Green
Senior Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Jean Miller, Director of Applications
Information Technology Services
A I M Advisors, Inc.
<PAGE> 38
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction,
$.10/per same day trade confirmations
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals
and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and related expenses, as pre-approved by the Fund
o System training, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversions between FDISG
systems
o Such other miscellaneous expenses reasonably incurred by FDISG
in performing its duties and responsibilities under this
Agreement
<PAGE> 39
SCHEDULE F
PERFORMANCE STANDARDS
I STANDARDS FOR RESOLUTION OF SYSTEM DEFICIENCIES
"SYSTEM DEFICIENCY" - A system process which does not operate according to the
design of the computer application or system specifications, and is not a
result of any act or failure to act by the Fund.
1. FIRE CALL - A System Deficiency with at least one of the following
characteristics:
1. Potential or real financial exposure in excess of $100,000, or
2. Causes the Fund to be out of compliance with a major
regulatory requirement, or
3. Causes incorrect transaction processing and/or shareholder
confirmations with no reasonable manual workaround available
either at the Fund or in FDISG's systems
FDISG Response: Analysis and resolution within 36 hours or 2 nightly
processing cycles
2. CRITICAL DEFICIENCY - A System Deficiency with at least one of the
following characteristics:
o Potential or real financial exposure estimated from
$25,000-$100,000 or,
o Manual workaround requires substantial manual effort and
carries a high potential for error
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within 5 business days of
initial notification; Problem resolution within an average of 30
business days of initial notification
3. NON-CRITICAL DEFICIENCY - All other System Deficiencies
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within an average of 15
business days of initial notification; Problem resolution and target
dates to be determined on an item-by-item basis jointly by the Fund
and FDISG.
<PAGE> 40
II STANDARDS FOR ON-LINE SYSTEMS AVAILABILITY AND RESPONSE TIME
These standards shall apply on business days of the Funds.
o On-line systems availability between 7:00 a.m. and 7:00 p.m
Central Time ("CT") - 99% of hours available measured monthly.
o Average response time (7:00 a.m. to 7:00 p.m. CT) of 3 seconds
or less, measured end-to-end, in response to the system
employed by A I M Fund Services, Inc. as of September 1, 1994
- 99% measured monthly.
III STANDARDS FOR DELIVERY OF SYSTEM REPORTS
o CRITICAL REPORTS - The following report bundles in queue and
ready to begin transmission no later than 7:00 a.m. CT each
business day - a cumulative of two late bundles permitted per
month:
EFSR047H
EFSR601H
Changes to critical report bundles must be jointly approved by
an FDISG Client Service Officer and an authorized requestor of
the Fund as listed in Exhibit 4 of Schedule C.
o All other nightly report bundles in queue and ready to begin
transmission no later than 7:00 a.m. CT each business day -
95% measured monthly.
<PAGE> 41
IV STANDARDS FOR DELIVERY OF FILE TRANSMISSIONS
o CRITICAL FILES - The following jobs in queue and ready to
begin transmission no later than 4:30 CT each business day of
the Fund - a cumulative of two late files permitted per month:
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCAD Daily Cap Stock File
PFSRXCYD Daily DISC Cap Stock File
PFSRXCTD Daily DISC ACH File
PFSRXCVD Daily DISC NSCC Green Sheets File
</TABLE>
o The following jobs in queue and ready to begin transmission no
later than 4:30 CT each business day of the Fund - 95%
measured monthly
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCGD Daily Acceptance File
PFSRXCKD Daily Dealer File
PFSRXCHD Daily Order File
PFSRXCID Daily ShareA Master File
PFSRXCJD Daily Fund File
PFSRXCMD Daily Lot History File
PFSRXCND Daily Lot Maintenance File
PFSRXCLD Periodic. Dividend Activity
</TABLE>
The standards will not apply on business days with the
following activity: Processing of Year-end Dividend and
Capital Gain Activity, Annual Trustee Fee Payment; Year-end
File Initialization.
V STANDARDS FOR THE FUND
All inbound transmissions (i.e. SIAC, various third parties) and fund prices in
receipt by FDISG by 8:00 p.m. CT
VI RIGHT TO AUDIT
The Fund shall have the option, on an annual basis, to audit the reports used
to measure the standards listed in this Schedule F. Notice of an audit will be
given 14 days in advance, and the audit will not last more than one day.
<PAGE> 42
VII PENALTIES/INCENTIVES
FDISG agrees to achieve the performance levels specified in Schedule F,
Sections II, III, and IV, and semiannually (as of each June 30th and December
31st) to adjust the monthly Account Fee Invoice to reflect any
penalties/incentives as outlined below. Penalties for a given business day will
be applied only if the Standards of the Fund in Section V are achieved.
ON-LINE SYSTEMS AVAILABILITY - MONTHLY
For each one-tenth of 1% under 99%, the monthly Account Fees will be reduced by
the same percentage. The monthly maximum percentage penalty reduction will be
3% of the monthly bill. For each one-tenth of 1% in excess of 99% up to a
maximum of 1%, the monthly Account Fees will be increased by the same
percentage.
ON-LINE SYSTEMS AVAILABILITY - DAILY
If systems availability on any given business day is less than 80%, the monthly
account Fees will be reduced by the percentage of systems availability below
80% for that day times 1/30 of the monthly Account Fees.
REPORT AVAILABILITY - CRITICAL REPORTS
Monthly Account Fees will be reduced by $250.00 for each late instance greater
than the allowable error rate, up to a maximum of $500.00 per day. For each
month within the allowable error rate, monthly Account Fees shall be increased
by $1,000.
FILE TRANSMISSIONS - CRITICAL FILES
Monthly Account Fees will be reduced by $500.00 for each late instance greater
than the allowable error rate with a maximum penalty of $10,000 per month. For
each month within the allowable error rate, monthly Account Fees shall be
increased by $1,000.
The Performance Standards and related penalties set forth in this Schedule F
shall not apply in the event of any occurrence defined in Section 8(g) of the
Agreement.
<PAGE> 43
SCHEDULE G
IMPRESS PLUS SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule G (the "Software"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibits 1 of Schedule G ("EXHIBIT 1")
and Exhibit 1.1 of Schedule G ("EXHIBIT 1.1") (collectively, the "SOFTWARE
EXHIBITS"). Subject to the terms and conditions set forth in this Schedule G,
FDISG grants to the Fund and the Fund accepts from FDISG the non-exclusive,
non-transferable license to use the Software during the term of the Agreement
("LICENSE"). Some software components ("THIRD PARTY SOFTWARE") required to be
used with the Software were developed by a third party ("THIRD PARTY VENDOR").
Third Party Software is licensed to the Fund only pursuant to: (a) shrink
wrapped or other agreements between the Third Party Vendor and the Fund and (b)
the specifically indicated terms and conditions in this Schedule G. The
Software Exhibits shall indicate which Third Party Software the Fund is
required to obtain and license from FDISG and which Third Party Software the
Fund shall be solely responsible to obtain and license. As part of the
Software, FDISG shall provide the Fund with the interfaces set forth in Exhibit
1, between the Software and Third Party Software ("INTERFACES"). FDISG shall
provide the software support services ("SOFTWARE SUPPORT") so designated in
Exhibit 3 of Schedule G ("EXHIBIT 3"). Software Support shall include a
License to error corrections, minor enhancements and interim upgrades to the
Software which are made generally available to FDISG client's of the Software
under Software Support, but shall not include a License to substantial added
functionality, new interfaces, new architecture, new platforms or other major
software development efforts, as determined solely by FDISG.
1.2 Ownership. FDISG or its licensors shall retain tide to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION"). FDISG
reserves all rights in the Proprietary Information not expressly granted to the
Fund in this Schedule G. Upon FDISG's reasonable request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") set forth in Exhibit 2.1 of Schedule G with respect to production
equipment and Exhibit 2.2 of Schedule G with respect to Test/Training equipment
(collectively, ("EXHIBIT 2"). Additional terms and conditions concerning the
Equipment are set forth in Exhibit 2. The Equipment identified in Exhibit 2
represents the minimum equipment configuration required to properly operate the
Software. FDISG disclaims responsibility for the performance of the Software in
the event that the Fund utilizes equipment different than that which is set
forth in Exhibit 2. FDISG and the Fund shall (a) within a reasonable time after
the Effective Date, agree upon the tasks required to implement the Software,
Third Party Software and Equipment ("SYSTEM") and the party responsible and
time frames for each task ("SCOPE OF WORK"); (b) perform their respective
assigned tasks according to the Scope of Work; and (c) if not the party
assigned to a task, cooperate with the responsible party. To the extent the
Scope of Work is incomplete, FDISG shall follow its reasonable and customary
practices. Upon prior notice by FDISG to the Fund, the Fund shall give
reasonable access to the System to FDISG, FDISG's employees. affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) and solely in connection with the Fund's use of the FDISG System and
only at the locations identified in the Agreement. If the Equipment is
inoperative due to malfunction, the license grant shall, upon written notice to
FDISG, be temporarily extended to authorize the Fund to use the Software on any
other equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph. Except as otherwise specifically stated
herein, the Fund shall not modify, re-engineer, decompile or reverse engineer
the Software or otherwise attempt to obtain any source code without FDISG's
prior written consent.
<PAGE> 44
1.5 Software Installation and Acceptance. FDISG shall advise the Fund that
the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
sixty (60) days after Software Installation Date or sixty (60) days after the
Fund's first use of any Software component to process live production data
("SOFTWARE ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
1.7 No-Export. The Software shall not be shipped or used by the Fund
outside the United States. The Fund shall comply with all applicable export and
re-export restrictions and regulations of the U.S. Department of Commerce or
other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule G which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software Warranties and Remedies. For the term of the Agreement, FDISG
warrants ("PERFORMANCE WARRANTY") that the Software shall perform on the
Equipment substantially in accordance with the Documentation and shall enable
the Funds to meet the requirements set forth in Section 240.17a-4 of the
Securities Exchange Act of 1934, except for Directly Obtained Third Party
Software as set forth in Section 2.2 below. The timely correction of errors
and deficiencies in the Software pursuant to Software Support shall be Fund's
sole and exclusive remedy for the Performance Warranty. FDISG warrants ("RIGHTS
WARRANTY") it has the right to license the Software in accordance with the
Agreement. Provided the Fund gives FDISG timely written notice, reasonable
assistance, including assistance from the Fund's employees, agents, independent
contractors and affiliates (collectively, "FUND'S AGENTS"), and sole authority
to defend or settle the action, then FDISG shall do the following
("INFRINGEMENT INDEMNIFICATION"): (a) defend or settle, at its expense, any
action brought against the Fund or the Fund's Agents to the extent the action is
based on a claim that the Software infringes a duly issued United States'
patent or copyright or violates a third party's proprietary trade secrets or
other similar intellectual property rights ("INFRINGEMENT"); and (b) pay
damages and costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Directly Obtained Third Party Software Warranties. All warranties for
the Directly Obtained Third Party Software identified Section 2.2 of Exhibit 1,
if any, are specifically set forth in the applicable agreements supplied by the
Third Party Vendors of such products.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and as
limited by applicable law, the Fund shall indemnify, defend and hold FDISG and
FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
<PAGE> 45
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("CONFIDENTIAL INFORMATION"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential Information, the other party may obtain injunctive relief, in
addition to its other remedies, inadequate monetary damages and irreparable
harm being acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System.
<PAGE> 46
EXHIBIT 1 OF SCHEDULE G
SOFTWARE
1. FDISG Software.
1.1 FDISG Software includes the following IMPRESS Plus products which are
further described in Exhibit 1.1 ("Specifications"):
IMPRESS Plus Workflow/Image Release 5.3
IMPRESS Plus Intelligent Workstations (IWT) Release 5.3 for FSR
IMPRESS Plus Customer Service System Release 5.3
1.2 Interfaces. Except as agreed in writing, FDISG shall not be required
to modify the Software or the Interfaces to accommodate changes made by the
Fund's vendor to its portion of the interface. If the Fund's vendor needs
information about the Software, then the vendor must first execute a
nondisclosure agreement in form and content reasonably acceptable to FDISG.
FDISG shall not be liable for any delay or degradation to the Software or
Equipment attributable to the Fund's use of Interfaces.
1.3 Customization. The listed products are licensed for IMPRESS Plus use
and customization only. Use of these tools to develop or customize non-IMPRESS
Plus applications is not permitted without the express written authorization of
FDISG.
2. Third Party Software.
2.1 FDISG Provided Third Party Software. The following Third Party
Software is licensed to the Fund directly by FDISG subject to the terms of the
Agreement:
2.1.1 BancTec Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory BancTec ("BancTec")
terms and conditions set forth in Attachment 1 of this Exhibit 1 of Schedule G
("Attachment 1"), attached and incorporated by reference. To the extent that
the terms of Attachment 1 conflict with or differ from the other terms and
conditions in the Agreement, the terms of Attachment 1 shall prevail with
respect to the following BancTec Software ("BancTec Software"):
Informix Multi-User with 512 maximum users
XDP Storage Manager Multi-User with 512 maximum users
FloWare Multi-User with 512 maximum users
Application Designer Single-User with 512 maximum users
2.1.2 Pegasystems Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory Pegasystems
("Pegasystems") terms and conditions set forth in Attachment 2 of this Exhibit
1 of Schedule G ("Attachment 2"), attached and incorporated by reference. To
the extent that the terms of Attachment 2 conflict with or differ from the
other terms and conditions in the Agreement, the terms of Attachment 2 shall
prevail with respect to the following Pegasystems Software ("Pegasystems
Software"):
Product Name Version Function
PegaSHARES RES 6.2 Workflow Engine
PegaENVIRONMENT ENV 4.2 Operating Shell
PegaPRISM Prism 5.1 Image Viewer
PegaStorage Manager Stor 2.1 Image Librarian
PegaREACH Real.0 Desktop Graphical Interface
2.2 Directly Obtained Third Party Software. The following Third Party,
Software is separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of any "shrink-wrapped" or
<PAGE> 47
other agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required: Optional:
<S> <C>
- - Microsoft DOS 6.2 or higher - ALCOM LanFax Redirector V2.15gl or greater
- - Microsoft Windows 95 or NT 4.0 (required if using fax)
- - Microsoft Office 95 or better - HiJaak PRO 2.0 or greater for Windows
- - Microsoft NT Server 3.5 (required if using fax)
- - Microsoft NTSQL Database 4.x and client - Word for Windows 6.Oc or greater (required if
Licenses using fax)
- - Microsoft TCP/IP Stack - Quarterdeck QEMM 7.X or greater (required if
- - Novell NetWare 3.11 or greater using fax)
- - SNA Server 3.0 or higher - CGS Computer Associates, Inc. Scanlib software
- - UNIX for selected Image Server platform (required for Ricoh scanners)
- - UNIX ESQL/C Compiler for selected - Powersoft PowerViewer (required for adhoc
UNIX platform reports)
- - MDI Gateway for DB2 by - 3270 Windows emulation package
MicroDecisionware Inc., A Sybase client (usually Rumba for Windows by WaUData)
- - Sybase Open Client NetLibrary for the
selected TCP/IP stack
</TABLE>
<PAGE> 48
ATTACHMENT 1 OF EXHIBIT 1 OF SCHEDULE G
TERMS AND CONDITIONS
BANCTEC
1. Each BancTec Software Package listed in Exhibit 1 of Schedule G
("Program") which is identified as "Multi-User Program" is licensed for
installation on a single network server computer which is supplied by BancTec,
FDISG, or a third party, and which is electronically linked with one or more
workstations having access to the Program. If Section 2.1.1 of Exhibit 1 of
Schedule G ("Exhibit 1") designates a maximum number of users authorized to
simultaneously access the Multi-User Program, no access will be permitted in
excess of such maximum number. In all other cases, Multi-User Program is
authorized to be accessed by all workstations which are configured to
communicate with that network server computer.
2. Each Program listed in Exhibit 1 identified as "Single-User Software"
is licensed for installation and use on a single computer.
3. Each Program listed in Exhibit 1 identified as an "Unlimited User
Program" is licensed for use by Client after ordering a copy of the Program.
Once ordered, the Fund may make unlimited copies of such Programs at no
additional charge.
4. Each Program listed in Exhibit 1 identified as a "Device Program" is
licensed for use solely to facilitate the operation of the corresponding
equipment device. If a Device Program is used for more than one device, the
license must be upgraded in accordance with Exhibit 1.
5. Each Program listed in Exhibit 1 identified as a "Development-User
Program" is licensed for installation and use on a single computer for
development and testing purposes. The license for Development-User Programs
also includes a license for production use on a single computer.
6. Each Program listed in Exhibit 1 identified as a "Production-User
Program" consists of necessary runtime modules and associated link libraries
for inclusion with custom software applications. Production-User Programs are
not licensed for use in the development of custom software applications and may
be either Multi-User or Single-User Programs.
7. Only a nontransferable, nonexclusive, perpetual license to use the
Programs and related BancTec documentation for its own internal use (including,
without limitation, providing processing services to third parties in a service
bureau or facilities management environment) is granted to the Fund.
8. BancTec or its vendors retain all title to the Programs, and all
copies thereof, and no title to the Programs, or any intellectual property in
the Programs, is being transferred; provided, however, nothing contained herein
shall give BancTec or its vendors any right, title or interest in the Software.
9. The Programs shall not be copied, except as specifically authorized
under an Exhibit to this Agreement and except for backup or archival purposes.
All such copies shall contain all copyright and other proprietary notices or
legends of BancTec or its vendors contained in the Programs delivered under
this Agreement.
10. The Programs shall not be modified, reverse assembled or decompiled by
the Fund. No attempt shall be made by the Fund to derive source code from the
Programs.
11. The Programs will not be shipped or used by FDISG or the Fund to
Africa or the Middle East. All applicable export and re-export restrictions and
regulations of the U.S. Department of Commerce or other U.S. agency or
<PAGE> 49
authority shall be complied with. The Programs shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
12. Each Program is copyrighted and contains proprietary and confidential
trade secret information of BancTec and its vendors. Each sublicensee of the
Programs shall protect the confidentiality of the Programs with at least the
same standard of care used to protect the Fund's own similar confidential
information.
13. BancTec and its vendors are each a direct and intended beneficiary of
the sublicenses granted for the Programs and may enforce such sublicenses
directly against sublicenses of the Programs.
14. Neither BancTec nor its vendors shall be liable to the Fund for any
general, special, direct, indirect, consequential, incidental, or other damages
arising out of the sublicense of the Programs.
15. The license granted to the Fund of the Programs may be terminated,
either immediately or after a notice period not exceeding thirty (30) days,
upon violation by the Fund of any of the terms or conditions of the Agreement,
including but not limited to Attachment 1.
16. Upon termination of the license grant to the Fund to use the Program
or the Agreement, the Fund shall return all copies of the Programs to FDISG.
<PAGE> 50
ATTACHMENT 2 OF EXHIBIT 1 OF SCHEDULE G
PEGASYSTEMS TERMS AND CONDITIONS
In addition to the terms of the Agreement, the following terms shall apply with
respect to the Pegasystems Software:
1. The Fund is prohibited from assigning, timesharing, renting, or
hypothecating any of the Pegasystems Software, without prior written approval
of Pegasystems.
2. The Fund is prohibited from passing or transferring any right, title,
or interest to the Pegasystems Software to any third party.
3. The Fund is prohibit from publicizing or disseminating any results of
any benchmark or other testing of the Pegasystems Software.
4. To the fullest extent permitted by applicable law, (i) Pegasystems
shall have no liability to the Fund for damages and claims, whether direct,
indirect, incidental, consequential, or punitive, and all attorneys' fees and
costs, arising from the Fund's use of the Pegasystems Software, and (ii) the
Fund shall have no rights to assert claims for damages against Pegasystems,
including claims against Pegasystems as a third party beneficiary of this
agreement.
5. Pegasystems, Inc. is a third party beneficiary of this agreement to
the extent permitted by applicable law.
<PAGE> 51
IMPRESSive Technology, IMPRESSive Results
EXHIBIT 1.1 OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. PRODUCT OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . Page 1
II. PRODUCT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . Page 3
III. TECHNICAL OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . Page 5
IV. HIGH LEVEL OVERVIEW OF IMPRESS Plus FUNCTIONALITY . . . . . . . Page 6
A. Workflow Management
B. Image Processing
C. Intelligent Workstation Processing
D. Customer Service System
</TABLE>
This item is the property of First Data Investor Services Group (First Data) of
Boston, Massachusetts, and contains confidential and trade secret information.
This item may not be transferred from the custody or control of First Data
except as authorized by, and then only by way of loan for limited purposes. It
must be returned to First Data upon request and, in all events, upon completion
of the purpose of the loan. Neither this item nor the information it contains
may be used or disclosed to persons not having a need for such use or
disclosure consistent with the purpose of the loan, without the prior written
consent of First Data.
Copyright First Data Investor Services Group
1994, 1995, 1996
ALL RIGHTS RESERVED
This media contains unpublished, confidential, and proprietary information of
First Data Investor Services Group. No disclosure or use of any portion of
these materials may be made without the express written consent of First Data
Investor Services Group.
<PAGE> 52
IMPRESSive Technology, IMPRESSive Results
I. PRODUCT OVERVIEW
IMPRESS Plus is First Data's workstation product. Designed to be a
cost-effective customer service and workflow management solution, it
takes an integrated approach to transfer agent service and processing
applications. IMPRESS Plus uses an open, three-tiered, client/server
architecture that provides both the flexibility and scalability to
address client's customization and growth needs.
IMPRESS Plus's valuable benefits include:
o Extensive management tools and employee empowerment via
intelligent workstation technologies.
o A lower cost of processing delivery through workflow routing
and document imaging.
o Efficient customer service through reduced research time,
automated inquiry tracking and correspondence tracking.
o State-of-the-art three-tiered client/server architecture
backed by relational databases and open systems.
o Client configurable screens, dialogue scripts, and workflow
rules for those components which use the Pegaysystems
technology.
o Automated correspondence generation.
IMPRESS Plus consists of these major components:
1.) A SOPHISTICATED MANAGEMENT WORKFLOW TOOL that contributes to
streamlining the flow of information on an enterprise-wide
basis. Automated workflow processes are systematically created
and the user's process is automatically documented at the same
time. Product users can continuously examine and redesign
their current processes, managing them interactively, focusing
on improving organizational productivity and quality.
2.) AN IMAGE PROCESSING SYSTEM that has the ability to scan
incoming documents, store them digitally and automatically
route them to the appropriate processing department thereby
eliminating paper from the workflow. This system also allows
for long term storage of documents and document retrieval.
Users can modify workflow and business rules on site.
3.) AN INTELLIGENT WORKSTATION APPLICATION (IWT) that improves
data entry speed and service quality by using graphical user
interface tools that seamlessly connect the user's desktop to
First Data's transfer agent processing systems, office
automation tools, correspondence/service tracking and
policy/procedure access systems.
4.) A CUSTOMER SERVICE SYSTEM that automates and enhances the
correspondence and customer servicing areas in mutual fund
operations. Customer Service staff can log all activity, such
as phone calls, letters, transactions, etc., while interacting
with customers. The system enables the service representative
to perform transactions over the phone, create "electronic
forms" consisting of instructions for other processors, and
dynamically sends work items to other staff electronically.
The Customer Service System is designed to enhance the quality
and efficiency of the service provided to customers through
the use of state-of-the-art client/server technology.
<PAGE> 53
IMPRESSive Technology, IMPRESSive Results
II. PRODUCT BENEFITS
o Allows clients to process transactiona and customer
correspondence quickly and efficiently.
o Allows clients to be at the leading edge of technology to
maintain competitiveness and to effectively deliver quality
service.
o IMPRESS Plus enables the organization to:
- enhance service responsiveness and quality
- streamline workflow and improve document control by
eliminating paper
- increase employee productivity and participation
- have access to real-time production statistics
- enhance organization cohesion and effectiveness
- reduce manual tasks
- increase accuracy by using intelligent rules-based
applications
- reduce processing costs
- Tie Customer Service Reps to sales
o The IMPRESS Plus workflow tools allow business/operational
workflows to be set up. Automated workflow processes are
created and the user's process is automatically documented at
the same time. Product users can continuously examine and
redesign their business processes and manage them
interactively, focusing on improving organizational
productivity and quality.
o IMPRESS Plus is a scaleable and flexible solution that allows
the user to choose an enterprise-wide or a departmental
solution. It allows the client to determine an implementation
strategy that meets their strategic plans and goals.
o The IMPRESS Plus product platform allows the user to build
upon and utilize future First Data services such as
information delivery of shareholder/investor data, sales and
marketing data and customer service processing.
o IMPRESS Plus is modular to support increasing volumes,
increasing numbers of users and future advances in component
technologies. This allows for functional as well as
enterprise-wide solution.
o The IMPRESS Plus product's UNIX and NT-based platform allows
for the flexibility and growth needed to market position and
grow in the '90s to meet the demands of the mutual fund
industry.
o IMPRESS Plus is developed to run in an open systems
environment, so that the application has the ability to
incorporate diverse hardware choices, such as servers,
scanners and printers.
Additional benefits that can be provided through customization of
certain products include:
o Ability for AIM Funds operations associates to customize
interfaces, rules, scripts, etc. based on predefined "levels"
of operators. Levels may range from entire organization right
down to the individual CSR.
o Creation of an Integrated Service Backbone within the AIM
organization designed to allow consistent processing of
service items, documents, correspondence, etc. regardless of
where they originated. (Internet, scan mail, fax, phone,
etc.)
o Optional ability to link VRU to the desktop via CTI and
related technologies for more efficiency and quality in
servicing.
<PAGE> 54
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
o Ability for AIM Funds operations associates to change workflow rules,
scripts, menus, screens, etc. associated with the front end servicing
applications as they see fit to effectively run their business efficiently
and with highest regard to quality.
o Ability for AIM Funds to introduce intelligent, 'point of contact'
scripting for service associates in the front end selling process.
Through the customized rules capability, AIM Funds can set up random
sales, campaigns, or promotions. In addition, IMPRESS Plus can be told
when to prompt CSR's that selected promotions apply to the customer at
hand based on data points in the customer's profile, recent activity, or
the like.
<PAGE> 55
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
III. TECHNICAL OVERVIEW
First Data's combined Customer Service, Workflow, Image and
Intelligent Workstation (IWT) technologies enable users to display the
digitized image of a shareholder form on the workstation along with
other service, data entry and office automation applications. This
allows a user to enter information directly from the image without
having to look away from the screen or handle paper. IMPRESS Plus
will have access to First Data's transfer agent processing system,
office automation tools, and correspondence tracking and
policy/procedure access systems. First Data has developed the
workflow and image capabilities of the system to meet the needs of the
financial industry.
The Customer Service and Intelligent Workstation applications improve
data entry speed and quality by using graphical user interface tools
and LAN/WAN topologies to seamlessly connect the users desktop to the
mainframe servers. These tools and technologies will significantly
off-load transactions and query processing from the mainframe by
putting these capabilities on the desktops and empowering the
end-user.
IMPRESS Plus is designed to run in an open systems environment. It has
the ability to incorporate various workstation platforms due to a
common set of access routines and open communication architecture.
IMPRESS Plus supports high-performance networking architectures
including Novell's SPX/IPX as well as the UNIX TCP/IP standard. SNA
connectivity is supported for LU6.2, 3270, and 5250 communications.
The application supports Microsoft Windows 3.11, Windows 95, and NT
client workstations, multiple UNIX server back-end platforms, and the
latest client/server database technologies offered by the INFORMIX and
Microsoft database systems.
IMPRESS Plus contains a state-of-the-art integration API (application
programming interface) that allows other applications, including
customer-specific applications, to be seamlessly integrated into
IMPRESS Plus.
The Customer Service and IWT applications have been designed with an
object-based architecture that allows one common application to
support First Data's multiple back-end transfer agent systems. They
are designed around First Data's newly defined and implemented
corporate data model. This model represents the future data source
for First Data's common transfer agent application. This object-based
architecture allows for a high level of client customization and
integration.
<PAGE> 56
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IV. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
WORKFLOW MANAGEMENT FUNCTIONALITY OVERVIEW
WORKFLOW DYNAMIC WORKFLOW DESIGN AND MONITORING
MANAGEMENT
IMPRESS Plus provides a set of client/server based tools that
allow designers and authorized system users to build workflow
rules to be implemented on the work floor. These rules can be
built and implemented, then changed as required by trained
administrators.
GENERIC WORKFLOW AVAILABLE FOR ALL TRANSACTIONS
IMPRESS Plus offers a generic wordflow that can be used for
any transaction type that is designated in an operation.
Liquidations, correspondence, new accounts, etc. are just some
examples of transactions that can be processed through this
generic workflow. Should the workflow need to be customized or
altered, it can be.
WORK FLOW MONITORING
IMPRESS Plus provides the following work flow monitoring
activities in a real time mode:
o Allow users with the proper security access to
monitor the status of workflow activities or entire
work flow maps
o Monitor work-in-process items via a graphical display
which produces bar graphs in a variety of
presentation formats
o Monitor multiple statistics simultaneously on a
graphical display.
PRIORITIZATION OF WORK
IMPRESS Plus allows the setting of a default priority of items
during workflow design, and, in addition, dynamically during
work in process. During work in process, an item's priority
is based on its transaction type, its default or subsequently
manually altered priority setting, as well as its age in the
activity queue.
<PAGE> 57
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
WORKFLOW MANUAL ROUTING OF ITEMS
MANAGEMENT
(CONTINUED) IMPRESS Plus allows items to be manually routed to
workflow map destinations, or, in some cases, to
specific end users by those users with authorization
to do so.
AUTOMATIC ROUTING OF WORK
IMPRESS Plus routes work items to the next
destination on a pre-defined set of workflow rules.
These rules can be overridden by the user when
necessary.
ITEM COPY ROUTING
IMPRESS Plus allows users to make "copies" of items
within the workflow and route them to other workflow
activities. This is commonly used when an individual
processing the work determines that an item must be
forwarded to another processing department or review
the steps because it is actually two or more
transactions.
ENHANCED QUALITY CONTROL
IMPRESS Plus allows for random or pre-determined QC,
statistical QC, or other more intelligent or
selective QC means.
ENHANCED QUALITY ASSURANCE
IMPRESS Plus allows for random or pre-determined QA,
statistical QA, or other more intelligent or
selective QA means.
<PAGE> 58
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IMAGE FUNCTIONALITY OVERVIEW
IMAGE DOCUMENT SCAN, STORE, ROUTE, AND RETRIEVE
PROCESSING
IMPRESS Plus captures, through scanning, electronic
images OF documents, stores these electronic images
on magnetic disk, and subsequently allows for
retrieval of the electronic images. IMPRESS Plus
allows images to be accessed for image quality review
and provides for the rescanning of images determined
to be of unacceptable quality. Following the
completion of scanning and any image quality review,
items are automatically routed to subsequent
activities, based on a predefined set of workflow
rules.
ELECTRONIC DOCUMENT IMAGE PRESENTATION AND
MANIPULATION
IMPRESS Plus allows images to be viewed on image-
enabled workstations. Multi-page documents can be
scrolled through, and selected portions of an image
can be magnified.
IMAGE CROSS-REFERENCE TO PHYSICAL DOCUMENT LOCATION
TRACKING
AND RETRIEVAL IMPRESS Plus is designed so that the image database
stores the location of the physical document for each
document image. This location - known as a storage
box - is entered into the system while scanning
documents.
INDEXING OF IMAGES
IMPRESS Plus automatically assigns a unique indexing
number to each document that is created through
scanning. The unique indexing number consists of a
system-generated number that can subsequently be used
to cross-reference an item to a mainframe transfer
agent system. In addition, IMPRESS Plus allows for
the alternate indexing of documents by other user-
entered fields such as fund/account.
SOURCE KEY GENERATION AND DISPLAY
Each transaction type processed within IMPRESS Plus
receives a unique identifier that can be used to link
an item to the First Data transfer agent system.
This key may also be used for document retrieval.
IMAGE SCANNING, INDEXING, AND STORAGE OF DOCUMENTS
TRACKING PROCESSED PRIOR TO IMAGE WORKFLOW
AND RETRIEVAL
(CONTINUED) Through the IMPRESS Plus merge facility, users can
scan documents processed prior to the installation of
IMPRESS Plus. The merge facility allows you to
associate documents with existing, already scanned
and indexed documents, making them available for
future inquiry using IMPRESS Plus.
IMAGE ARCHIVAL AND SUBSEQUENT RETRIEVAL FROM OPTICAL
STORAGE
IMPRESS Plus provides storage and backup functions
for data objects, is designed to handle media
management, and communicates with the database
management system. IMPRESS Plus supports archival of
items to magnetic or selected WORM (Write Once
<PAGE> 59
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
Read Many) optical media. Archival from magnetic to
optical media criteria are set during installation
time.
PRINTING OF IMAGES
IMPRESS Plus allows you to print copies of document
images at LAN-based printers equipped with the
appropriate print server components.
REAL-TIME ADMINISTRATION TOOLS
IMPRESS Plus offers an administration function that
allows authorized users to add and maintain user
profiles, funds, transaction types, locations, and
other client site-specific data. This tool also
allows authorized users to change courier status,
determine the status of work that may have been
affected by an environmental mishap, and perform
other administrative tasks.
DOCUMENT/ACTIVITY HISTORY AND AUTOMATIC UPDATE
IMPRESS Plus automatically records and stores
document/activity history statistics on audit trail
logs during workflow activities, and produces
standard reports for such items as:
o Workflow activity type
o Date/time/user of each activity
o Beginning/ending date/time of each activity
o Last update user/date/time
ADMINISTRATIVE IMPRESS Plus allows much of this activity history to
FUNCTIONS be viewed on-line in various portions of the
(CONTINUED) application.
PRODUCTIVITY REPORTING AND QUALITY/TIMELINESS
REPORTING
IMPRESS Plus logs document/activity history
statistics to produce standard productivity reports
that can be run at the client's request.
ADHOC REPORTING
IMPRESS Plus provides a suite of standard reports
that can be customized. A client can also create
their own additional reports.
QUALITY CONTROL PROCESSING
IMPRESS Plus currently allows for processing
activities to be reviewed for quality by routing them
to a Quality Control queue. Authorized users can
then QC work items. Future IMPRESS Plus releases
will include various rule-based options for selective
quality control. IMPRESS Plus prevents users from
quality control checking their own work.
ACCESS SECURITY
IMPRESS Plus image processing provides security
access in the form of user logons and user profiles.
Users must have a user ID to access the system and
are further constrained by their user profile. The
client assigns user IDs for staff to access the
system and specifies the parameters of each user
profile. These profiles limit users to performing
<PAGE> 60
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
only those specific activities for which they have
been given permission (e.g. processing, scan, etc.).
It is recommended that the logon IDs match the user's
logon ID from the First Data transfer agent system.
VALUE-ADDED SHAREHOLDER ACCOUNTING SYSTEM ACCESS
FUNCTIONALITY
IMPRESS Plus allows workstation access to First
Data's transfer agent recordkeeping system. 3270
terminal emulation is accomplished through a
Windows-based software application. Keyboard mapping
is limited to the technical capabilities of the
emulation software and/or hardware.
DYNAMIC DATA EXCHANGE (DDE) FUNCTIONALITY
IMPRESS Plus will allow for Dynamic Data Exchange at
selected points in application modules when necessary
to transfer data between processes. An example would
be the passing of a source key stored on a transfer
agent system history line to the imaging inquiry
screen for a customer service operator.
ON-LINE HELP FOR USERS
IMPRESS Plus offers a comprehensive on-line help
system that follows Microsoft Windows help system
conventions. It is designed to serve both new users
learning how to use the system and more experienced
users who may occasionally need assistance or
additional information.
SYSTEM ADMINISTRATION PROCEDURES
IMPRESS Plus System Administration is made easier for
designated IMPRESS Plus technical support staff due
to the IMPRESS Plus Systems Administration and
Procedures manual and related documentation.
<PAGE> 61
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
INTELLIGENT WORKSTATION PROCESSING
(IWT) FUNCTIONALITY OVERVIEW
INTELLIGENT IWT is designed with a graphic interface ("GUI")
WORKSTATION which will provide an intelligent real-time interface
PROCESSING to the First Data transfer agent system for the
(IWT) following transaction activity:
NEW ACCOUNT SETUP
The IWT new account setup application is designed to
provide a MS/Windows graphic interface ("GUI") to
allow an intelligent real-time interface to the First
Data transfer agent system. New account setup
functionality includes:
o new account setup entry
o dealer/rep list
o TIN list for shareholder list
o systematic city and state population based on
entry of a 5 digit zip code
o dividend/cap gain addresses
o beneficiary addresses
o statement addresses
o ABA lookup and validation
o fund list
o wire and ACH bank addresses
Financial Transactions
The IWT financial transaction entry application is
designed to provide a MS/Windows graphic interface
("GUI") to allow an intelligent real-time interface
to the First Data transfer agent system. Financial
transaction entry functionality includes:
o telephone redemptions
o telephone exchange
o exchange processing
o transfer processing
o redemption processing
o subscription processing
Group
o linking and linking of accts by ROA, confirm,
L01, plan
<PAGE> 62
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
CUSTOMER SERVICE & ENHANCED INQUIRY SYSTEMS
FUNCTIONALITY OVERVIEW
CUSTOMER The Customer Service System is a client/server based,
SERVICE graphical user interface (GUI) system designed to
SYSTEM provide an intelligent real-time application to
enable clients to improve the quality of the service
provided to both shareholders and broker dealers.
This system provides functionality in the following
areas:
CONTACT TRACKING AND MANAGEMENT
A key feature of the Customer Service System will be
the ability to track and report on all interaction
with an end customer, be it a shareholder or
broker/dealer. Designed for ease of use by a
customer service representative, this system will
allow for the logging of telephone calls and
correspondence, the creation and updating of service
items, the processing and resolution of customer
issues to insure customer satisfaction at the end of
any contact. In addition, via reason codes and aging
information, management is empowered with the use of
statistical and trending reports regarding contact
made with their customer base .
CORRESPONDENCE GENERATION AND TRACKING
The Customer Service System is closely integrated to
word processing to allow for the automatic generation
of outgoing correspondence related to service items.
A service representative can choose from customized
pre-defined letters to generate high quality customer
correspondence.
TELEPHONE TRADING
Authorized customer service system users will be able
to perform transactions while on the telephone with
customers by invoking simplified graphical data entry
screens. In addition, customer service
representatives can create electronic forms
consisting of processing instructions for other
departments and dynamically send route these work
items via the workflow manager.
CUSTOMER ENHANCED INQUIRY
SERVICE
SYSTEM The Enhanced Inquiry windows provide enriched and
(Continued) user-friendly replacements for legacy transfer agent
inquiry screens. Examples of the inquiry functions
are search for customer information by name, account
number and social security number, account
information, financial transaction history, service
history, and correspondence history.
<PAGE> 63
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
IMPRESS IMAGE PRODUCTION HARDWARE AND SYSTEMS SOFTWARE
- ---------------------------------------------------------------------------------------------------------
PRODUCT Description QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Servers Parallel Cable for printer 10
- ---------------------------------------------------------------------------------------------------------
HP IV+ / 5 Laser Printer with 6 MB Ram, Jet Direct for
Printers other printing can be installed 10
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable,
Scan Server Terminator. 5
- ---------------------------------------------------------------------------------------------------------
Ricoh IS-520 SCSI with Ink Jet Endorser. SCSI
Mid Speed Scanner Version 5
- ---------------------------------------------------------------------------------------------------------
Sun SPARCstation 5 Model 170, 17" Color Display,
48MB RAM, 2X2.1 GB Int disks, 4mm Tape, 3.5"
Floppy Drive, CD-ROM, Solaris 2.5.1, Solarais
Answerbooks, 1 @ X1053A, Solaris 2.5.1 SDK Kit,
Kodak Scan Server Solaris 2.5.1 Motif ToolKit, SUN Professional C 4.0 3
- ---------------------------------------------------------------------------------------------------------
High Speed Scanner Kodak 923D Scanners 3
- ---------------------------------------------------------------------------------------------------------
Sun ULTRAserver 6000, 12 250MHZ CPU's, 17" Color
Display, 1.2GB RAM, 2x9 GB Int disks, DG Clariion 42
Gb Raid 5 disk array, 4mm Tape, CD-ROM, Solaris
2.5.1. Answerbooks, 35/7OGb DLT Tape Changer, 1 @
1053A, 1 @ X1052A, 2 @ X1062, Fast
Image Server Ethernet/FDDI/ATM 1
- ---------------------------------------------------------------------------------------------------------
CYGNET 1802 with (3) Philips LD6100 Optical Drives,
Jukebox Optical SCSI Cable, RS-232 Null Modem Cable 1
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 x 768, Windows 3.1, Hiijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- ---------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 2 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (4)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- ---------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 2 or 3
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
**The fax server will require analog modem lines a max of 16 lines would
- ---------------------------------------------------------------------------------------------------------
be required for the hardware listed above.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (10 KVA) 1
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN) (1.4 KVA) 3
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX HW) (1 KVA) 2
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 64
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- ---------------------------------------------------------------------------------------------------------
Equipment to maintain a routed or switched network
environment with no more that 25-30 clients per
Network Hardware network segment.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32MB ram. Display
should optimally support Image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (1280X1024) 400
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Software required on all workstations
- ---------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- ---------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- ---------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 65
EXHIBIT 2.2 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
IMPRESS Test/Training Hardware and Systems Software
- -------------------------------------------------------------------------------------------------------
PRODUCT DESCRIPTION QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Server Parallel Cable for printer 1
- -------------------------------------------------------------------------------------------------------
HP IV+/5 Laser Printer with 6 MB Ram, Jet Direct for
Printer other printing can be installed 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP 120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable
Scan Server Terminator 1
- -------------------------------------------------------------------------------------------------------
Ricoh IS-420 SCSI with Ink Jet Endorser, SCSI
Low Speed Scanner Version 1
- -------------------------------------------------------------------------------------------------------
Sun ULTRAserver 1, 250MHZ CPU, 17" Color Display,
128MB RAM, 2X2.1 GB Int disks, SUN 4GB External
Disk Pack, (2) 4mm Tape Drives, CD-ROM, Solaris
Image Server 2.5.1, Answerbooks, 1 @ 1053A, 1 @ X1052A. 1
- -------------------------------------------------------------------------------------------------------
Phillips LD6100 Optical Drive Differential, SCSI Cable
Standalone Optical SCSI Differential Terminator. 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 X 768, Windows 3.1, Hijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- -------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 1 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (1)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- -------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
** THE FAX SERVER WILL REQUIRE ANALOG MODEM LINES A MAX OF 4 LINES WOULD BE
REQUIRED FOR THE HARDWARE LISTED ABOVE.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX) (1 KVA) 1
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (3 KVA) 1
- -------------------------------------------------------------------------------------------------------
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32 MBram. Display
should optimally support image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (128X1024) 10
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Software required on all workstations
- -------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- -------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- -------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 66
EXHIBIT 3 OF SCHEDULE G
MAINTENANCE AND SUPPORT TERMS
These terms are based on an IMPRESS User network environment of up to 512 Users
and the associated server(s), as described in Exhibits 1 and 2 of this Schedule
G.
1. Software Support.FDISG shall provide the following Software support
services ("Software Support"):
1.1. FDISG shall provide the Fund with full System Administration Guide(s)
for FDISG Software.
1.2. FDISG will have a Response Center (help desk) to provide 24 hours a
day, 7 days a week to designated client contacts.
1.3. FDISG shall use reasonable efforts to resolve all Software failures
through; (a) remote support to the Fund's information systems staff ("Fund's
Staff"); (b) coordination of Third Party Vendor support (on-site or remotely);
(c) coordination of other subcontractors' actions; or (d) direct on-site
support by FDISG personnel.
1.4. FDISG shall investigate errors in the Software reported by the Fund
which prevent substantial compliance with the then current Documentation and to
initiate the corrective action, if any, which FDISG considers reasonable and
appropriate, including but not limited to temporary fixes, patches and
corrective releases to FDISG's clients generally. Notwithstanding the
foregoing, if reported errors result from or arise out of. (i) malfunctions of
equipment other than the Equipment, (ii) improper Fund operator procedure or
misuse of the system by the Fund, (iii) modifications or changes made to the
system without FDISG's prior written approval, (iv) causes beyond the
reasonable control of either party, or (v) user developed features such as
those users may develop with form generators, ad hoc report writers and user
customized screens, then FDISG shall have no responsibility for investigating
the error or making the correction, except as the parties may otherwise agree
to in writing. The Fund shall pay FDISG's then current time and materials
charges plus reasonable travel and out-of-pocket expenses incurred in
investigating and attempting to correct any such errors.
1.5. FDISG shall from time to time provide bug fixes, error corrections,
maintenance, minor enhancements, upgrades and updates to the Software which are
generally made available by FDISG to its similar customers as part of Software
Support ("Updates"). The cost of the Updates is included in the fees and other
charges identified in Schedule C of the Agreement, if the updates are supplied
to the Fund using FDISG's standard update facility. FDISG installation
assistance for the new Updates may be required and, is billable to the Fund as
an Additional Service. During the term of the Agreement, FDISG will use
reasonable efforts to provide the Fund with not less than thirty (30) days
prior written notice of FDISG's intent issue a new update of Software. The
Fund shall implement an Update within ninety (90) days of receipt. Any support
by FDISG of any prior release of the Software after such ninety (90) day period
shall be at FDISG's sole discretion and as an Additional Service.
1.6. Software Support, the License, and the Software shall not include any
modification to the Software which contains any substantial added functionality
(including any significant new interface features), as determined solely by
FDISG or any new architecture or any significant modification of the Software
which contains any substantial added or different functionality, whether or not
such new functionality is coupled with any change in software architecture or
hardware platform ("New Products"). New Products shall be provided and
licensed to the Fund as an Additional Service.
1.7. FDISG may decline to support the Software if (i) the Software or
Equipment was added to or changed without FDISG's prior approval; (ii) the Fund
does not perform the Software Support; or (iii) FDISG determines that such
support would adversely affect the Scope of Work.
1.8 Software Support for the FDISG Software shall conform to the standards
set forth in Section I of Schedule F.
2. The Fund's Maintenance and Support Responsibilities. The Fund's facility
will have all of the required security, space, electrical power source,
communications lines, heating, ventilation and cooling, and other physical
<PAGE> 67
requirements reasonably necessary for the installation and proper operation of
the Equipment. The Fund's users will first direct all questions and problem to
the Fund's Staff for proper call tracking and problem resolution. The Fund's
Staff will coordinate all facility issues at the site and will serve as primary
contact for FDISG when planning installs, upgrades and other equipment changes.
The Fund's Staff shall:
2.1. Identify designated client contacts, one for Operations and one
technical systems administrator, to function as single points of contact for
discussion, review and resolution of problems with FDISG.
2.2. Perform initial problem determination and symptom documentation.
2.3. Be responsible for all system hardware and network hardware components
and shrink-wrap software from a maintenance, support and problem resolution
standpoint.
2.4. Provide (a) data back-up and recovery, (b) preventive maintenance,
and (c) perform server administration tasks as described in the Systems
Administration Guide(s) and Third Party Software documentation.
2.5. Maintain all network and trouble-log documentation required by FDISG
or by third-party vendors. FDISG shall be allowed to review such documentation
if necessary to resolve support issues.
2.6. Be available during normal business hours and reachable for support 24
hours a day, 7 days a week, as required. The Fund shall maintain the
appropriate staff level to adequately perform the maintenance support functions
specified. This staff should have experience in network administration,
troubleshooting, Microsoft Windows, workstation memory management, and UNIX and
NT systems administration.
2.7. Consult with FDISG before performing any work that may affect the
Software or performance of the System, including installation, upgrading, or
unplanned maintenance affecting Equipment
2.8. The fund is responsible for maintenance and support of customized code
unless contracted with FDISG.
3. Support of Customized Code. (Code changed by Fund or FDISG on a customized
basis)
3.1 Software Revisions. At times, FDISG will provide software updates to
components (third party or FDISG software) to either enhance the product or
address quality deficiencies. FDISG is responsible for notifying the Fund of
these updates, and what changes have been made. The Fund is responsible for
installing the updates and modifying any code which they have customized to
accommodate these enhancements. Assistance can be provided by FDISG at stated
billable rates.
3.2 Support of Modified Code. FDISG will provide application, technical
and workflow support for modified code only on a time and materials basis.
FDISG may request the replacement of the modified code with the original code
in order to assist in the determination of the problem source.
3.3 Mainframe Resource Utilization. If customized code requires greater
FDISG mainframe CICS, DASD, or CPU resources than the base FDISG delivered
IMPRESS Plus solution, FDISG reserves the right to charge the Fund for this
usage. If there is concern that excessive resource utilization could impair
the mainframe system, FDISG reserves the right to disallow this modified code
from executing on the mainframe. The Fund is advised to consult with FDISG in
order to determine if planned customization may negatively impact mainframe
resources.
4. Roles and Responsibilities.
4.1 FDISG shall not be responsible for the support of any Directly
Obtained Third Party Software or any other third party products. The Fund is
responsible for network connectivity, Operating Systems, gateways, and other
third party products. FDISG is not responsible for hardware not listed in
Exhibit 2 of Schedule G or software not listed in Sections 1, 2.1.1, or 2.1.2
of Exhibit 1 of Schedule G, unless specifically covered in a separate
agreement.
4.2 Additional support tasks may be provided on a time and material basis.
This may include workflow analysis, customization, network design, third party
product installation and additional training.
<PAGE> 68
SCHEDULE H
ACE + SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule H (the "SOFTWARE"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibit 1 of Schedule H ("Exhibit 1").
Subject to the terms and conditions set forth in this Schedule H, FDISG grants
to the Fund and the Fund accepts from FDISG the non-exclusive, non-transferable
license to use the Software during the term of the Agreement ("LICENSE"). Some
software components ("THIRD PARTY SOFTWARE") required to be used with the
Software were developed by a third party ("THIRD PARTY VENDOR"). Third Party
Software is licensed to the Fund only pursuant to shrink wrapped or other
agreements between the Third Party Vendor and the Fund directly. Exhibit 1
shall indicate the Third Party Software that the Fund is responsible to obtain
and license. FDISG shall provide the Fund with all error corrections, minor
enhancements and interim upgrades to the Software which are made generally
available to FDISG client's of the Software ("SOFTWARE SUPPORT"), but shall not
provide a License to any substantial added functionality, new interfaces, new
architecture, new platforms or other major software development efforts, as
determined solely by FDISG.
1.2 Ownership. FDISG or its licensor shall retain title to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION").
FDISG reserves all rights in the Proprietary Information not expressly granted
to the Fund in this Schedule H. Upon FDISG's request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") also set forth in Exhibit 1 of Schedule H. Additional terms and
conditions concerning the Equipment are also set forth in Exhibit 1. The
Equipment identified in Exhibit 1 represents the minimum equipment requirements
to run the Software. FDISG disclaims responsibility for the performance of the
Software in the event that the Fund utilizes equipment different than that
which is set forth in Exhibit 1. FDISG and the Fund shall (a) within a
reasonable time after the Effective Date, agree upon the tasks required to
implement the Software, Third Party Software and Equipment ("SYSTEM") and the
party responsible and time frames for each task ("SCOPE OF WORK"); (b) perform
their respective assigned tasks according to the Scope of Work; and (c) if not
the party assigned to a task, cooperate with the responsible party. To the
extent the Scope of Work is incomplete, FDISG shall follow its reasonable and
customary practices. Upon prior notice by FDISG to the Fund, the Fund shall
give reasonable access to the System to FDISG, FDISG's employees, affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) in connection with the Fund's use of the FDISG System and only at the
locations identified in the Agreement. If the Equipment is inoperative due to
malfunction, the license grant shall, upon written notice to FDISG, be
temporarily extended to authorize the Fund to use the Software on any other
equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph..
1.5 Software Installation and Acceptance. FDISG shall advise the Fund
that the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
thirty (30) days after Software Installation Date or thirty (30) days after the
Fund's first use of Software to process live production data ("SOFTWARE
ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
<PAGE> 69
1.7 No-Export. The Software shall not be shipped or used by the fund
outside the United States. The Fund shall comply with all applicable export
and re-export restrictions and regulations of the U.S. Department of Commerce
or other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule H which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software. For the term of the Agreement, FDISG warrants ("Performance
Warranty") that the Software shall perform on the Equipment substantially in
accordance with the Documentation, except for Third Party Software as set forth
in Paragraph 2.2 below. The timely correction of errors and deficiencies in
the Software shall be Fund's sole and exclusive remedy for the Performance
Warranty. FDISG warrants ("Rights Warranty") it has the right to license the
Software in accordance with the Agreement. Provided the Fund gives FDISG
timely written notice, reasonable assistance, including assistance from the
Fund's employees, agents, independent contractors and affiliates (collectively,
"Fund's Agents"), and sole authority to defend or settle the action, then FDISG
shall do the following ("Infringement Indemnification"): (a) defend or settle,
at its expense, any action brought against the Fund or the Fund's Agents to the
extent the action is based on a claim that the Software infringes a duly issued
United States' patent or copyright or violates a third party's proprietary
trade secrets or other similar intellectual property rights ("Infringement");
and (b) pay damages and costs finally awarded against the Fund or the Fund's
Agents directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Third Party Warranties. All warranties for the Third Party Software,
if any, are specifically set forth in the Software Exhibits, Exhibit 1 or in
the applicable agreements supplied by the Third Party Vendors. Subject to the
terms of the Exhibit 1 and to the extent permitted by FDISG's suppliers, FDISG
conveys to Fund all Third Party Software warranties made by the Third Party
Vendors.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and
as limited by applicable law, the Fund shall indemnify, defend and hold FDISG
and FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("Confidential Information"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party, prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential
<PAGE> 70
Information, the other party may obtain injunctive relief, in addition to its
other remedies, inadequate monetary damages and irreparable harm being
acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System. Fund shall not
modify or reverse engineer the Software without FDISG's prior written consent.
<PAGE> 71
EXHIBIT 1 OF SCHEDULE H
SOFTWARE/HARDWARE
1. FDISG Software.
1.1 FDISG Software includes the following products:
ACE +
2. Third Party Software.
2.1 Directly Obtained Third-Party Software. The following Third Party
Software are separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of "shrink-wrapped" or other
agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required Optional
-------- --------
<S> <C>
Windows 3.1 Reachout PC Link (for external FDISG Support of ACE +)
DOS 3.3 or higher
</TABLE>
3. Hardware.
3.1 It is recommended that ACE + run on a PC Network (LAN) to fully use its
database features. The network should have at least 200 Mb of available disk
space. ACE + will also run on an individual local (hard) drive. PC
specifications are:
o 2 or more IBM PC Compatible 486/66 (486/33 minimum) Mhz (or
Pentium) with 16 Mb Ram (8 Mb minimum)
o 500 Mb Local (hard) drives (for backup only)
o External Fax/Modems (9600 baud or greater)(for PC faxing or
Reachout only)
o HP Laserjet 4 w/ Windows Drivers
3.2 PC/Mainframe Connection: ACE + data is based on mainframe ASCII files.
These files must be transmitted from the mainframe to LAN or PC. This can be
accomplished various ways. FDISG uses a mainframe to Gateway and BARR/SNA
transmission.
<PAGE> 72
SCHEDULE I
DISASTER RECOVERY SUMMARY
OVERVIEW
First Data's data center is a free standing building that is self sufficient
with back-up water supply, fuel storage, and diesel generator backup. The
building is protected with 24 hour on site guard protection as well as security
camera coverage throughout the property. Access is by picture ID only and all
doors are protected with card key access. Additionally, all systems are
protected by ACF2 Security. Security is audited on a regular basis.
Additionally, First Data maintains a reliable, tested disaster recovery system.
A tape backup system is set up on a daily rotation schedule with a full backup
of all data. The backup jobs run automatically every night and all tapes are
sent off-site on a daily basis to a physically secured facility. A business
resumption site has been established in our Providence facility. This Hot Site
is fully equipped with equipment, wiring and supplies in the case of a disaster
or business recovery.
A disaster is defined as any unforeseen business interruption or outage that
renders the data center or telecommunications network inoperable or
inaccessible for an undetermined amount of time suspending normal processing.
First Data's Disaster Recovery Plan provides us with the required procedures
and resource references to execute a full recovery of the data center and
associated critical processing.
This Plan addresses:
o Computer and communications equipment
o Programs, data and documentation
o Building and environmental concerns
o Fire detection and building evacuation
o Personnel, and
o Client Liaisons.
Due to contractual requirements, the data center must provide on-line
accessibility and processing availability within 24 hours of a declared
disaster. Total "downtime" is not to exceed 48 hours.
All outages that affect any client are considered priority one and all
available resources will be utilized to resolve outages, failures or slowdowns.
APPROACH
In a disaster situation, numerous issues and tasks must be addressed
immediately. To ensure all get equal attention, "teams" have been developed.
These teams are comprised of experienced First Data personnel responsible to
execute specific assigned functions critical to the overall recovery. Each team
will activate their procedures concurrently to affect a full system recovery at
the hot site. Some of the teams will act as support teams providing
<PAGE> 73
financial, administrative, and logistical coordination. The remaining recovery
teams will address more specific data and telecommunications issues.
o Support Teams
Financial/Administrative Support
Human Resources/Corporate Communications
Applications Team
Client Liaison Team
o Recovery Teams
Management Teams
Systems Software
Data Center Operations
Vendor
Telecommunications Team
Production Control
Facilities/Hardware
Each team will be headed by a team leader and a designated alternate. If, for
any reason, the team leader is unavailable, the alternate will assume
responsibility for the team notification and progress reporting to the team
management.
Dial backup capabilities, diverse routing of communications circuits and
triangulation present the best options for insuring continued system access in
the event of a communications failure. First Data can demonstrate each of these
capabilities at the client's request.
TESTING SUMMARY
First Data/FDT has contracted with Comdisco to provide hotsite disaster
recovery and backup services. First Data's overall goal is to establish network
connectivity for on-line and transmission capability, restore the application
and recover forward to a point in time and then re-process a batch cycle.
Using Comdisco's site at North Bergen, the First Data Technology (FDT)
operating system will be recovered while testing FDISG recoverability for all
network and application platforms.
The recovery will take place remotely with FDT, using the Business Recovery
Facilities (BRF) in Denver, and Westboro staff working out of the new BRF
in Tewksbury, MA. Comdisco will have staff at both BRFs, as well as North
Bergen, to assist whenever needed.
Tests are conducted annually. The test runs for 48 contiguous hours. Multiple
shifts will be required for FDT, FDISG, and Comdisco staff. Specific staff
requirements will be determined as the scope of the test becomes more clearly
defined.
The systems recovery portion of the test will take place at the Comdisco site in
New Jersey utilizing an IBM ES9000 with related peripherals. All the equipment
used in testing is
<PAGE> 74
compatible with the FDT hardware located in Denver. All tape mounts will be
handled by Comdisco staff in New Jersey, and the telecommunications testing
will be staffed by FDT with Comdisco assisting in New Jersey.
FDISG Test Objectives
o Test recoverability from both of Comdisco's new Business Recovery
Facilities
o Test transmission and network connectivity with clients
o Check and verify tape volumes stored offsite
o Benchmark the restore time for all (500) DASD volumes
o Ship all tapes from Denver to New Jersey
o Document (CDRS/FDISG) connectivity procedures
o Recover all applications to previous business cycle
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COUNSEL
AIM INTERNATIONAL FUNDS, INC.
We hereby consent to the use of our name and to the reference to our
firm under the caption "General Information - Legal Counsel" in the Prospectuses
for the AIM Asia-Pacific Growth Fund, the AIM European Capital Growth Fund, the
AIM International Equity Fund, and the AIM Global Aggressive Growth, AIM Global
Growth, and AIM Global Income Funds, and under the caption Miscellaneous
Information - Legal Matters in the Statement of Additional Information for such
Funds, which are included in Post-Effective Amendment No. 12 to the Registration
Statement under the Securities Act of 1933 (No. 33-44611) and Amendment No. 14
to the Registration Statement under the Investment Company Act of 1940 (No.
811-6463) on Form N-1A of AIM International Funds, Inc.
/s/ Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
July 7, 1997
<PAGE> 1
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
AIM International Funds, Inc.:
We consent to the use of our reports on the AIM Global Aggressive Growth Fund,
AIM Global Growth Fund, AIM Global Income Fund, and AIM International Equity
Fund (series portfolios of AIM International Funds, Inc.) dated December 6,
1996 included herein and the references to our firm under the headings
"Financial Highlights" in the Prospectus and "Audit Reports" in the Statement
of Additional Information.
/s/ KPMG PEAT MARWICK LLP
--------------------------------
KPMG Peat Marwick LLP
Houston, Texas
July 7, 1997
<PAGE> 1
EXHIBIT 14(d)
403(b) PLAN
ACCOUNT APPLICATION [AIM LOGO APPEARS HERE]
To open your AIM 403(b) Plan account.
Employer mail to: AIM Fund Services, Inc., P.O. Box 4399, Houston, TX
77210-4399. Phone: 800-959-4246
All sections must be fully completed.
- --------------------------------------------------------------------------------
1. EMPLOYEE INFORMATION (please print)
Participant / /
------------------------------------------------------------------
First Name Middle Last Birth Date
Address
----------------------------------------------------------------------
Street City State Zip Code
Social Security # Daytime Telephone
--------------------- -----------------------
Employer
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. INVESTMENT INFORMATION (Minimum investment in any AIM Fund is $25 per pay
period per Fund.)
CONTRIBUTIONS:
[ ] I will be making salary-deferral contributions in the amount of $_______
or _______% of compensation.
[ ] This is a transfer of 403(b) assets only; no salary-deferral
contribution will be made at this time.
Each contribution to the Custodial Account shall be invested in the
following AIM Funds in the amounts specified.
EQUITY FUNDS $ or % of Assets Class of Shares
(Check one)
AIM Blue Chip Fund $ Class [ ] A [ ] B
---------
AIM Capital
Development Fund $ Class [ ] A [ ] B
---------
AIM Charter Fund $ Class [ ] A [ ] B
---------
AIM Global Aggressive
Growth Fund $ Class [ ] A [ ] B
---------
AIM Global Growth Fund $ Class [ ] A [ ] B
---------
AIM Constellation Fund $ Class [ ] A
---------
AIM Growth Fund $ Class [ ] A [ ] B
---------
AIM International
Equity Fund $ Class [ ] A [ ] B
---------
AIM Global Utilities Fund $ Class [ ] A [ ] B
---------
AIM Value Fund $ Class [ ] A [ ] B
---------
AIM Weingarten Fund $ Class [ ] A [ ] B
---------
FIXED INCOME FUNDS $ or % of Assets Class of Shares
(Check one)
AIM Balanced Fund $ Class [ ] A [ ] B
---------
AIM Global Income Fund $ Class [ ] A [ ] B
---------
AIM Intermediate
Government Fund $ Class [ ] A [ ] B
---------
AIM High Yield Fund $ Class [ ] A [ ] B
---------
AIM Income Fund $ Class [ ] A [ ] B
---------
AIM Limited Maturity
Treasury Shares $ Class [ ] A
---------
Money Market Funds
AIM Money Market Fund $ Class [ ] A [ ] B
---------
Total $
---------
If no class of shares is selected, Class A shares will be purchased, except in
the case of AIM Money Market Fund, where Class C Shares will be purchased.
BILLING: PLEASE CONFIRM WITH YOUR EMPLOYER THAT THIS IS REQUIRED BEFORE
COMPLETING THIS SECTION.
MY EMPLOYER HAS REQUESTED THAT AIM FORWARD A BILLING EACH MONTH FOR SUBMISSION
OF MY ON-GOING SALARY-DEFERRAL CONTRIBUTION. (NOTE: BILLING IS ONLY AVAILABLE
WHEN AN ORGANIZATION HAS 10 OR MORE 403(b) PARTICIPANTS WITH AIM.)
PLEASE REMIT THE BILLING TO:
Employer's Name Attention
---------------------------------------- ---------------
Address Telephone
------------------------------------------------ ---------------
- -------------------------------------------------------------------------------
3. ACCOUNT OPTIONS
Please indicate options you desire, if any.
TELEPHONE EXCHANGE PRIVILEGE. Unless indicated below, I authorize the
Transfer Agent to accept from any person instructions to exchange shares in
my account(s) by telephone for shares of other AIM Funds within the same
Class of Shares, in accordance with the procedures and conditions set forth
in the Fund's current prospectus.
[ ] I DO NOT want the telephone exchange privilege.
11
<PAGE> 2
Reduced Sales Charge (optional/available for Class A shares only)
Right of Accumulation
I apply for Right of Accumulation reduced sales charges based on the
following accounts in The AIM Family of Funds--Registered Trademark--:
Fund(s) Account No(s).
------------------------------- -------------------------
Letter of Intent
I agree to the Letter of Intent provisions in the prospectus. I plan to
invest during a 13-month period a dollar amount of at least:
[ ] $25,000 [ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
- -------------------------------------------------------------------------------
4. BENEFICIARY DESIGNATION
Primary Beneficiary:
I hereby designate the following individual(s) to receive the full value of
the assets of my 403(b) plan with AIM Distributors, Inc. upon my death.
This revokes any and all prior Beneficiary Designations made by me and filed
with the Custodian. (If you designate a beneficiary other than your spouse,
your spouse must acknowledge the designation by signing this form.)
Full Name
--------------------------------------------------------------------
Address
----------------------------------------------------------------------
Social Security#
-------------------------------------------------------------
Relationship
-----------------------------------------------------------------
Percentage of Assets
---------------------------------------------------------
Please complete and sign the beneficiary designation. We cannot accept this
application without proper designation of beneficiary.
If you wish to identify additional or contingent beneficiaries, please attach
a separate letter identifying the same information requested above.
- -------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I hereby adopt the AIM Distributors, Inc. 403(b)(7) Custodial Agreement
appointing Boston Safe Deposit and Trust Company as Custodian. I have
received and read the current prospectus of the investment company(ies)
selected in this agreement and have read and understand the 403(b)(7)
custodial agreement and consent to the custodial account fee as specified. I
understand that an annual AIM 403(b)(7) Maintenance Fee (currently $10) will
be deducted in early December from my 403(b)(7) Fund account.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is
required to have the following certification. Please refer to the Fund
prospectus for complete instructions regarding backup withholding. Under the
penalties of perjury, I certify that (i) the number shown in Section 1 is my
correct Social Security/Taxpayer Identification Number and (ii) I am not
subject to backup withholding because the Internal Revenue Service (a) has
not notified me that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (b) has notified me that I
am no longer subject to backup withholding (does not apply to real estate
transactions, mortgage interest paid, the acquisition or abandonment of
secured property, contributions to an individual retirement arrangement
[403(b)(7)], and payments other than interest and dividends).
Certification Instructions-You must cross out item (b) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting of interest or dividends on your tax
return.
[ ] Exempt from Backup Withholding (i.e. exempt entity as described in the
prospectus)
[ ] Nonresident alien [Form(s) W-8 attached]
Your Signature Date / /
--------------------------------- --- --- ---
- -------------------------------------------------------------------------------
6. BROKER/DEALER INFORMATION
Name of Broker/Dealer Firm
---------------------------------------------------
Branch Address
---------------------------------------------------------------
Rep. Name and Number
---------------------------------------------------------
Rep. Signature
---------------------------------------------------------------
Rep. Telephone
------------------
[LOGO APPEARS HERE] A I M Distributors, Inc.
12 42600-12/96
<PAGE> 3
403(b) PLAN
ASSET-TRANSFER FORM [AIM LOGO APPEARS HERE]
To move assets from another 403(b) custodian to AIM.
Use this form only when transferring assets from an existing 403(b) (account #
________________) to an AIM 403(b) (account # ______________).
If you do not already have an AIM 403(b), you must also submit a 403(b)
Application. AIM will arrange the transfer for you.
- --------------------------------------------------------------------------------
1. INVESTOR INFORMATION (please print)
Name
--------------------------------------------------------------------
Address
-----------------------------------------------------------------
City State Zip
--------------------------------- ------------ ------------
Social Security Number Daytime Telephone
--------------- ----------------
- --------------------------------------------------------------------------------
2. CURRENT CUSTODIAN
Name of Resigning Trustee Account Number
------------ -------------------
Address of Resigning Trustee
--------------------------------------------
City State Zip
---------------------------------- ------------ ------------
Attention Telephone
----------------------------- -------------------------
- --------------------------------------------------------------------------------
3. 403(b) ACCOUNT INFORMATION
Please deposit proceeds in my
[ ] existing [ ] new*
<TABLE>
<CAPTION>
EQUITY FUNDS $ or % of Assets Class of Shares (Check one)
<S> <C> <C> <C>
AIM Blue Chip Fund $ [ ] Class A [ ] Class B
---------------
AIM Capital Develop- $ [ ] Class A [ ] Class B
ment Fund ---------------
AIM Charter Fund $ [ ] Class A [ ] Class B
---------------
AIM Global Aggres- $ [ ] Class A [ ] Class B
sive Growth Fund ---------------
AIM Global Growth $ [ ] Class A [ ] Class B
Fund ---------------
AIM Constellation $ [ ] Class A
Fund ---------------
AIM Growth Fund $ [ ] Class A [ ] Class B
---------------
AIM International $ [ ] Class A [ ] Class B
Equity Fund ---------------
AIM Global Utilities $ [ ] Class A [ ] Class B
Fund ---------------
AIM Value Fund $ [ ] Class A [ ] Class B
---------------
AIM Weingarten Fund $ [ ] Class A [ ] Class B
---------------
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUNDS Class of Shares (Check one)
<S> <C> <C> <C>
AIM Balanced Fund $ [ ] Class A [ ] Class B
---------------
AIM Global Income Fund $ [ ] Class A [ ] Class B
---------------
AIM Intermediate $ [ ] Class A [ ] Class B
Government Fund ---------------
AIM High Yield Fund $ [ ] Class A [ ] Class B
---------------
AIM Income Fund $ [ ] Class A [ ] Class B
---------------
AIM Limited Maturity $ [ ] Class A
Treasury Shares ---------------
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS Class of Shares (Check one)
<S> <C> <C> <C>
AIM Money Market Fund $ [ ] Class A [ ] Class B [ ] Class C
---------------
Total $
---------------
</TABLE>
If no class of shares is selected, Class A shares will be purchased,
except in the case of AIM Money Market Fund, where Class C Shares will be
purchased.
- --------------------------------------------------------------------------------
4. TRANSFER INSTRUCTIONS
To Resigning Trustee or Custodian:
Please liquidate [ ] all or [ ] part of the account(s) listed in
Section 2 and transfer the proceeds to my 403(b) account with Boston
Safe Deposit and Trust Company.
13
<PAGE> 4
[ ] Partial amount to transfer $ [ ] immediately
------------- [ ] at maturity ( / / )
-- -- --
[ ] Please transfer "In Kind" [ ] all [ ]part of the shares of the AIM Fund
held in my account to Boston Safe Deposit and Trust Company.
Percent of shares to transfer %
-----
- --------------------------------------------------------------------------------
5. AUTHORIZATION AND SIGNATURE
I have established a 403(b) account with the AIM Funds and have appointed
Boston Safe Deposit and Trust Company as the successor Custodian. Please
accept this as your authorization and instruction to liquidate or transfer
in kind the assets noted above, which your company holds for me.
Your Signature Date / /
-------------------------------------- -- -- --
Note: Your resigning trustee or custodian may require your signature to be
guaranteed. Call that institution for requirements.
Name of Bank or Firm
-------------------------------------------------------
Signature Guaranteed by
----------------------------------------------------
(Name & Title)
- --------------------------------------------------------------------------------
6. CUSTODIAN ACCEPTANCE
This is to advise you that Boston Safe Deposit and Trust Company, as
custodian, will accept the account identified above for:
Depositor's Name Account Number
------------------------- -----------------
This transfer of assets is to be executed from fiduciary to fiduciary and
will not place the participant in actual receipt of all or any of the plan
assets. No federal income tax is to be withheld from this transfer of
assets.
Authorized Signature Mailing Date / /
--------------------------------- -- -- --
(Boston Safe Deposit and Trust Company)
- --------------------------------------------------------------------------------
7. INSTRUCTIONS TO RESIGNING TRUSTEE OR CUSTODIAN
Please attach a copy of this form to the check. Indicate account number on
all documents. Return this completed form and completed 403(b) Application
to Boston Safe Deposit and Trust Company, c/o AIM Fund Services, Inc., P.O.
Box 4399, Houston, TX 77210-4399. Phone: 800-959-4246
- --------------------------------------------------------------------------------
8. DISTRIBUTION ELECTION INFORMATION
If this participant is age 70 1/2 or older this year, the resigning
Trustee/Custodian must complete this section.
Election made by the participant as of the required beginning date:
1. Method of calculation (check one): [ ] declining years
[ ] recalculation
2. Life expectancy (check one): [ ] single life payout
[ ] joint life payout*
3. The amount withheld from this transfer to satisfy this year's required
distribution: $
-------------------------
Were any previous distributions made to the participant this year?
[ ] No [ ] Yes $
----------------------
The factor used to calculate this required payment was
----------------------
Name of Designated Beneficiary
---------------------------------------------
Relationship Date of Birth / /
---------------------------------------- -- -- --
Signature of Current Custodian/Trustee
-------------------------------------
[LOGO APPEARS HERE] A I M Distributors, Inc.
14 42600-12/96
<PAGE> 5
403(b) PLAN
EXCHANGE AND CONTRIBUTION CHANGE FORM [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. PARTICIPANT INFORMATION (please print)
Employee Name
------------------------------------------------------------
Social Security Number Account Number
------------------------ -------------
EMPLOYER NAME
------------------------------------------------------------
- --------------------------------------------------------------------------------
2. FUND EXCHANGE
An AIM Fund exchange is the transfer of existing fund assets from one AIM
Fund to another AIM Fund. Please consult your investment adviser first.
Fund exchanges will not effect how your 403(b) contributions are invested.
You must indicate under the 403(b) Contribution Section any changes with
respect to your future contribution.
From AIM Fund to AIM Fund Shares, or $ or %
--------- --------- -------- ------ ------
From AIM Fund to AIM Fund Shares, or $ or %
--------- --------- -------- ------ ------
- --------------------------------------------------------------------------------
3. 403(b) CONTRIBUTIONS
MARK BELOW THE STATEMENT THAT APPLIES
[ ] All future contributions are to be invested as previously indicated.
[ ] All future contributions (indicate % or dollar amount) are to be invested
as indicated below.
INVESTMENT SELECTION
I wish to change the investment of my future 403(b) contributions to the
AIM Funds listed below. This change is to be effective with the first
payroll contribution received following receipt of this form.
A. Fund %
---------------------------- ---------------------
B. Fund %
---------------------------- ---------------------
C. Fund %
---------------------------- ---------------------
D. Fund %
---------------------------- ---------------------
Total: 100%
Signature Date
------------------------------------ ---------------------
Please return the completed form to A I M Fund Services, Inc., Attn:
Qualified Plan Services Department, P.O. Box 4399, Houston, TX 77210-4399.
Phone: 800-959-4246.
If you have any questions, please call one of our Client Services
Representatives. Please retain a photocopy of this form for your records.
15 A I M Distributors, Inc. 12/96
<PAGE> 6
403(b) PLAN
AGREEMENT FOR SALARY DEFERRAL [AIM LOGO APPEARS HERE]
USE THIS FORM ONLY IF YOUR EMPLOYER DOES NOT SUPPLY YOU WITH ITS OWN FORM.
Submit this form to your employer.
[ ] Original Authorization
[ ] Amended Authorization
BY THIS AGREEMENT MADE BETWEEN
(the "Employee")
-----------------------------------------------------------
(Please Print)
and
(the "Employer")
-----------------------------------------------------------
the parties hereto agree as follows:
Effective with the paycheck dated , 19 (which date is
---------------- --
subsequent to the date of executive of this Agreement), the Employee's
basic salary will be deferred by the amount indicated in item (1) or (2)
below, as designated by the Employee.
This Agreement shall be legally binding and irrevocable as to each of the
parties hereto while employment continues; provided, however, that either
party may terminate this Agreement by giving at least 30 days written
notice of the date of termination.
The amount of the Employee's salary deferral cannot exceed the Exclusion
Allowance under Section 403(b) of the Internal Revenue Code or the
limitations under Section 402(g) and 415 of the Internal Revenue Code.
The amount of the Employee's salary deferral will be: (select one)
1. $ per pay period beginning
------------------------- -------------------
2. % of basic salary beginning
------------------------- -----------------
It is understood that the amount of such salary deferral will be sent by
the Employer directly to AIM Fund Services, Inc., P.O. Box 4399,
Houston, Texas 77210-4399. Checks should be made payable to Boston Safe
Deposit and Trust Company. If your employer is requesting a billing from
AIM, please indicate this on the application.
Signed this day of , 19
---------------------- ---------------------- ------
Employee Signature
-----------------------------------------------------
Signed this day of , 19
---------------------- ---------------------- ------
Name of Employer
-------------------------------------------------------
By
---------------------------------------------------------------------
(Accepted)
Title
------------------------------------------------------------------
17 A I M Distributors, Inc. 12/96
<PAGE> 7
403(b) PLAN
SALARY-DEFERRAL WORKSHEET [AIM LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
1. INSTRUCTIONS
Under current IRS rules, the maximum amount you may defer from your salary
is based upon a formula using a number of factors, including current
salary, years of service, type of employer, and plan contributions made on
your behalf in past years.
Simplified, the contribution to your 403(b) plan is the lesser of:
-- Basic Exclusion Allowance
-- 20% of your gross salary
-- $9,500
It is important not to exceed the maximum permitted contribution in any
tax year. Excess contributions may be subject to federal taxes unless
corrected by April 15 of the tax year following the tax year for which the
contribution is made. Excess contributions, not corrected, are also subject
to a 6% non-deductible annual excise tax.
Please note that some employees of certain church organizations and
employees of more than one qualified organization are subject to somewhat
different limitations. Also, special "catch-up" provisions may permit you
to exceed the basic limits. If you think you may qualify for such special
treatment, consult your tax adviser for details.
The worksheet below will help you determine the amount you may defer.
However, you may be required to further reduce this amount if your employer
is making plan contributions in addition to your deferrals or you are
currently making salary-deferral contributions to other retirement plans.
You should keep this worksheet for your own records. Do not return it to
AIM.
- --------------------------------------------------------------------------------
2. WORKSHEET DEFINITIONS
Current Salary $ = Current annual salary (before
----------- salary-deferral contributions)
Service Years = Years of service with current employer
----------- (enter whole and fractional years; however,
if less than 1 year, use "1" year).
Prior
Contributions $ = All contributions (excluding this year's
----------- salary deferrals) made by your present
employer to a pension or profit sharing
plan, state teachers retirement plan,
403(b) plan, 457 deferred compensation plan
or SEP-IRA.
Prior Deferrals $ = All salary deferrals made to 403(b) plans,
----------- including tax-sheltered annuities, 457
plans (relating to state deferred
compensation plans), SAR-SEP, and 401(k)
plans on your behalf by your present
employer in past years.
Current Deferrals $ = Your salary-deferral contributions made in
----------- the current tax year. This amount may be
zero or the amount deferred year to date.
- --------------------------------------------------------------------------------
3. BASIC EXCLUSION ALLOWANCE FOR SALARY DEFERRALS:
<TABLE>
<CAPTION>
<S> <C> <C>
a. $ x x.1667 = $
------------------------------ --------------------- ----------------------------------
Current Salary Service Years
b. $ + $ = $
------------------------------ --------------------------- ----------------------------------
Prior Contributions Prior Deferrals
c. $ - $ = $
------------------------------ --------------------------- ----------------------------------
Total Line a Total Line b Basic Exclusion Allowance
d. $ x .20 = $
------------------------------ ----------------------------------
Current Salary Employer's Contribution Limit
e. $9,500- = $
---------------------- ----------------------------------
Current Year's Salary Deferral Salary Deferral Limit
f. Your Basic Salary Deferral Limit is the lesser = $
of c, d, or e ----------------------------------
</TABLE>
19
<PAGE> 8
4. SPECIAL INCREASE IN DOLLAR LIMITATION:
This option is only available if you have at least 15 years of service with
the same qualified employer. This Special Increase in the Dollar Limitation
may permit you to exceed the $9,500 salary-deferral limit.
g. ($5,000 x ) - $ = $
--------------- ---------------- ----------------
Service Years Prior Deferrals
h. Total of Special Increase Dollars(1) used in
prior years under this option = $
----------------
i. $15,000 - $
---------------- = $
Amount on Line h ----------------
j. Lesser of lines g or i or $3,000 = $
----------------
k. $9,500 + = $
------------------- ----------------
Amount on Line j Special Deferral Limit
l. The maximum amount you can defer is the
lesser of lines c, d, or k = $
----------------
- --------------------------------------------------------------------------
5. "CATCH-UP" OPTIONS
Employees of a qualified organization(2) may elect to use one of three
special "catch-up" options to increase your 403(b) contribution. Each option
is irrevocable and once chosen, no other "catch-up" option may be used in
future years. However, an individual may chose to use the Basic Exclusion
Allowance in any year instead of the "catch-up" option.
NOTE: The "catch-up" options calculate the total amount your employer plus
you may contribute. Your salary deferral may not exceed $9,500 even if the
total "catch-up" amount is greater than $9,500.
OPTION A - May be elected only in the year in which the participant separates
from service.
m. Amount on line c, recalculated using steps
a, b, c based on only the last 10 years of
service = $
----------------
n. The option's limit is the lesser of line m
or $30,000
(Your salary-deferral contribution is
limited to 9,500.) = $
----------------
OPTION B - May be elected in any year of service.
o. Amount on line c = $
----------------
p. $3,200 + = $ = $
---------------- ----------------
Total line d
q. Option b overall limit = $15,000
----------------
r. The maximum contribution under this option
is the lesser of line o, p, or q
(Your salary-deferral contribution is
limited to $9,500) = $
----------------
OPTION C - May be elected in any year of service
s. x .20 = $
-------------------- ----------------
Current Salary
t. The maximum contribution under this option
is the lesser of line s, or $30,000
(Your salary-deferral contribution is
limited to $9,500) = $
----------------
(1) Special Increase in Dollar Limitation permits you an additional lifetime
contribution up to $15,000, not to exceed $3,000 extra in any one year. Step
h accounts for previous contributions made under this option. (2)A "qualified
organization" is an educational organization [described in IRC Section
170(b)(1)(A)(ii)], hospital, home health service agency [described in IRC
Section 501(c)(3) and which has been determined by the Secretary of Health,
Education, and Welfare to be a home health agency, as defined in Section
1861(o) of the Social Security Act], health and welfare service agency,
church or convention or association of churches [described in IRC Section
414(e)] or an organization which is exempt from tax under IRC Section 501
and which is controlled by or associated with a church or a convention or
association of churches.
You should review these calculations with your tax adviser. You may also
want to consult the Internal Revenue Service Publication 571 as an additional
source of information. The Custodian, its agent or the sponsor of the AIM
403(b) Plan will not provide legal or tax advice, nor calculate your 403(b)
plan contributions.
20 [LOGO APPEARS HERE] A I M Distributors, Inc.
42600-12/96
<PAGE> 9
403(b)(7) PLAN
CUSTODIAL AGREEMENT
ARTICLE I. EFFECTIVE DATE
This AIM 403(b)(7) Custodial Agreement shall become effective on the
date on which the Custodian or its agent, A I M Distributors, Inc. receives
incorporated AIM 403(b)(7) Application executed by the Employee.
ARTICLE II. DEFINITIONS
2.01. ACCOUNT OR FUND(S) means the separate account or accounts
established and maintained by the Custodian for an Employee pursuant to this
Agreement.
2.02. AGREEMENT OR AIM 403(b)(7) AGREEMENT means this document and the
Application.
2.03. AIM FUND(S) means any of the mutual funds which are distributed
by A I M Distributors, Inc. and are part of The AIM Family of Funds--Registered
Trademark--.
2.04. APPLICATION OR AIM 403(b)(7) APPLICATION means the document(s)
which established the Agreement and is (are) executed by the Employer, Employee
and Custodian.
2.05. BENEFICIARY means the person or persons (including entities)
designated by the Employee as entitled to receive the Account balance, if any,
at the Employee's death. If at the time of the Employee's death, no designated
Beneficiary is alive, Beneficiary shall mean the Employee's surviving spouse
or, if the Employee does not have a surviving spouse, the Employee's estate.
2.06. CODE means the Internal Revenue Code of 1986, as amended.
2.07. CONTRIBUTIONS shall mean Salary Reduction Contributions and/or
Employer Contributions.
2.08. CUSTODIAN means the party who executed the Application as
Custodian, and any successor thereto, provide that such successor is either a
bank or another person who satisfies the requirements of Code Section
401(f)(2).
2.09. DESIGNATION OF BENEFICIARY means a form executed and submitted to
the Custodian in accordance with the terms of Article IX.
2.10. DISABILITY means the inability of the Employee to engage in any
substantial gainful activity because of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration. The Employee shall not be considered to
be suffering from Disability until the Custodian has received certification
from the Employer to such effect.
2.11. DISTRIBUTOR means A I M Distributors, Inc. and any successor
thereto.
2.12. EMPLOYEE means an individual who is employed by the Employer and
who has properly executed the Application.
2.13. EMPLOYER means the employer who is listed on the Application.
2.14. EMPLOYER CONTRIBUTIONS mean the amount, if any, transmitted by
the Employer to the Custodian for addition to the Employee's Account other than
Salary Reduction Contributions.
2.15. SALARY REDUCTION CONTRIBUTION means the amount not included in
the Employee's compensation pursuant to a written salary reduction agreement
and transmitted by the Employer to the Custodian for addition to the Employee's
Account.
ARTICLE III. MAINTENANCE OF A CUSTODIAL ACCOUNT
3.01. SALARY REDUCTION CONTRIBUTIONS TO THE ACCOUNT. The Employee may
make Salary Reduction Contributions to the Account. Any salary reduction
agreement between the Employer and the Employee shall be effective only as to
amounts earned by the Employee after such agreement becomes effective. Each such
agreement shall be legally binding and irrevocable with respect to compensation
subsequently earned. A salary reduction agreement may be terminated by written
notice received at least 30 days prior to the date of termination. The
Employer and Employee shall not enter into more than one salary reduction
agreement in any one taxable year of the Employee.
3.02. TRANSFERS TO AND FROM THE ACCOUNT. All direct or indirect asset
transfers to an Account from an existing custodial account described in Code
Section 403(b)(7) or an annuity contract qualified under Code Section 403(b)(1)
shall be in cash unless the Custodian otherwise consents. Direct transfers into
an account may be accepted to the extent permitted by the Code. The Employee has
the right by proper written instruction to cause a transfer of cash or, if
agreed to by the Custodian, shares of AIM Fund(s) to another custodial account
described in Code Section 403(b)(7), an annuity contract qualified under Code
Section 403(b)(1), an individual retirement account described in Code Section
408(a) or an individual retirement annuity described in Code Section 408(b).
3.03. ROLLOVERS TO THE ACCOUNT. The Employee shall be permitted to make
rollover contributions to the Account of an amount received by the Employee
that is attributable to participation in another annuity or custodial account
which meets the requirements of Section 403(b) of the Code. Neither the
Custodian nor the Distributor shall have responsibility to ensure that
contributions under 3.02 or 3.03 satisfy the applicable provisions of the Code.
3.04. EMPLOYER CONTRIBUTIONS. In addition to Salary Reduction
Contributions, the Employer may make a contribution to the Account on behalf
of the Employee in accordance with any retirement plan, fund or program for
which the Employee is eligible, subject to the limitations under 3.05.
3.05. CONTRIBUTION LIMITS.
(a) Unless the Employee has made a special election as described under
Section 415(c)(4) of the Code, the total amount of annual additions that may be
made to the Account on behalf of the Employee for any limitation year shall not
exceed the lesser of:
(i) $30,000 (or, if greater, one-fourth the defined benefit
plan dollar limitation in effect under Section 415(b)(1) of the Code for the
limitation year); or
(ii) 25 percent of the Employee's compensation (within the
meaning of Section 415(c)(3) of the Code) for the limitation year.
(b) For purposes of this subsection (a) above, the term "annual
additions" shall include contributions to the Account under 3.01 (pertaining to
Salary Reduction Contributions) for the limitation year.
(c) The term "limitation year" shall mean the calendar year, unless
the Employee elects to change the limitation year to another twelve-month
period by attaching a statement to his or her federal income tax return in
accordance with the regulations under Section 415 of the Code. If the Employee
is in control of the Employer (within the meaning of Code Section 414(b) or
(c), as modified by Code Section 415(h)) the limitation year shall be the same
as the limitation year of the Employer under Section 415 of the Code.
(d) If the Employer or any affiliated employer as described in Section
415(h) of the Code makes contributions on behalf of the Employee to any other
annuity contract described in Section 403(b) of the Code, then the
contributions to such annuity contract shall be combined with the contributions
to the Account for purposes of the limitations of subsection (a) above.
3.06. LIMITATIONS ON SALARY REDUCTION CONTRIBUTION. For any taxable
year beginning after December 31, 1986, Salary Reduction Contributions shall
not exceed the amount of $9,500, as adjusted in accordance with Code Section
402(g)(4), or such greater amount as may be permitted with respect to the
Employee for the taxable year under Code Section 402(g)(8).
ARTICLE IV. INVESTMENT OF CONTRIBUTIONS
4.01. PURCHASE OF SHARES. As soon as is practical after the Custodian
receives a Contribution, it shall invest such Contribution in shares of the
designated AIM Funds(s).
4.02. REPORTS AND VOTING OF SECURITIES. The Custodian shall deliver to
the Employer or, if applicable, his other Beneficiary, any notices,
prospectuses, financial statements, proxies and proxy solicitation materials
received by it with respect to investments made for the Employee's Account.
4.03. DIVIDEND. All capital gain distributions and dividends received
on the shares of the selected AIM Funds(s) shall be automatically reinvested in
shares of the Fund consistent with the Employees's investment instruction in
effect on the date such dividend or distribution is paid.
ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS
5.01. INSTRUCTIONS TO CUSTODIAN. The Custodian shall not be responsible
for making any distributions until such time as it has been notified in writing
by the Employee to begin making distributions. No distributions will be made
upon the death of the Employee unless the Custodian has been notified in
writing of the Employee's death. The Custodian may require adequate
verification of such death. Distributions to the Employee (or, if applicable,
his or her Beneficiary) of amounts in the Account shall be made in cash and/or,
if the Distributor consents, in kind.
5.02. EMPLOYEE WITHDRAWALS.
(a) After Attainment of Age 59-1/2. At any time after the Employee
attains age 59-1/2, he or she may withdraw amounts from his or her Account by
making written instructions to the Custodian as to the amounts to be so
withdrawn.
(b) Hardship Withdrawals. An Employee who has a financial hardship, as
determined by the Employer, and who has made all available withdrawals
pursuant to the paragraph above and pursuant to the provisions of any other
plans of the Employer and any related entities of which he is a member and who
has obtained all available loans pursuant to the provisions of any other plans
of the Employer and any related entities of which he or she is a member may
withdraw from his Account an amount not to exceed the lesser of the balance of
21
<PAGE> 10
his Account or the amount determined by the Employer as being available for
withdrawal pursuant to this paragraph. For purposes of this paragraph,
financial hardship means the immediate and heavy financial needs of the
Employee. A withdrawal based upon financial hardship pursuant to this
paragraph shall not exceed the amount required to meet the immediate financial
need created by the hardship and not reasonably available from other resources
of the Employee. The determination of the existence of an Employee's financial
hardship and the amount required to be distributed to meet the need created by
the hardship shall be made by the Employer. A withdrawal shall be deemed to be
made on account of an immediate and heavy financial need of an Employee if the
withdrawal is on account of:
(i) medical expenses described in Section 213(d) of the code
incurred by the Employee, the Employee's spouse or any dependents of the
Employee (as defined in Section 152 of the Code);
(ii) purchase (excluding mortgage payments) of a principal
residence of the Employee;
(iii) payment of tuition for the next semester or quarter of
post-secondary education of the Employee, or the Employee's spouse, children or
dependents (as defined in Section 152 of the Code);
(iv) the need to prevent the eviction of the Employee from his
principal residence or foreclosure on the mortgage of the Employee's principal
residence;
(v) such other financial needs which the Commissioner of
Internal Revenue may deem to be immediate and heavy financial needs through the
publication of revenue rulings, notices and other documents of general
applicability, or
(vi) such other circumstances as the Employer determines, and
certifies, as an immediate and heavy financial need of the Employee in
accordance with applicable governmental regulations and procedures adopted by
the Employer.
The decision of the Employer shall be final and binding, provided that
all Employees similarly situated shall be treated in a uniform and
nondiscriminatory manner. The above notwithstanding, (a) withdrawals under
this paragraph from an Employee's Account shall be limited to the sum of the
Employee's Salary Reduction Contributions to his Account, plus income allocable
thereto and credited to the Employee's Account as of December 31, 1988, less
any previous withdrawals of such amounts. An Employee who makes a withdrawal
under this paragraph may not again make Salary Reduction Contributions or
employee contributions to the Account or to any other qualified or nonqualified
plan of the Employer or any related entity for a period of twelve months
following such withdrawal. Further, such Employee may not make Salary
Reduction Contributions to the Account or to any other plan maintained by the
Employer or any related entity for such Employee's taxable year immediately
following the taxable year of the withdrawal in excess of the applicable limit
set forth in Section 402(g) of the Code for such next taxable year less the
amount of such Employee's Salary Reduction Contributions for the taxable year
of the withdrawal. All hardship withdrawals shall be made by executing the
Financial Hardship Form prescribed by AIM Distributors and completed and signed
by the Employer and filing such form with AIM Distributors prior to the
proposed date of withdrawal.
5.03. DISTRIBUTIONS AT SEPARATION FROM SERVICE. Unless the Employee
otherwise irrevocably elects in writing within 60 days after the Employee's
separation from service with the Employer, and the Custodian consents to such
election, distribution of the Account shall be made in a lump sum 90 days after
the Employee's separation from service. If the Employee makes such an election,
distribution of the Account shall not commence until the date specified in such
election unless the Employee earlier dies or becomes disabled as defined in this
Agreement.
If the Employee wishes to make such an irrevocable election, he or she
may do so by filing a written notice with the Custodian in a form acceptable to
the Custodian. The written notice to the Custodian shall list the date on
which distribution shall commence, the period over which distribution shall be
made, and amount(s) of each distribution. The Employee may not elect either
(a) a date for commencement of distribution which delays the commencement of
distribution from the Account beyond April 1 following the calendar year during
which the Employee attains age 70 1/2 or (b) a form of distribution which
results in the present value (determined at the time distribution commences) of
payments to be made to the Employee over the Employee's life expectancy (as
determined under Section 1.72-9 of the Treasury Regulations) equaling less than
50% of the present value of the total payments to be made.
5.04. DISTRIBUTIONS AT THE EMPLOYEE'S DEATH. At the Employee's death,
if such Employee has not already specified the form of distribution, the
Beneficiary (or each beneficiary if there is more than one) may elect the form
of distribution. Such election, which will be irrevocable, must be in writing
and provided to the Custodian within 60 days calendar days after the Custodian
has received notification of the Employee's death. If such an election is not
made in the time provided, distribution of the Account shall be made in a lump
sum 90 days after the Custodian receives notification of the Employee's death.
Any form of distribution must comply with the following requirements:
(a) Death While Receiving Distributions. If the Employee had already
begun to receive distributions from the Account and the Employee's spouse is
not the Beneficiary, the Account balance which remains at the time of the
Employee's death shall be distributed to the Beneficiary at least as rapidly
as under the distribution method being used at the time of the Employee's death.
(b) Death Prior to Receiving Distributions. If the Employee had not
begun to receive distributions at his or her death and the Employee's spouse is
not the Beneficiary, the entire Account balance which remains at the time of
the Employee's death shall be distributed to the Beneficiary either (i) within
five (5) years, or (ii) in installments over a period not exceeding the life
expectancy of the Beneficiary (as determined as of the date of the Employee's
death by using the return multiples contained in Section 1.72-9 of the Treasury
Regulations), provided that such distributions commence within one year after
the date of the Employee's death.
(c) Spoused Beneficiary. If the Employee's spouse is the Beneficiary,
regardless of whether distributions to the Employee have already commenced,
this Section 5.04 shall be applied to the spouse as though the spouse were the
Employee and, as though the spouse, as Employee, separated from service with the
Employer on the date of the Employee's death.
5.05. DISTRIBUTION UPON DISABILITY. If the Employee becomes disabled as
defined in this Agreement after his or her separation from service with the
Employer, he or she shall receive a lump sum distribution of the Account 90
days after the date of such Disability unless, within 60 days after the date of
such Disability, the Employee elects another time for commencement and/or form
of distribution and the Custodian consents to such election. The Employee may
not elect either (a) a date for commencement of distribution which delays the
commencement of distribution from the Account beyond the first April 1
following the calendar year during which the Employee attains age 70 1/2 or (b)
a form of distribution which results in the present value (determined at the
time distribution commences) of payments to be made to the Employee over the
Employee's life expectancy (as determined under Section 1.72-9 of the Treasury
Regulations) equaling less than 50% of the present value of the total payments
to be made.
5.06. DISTRIBUTION OF EXCESS DEFERRAL. Upon written notice to the
Custodian from the Employee, by the first March 1 following the close of the
taxable year of the Employee, that "excess deferrals" (as that term is defined
in Code Section 402(g)(2)(A)) have been made with respect to the Account for
such taxable year, the Custodian shall distribute to the Employee such "excess
deferrals" not later than the first April 15 following the close of such
taxable year. The Employer shall have sole responsibilities for determining
such an excess deferrals and timely notification to the Custodian.
5.07. DISTRIBUTION TO INCOMPETENTS. If a distribution is payable to a
person known by the Custodian to be a minor or person under a legal disability,
the Custodian may, in its absolute discretion, make all or any part of the
distribution to (a) a parent of such person, (b) the guardian, committee or
other legal representative, wherever appointed, of such person, including a
custodian for such person under a Uniform Gifts to Minors Act or similar act,
(c) any person having the control and custody of such person, or (d) to such
person directly.
ARTICLE VI. CUSTODIAN
6.01. DUTIES. The Custodian shall:
(a) Receive transmitted Contributions;
(b) Provide safekeeping for the assets in the Account;
(c) Collect income;
(d) Execute orders for purchase, sale or exchange of shares of
the AIM Fund(s) and make settlements in accordance with general practice;
(e) Maintain records of all transactions in the Account;
(f) Transmit to each Employee, not less frequently than
annually, appropriate statements of the amount of the Custodian's compensation,
if any, charged to the Account;
(g) File with the Internal Revenue Service and/or any other
government agency such returns, reports, forms and other information as may be
prescribed as the responsibility of the Custodian in its capacity as Custodian
by the applicable statue and regulations thereunder; and
(h) Perform all other duties and services consistent with the
purposes and intentions of the Agreement.
The Custodian may perform any of its administrative duties through other
persons designated by the Custodian from time to time, including persons
otherwise unaffiliated with the Custodian.
6.02 SHARE REDEMPTIONS. If cash funds are required to pay taxes, fees,
or other expenses pursuant to Article VI or to make payments to the Employee or
his or her Beneficiary pursuant to Article V, the Employee (or Beneficiary, if
applicable) shall redeem shares of the AIM Fund(s) held in the Employee's
Account.
6.03. LIMITATIONS ON LIABILITIES AND DUTIES.
(a) The Custodian shall be fully protected in acting or
omitting to take any action in reliance upon any document, order or other
direction believed by the Custodian to be genuine and properly given.
Conversely, the Custodian shall
22
<PAGE> 11
be fully protected in acting or omitting to take any action in reliance on its
belief that any document, order or other direction either is not genuine or was
not properly given.
(b) To the extent permitted by law, 30 days after providing to the
Employee the statements required under Section 6.01(f), the Custodian shall be
released and discharged from all liability to the Employee or any third party
as to the matters contained in such statement unless the Employee files written
objections with the Custodian within such 30-day period.
(c) In no event shall the Custodian or Distributor be under a fiduciary
duty to the Employee in regard to the selection of investments or be liable for
any loss incurred on account of a selected investment.
(d) The Custodian and Distributor shall have no responsibility with
regard to the initial or continued qualification of the Account under Code
Section 403(b)(7) or with regard to whether the Account or any Contributions to
the Account satisfy any applicable minimum participation, coverage or
nondiscrimination requirements under the Code.
(e) Neither the Custodian nor the Distributor shall be obligated to
determine the amount of any Contribution due or to collect any Contribution
from the Employee or Employer.
(f) Neither the Custodian nor the Distributor shall be held responsible
for determining the amount, character, or timing of any distribution to the
Employee.
(g) Neither the Custodian nor the Distributor shall have
responsibility, and the Employee shall have sole responsibility, with respect
to the computation of the Employee's "excursion allowance" as defined in Code
Section 403(b)(2), any applicable limitation(s) on contributions under Code
Section 402(g) and Code Section 415(c), any election available to the Employee
under Code Section 415, or any matters relating to any tax consequences with
respect to Contributions, Account earnings, Account distributions, transfers,
or rollovers.
(h) The Custodian shall not be required to carry out any instructions
not given in accordance with this Agreement and neither the Custodian nor the
Distributor shall be liable for loss of income, or for appreciation or
depreciation in share value that shall result from the Custodian's failure to
follow instructions not given in accordance with this Agreement.
(i) If instructions are received that, in the opinion of the Custodian,
are unclear, neither the Custodian nor the Distributor shall be liable for loss
of income, or for appreciation or depreciation in share value during the period
preceding the Custodian's receipt of written clarification of the instructions.
(j) The Custodian shall have no responsibility to make any distribution
or process any withdrawal by order of the Employee or Beneficiary unless and
until the requisite written instructions specify the occasion for such action
and the Custodian is furnished with any and all applications, certificates, tax
waivers, signature guarantees and other documents (including proof of any legal
representative's authority) deemed necessary or advisable by the Custodian.
(k) The Custodian shall neither assume nor have any duty of inquiry
about any matter arising under the Plan.
(l) Neither the Custodian nor the Distributor shall have any liability
to the Employee or Beneficiary for any tax penalty or other damages resulting
from any inadvertent failure by the Custodian to make a distribution under this
Agreement.
(m) Neither the Custodian nor the Distributor shall be liable for
interest on temporary cash balances, if any, maintained in the Account.
(n) To the extent permitted by law, the Employee shall always fully
indemnify the Custodian and hold it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement and
matter which it contemplates (except that which arises due to the Custodian's
gross negligence or willful misconduct) or (ii) with respect to making or
failing to make distribution, other than for failure to make distribution in
accordance with instructions therefore which are in full compliance with both
Article IX and this Section 6.03.
(o) Except as required by law, the Custodian shall not be obligated or
expected to commence or to defend a legal action or proceeding in connection
with this Agreement, unless the Custodian and the Employer agree that the
Custodian will defend a given legal action and the Custodian is fully
indemnified for doing so to its satisfaction.
(p) In no event shall the Employee, Employer, or Distributor have any
responsibility or liability for any acts or omissions of the Custodian (or its
agents or designees) hereunder.
6.04 COMPENSATION. In consideration for its services hereunder the
Custodian shall be entitled to receive the applicable fees specified in its
then current fee schedule, if any. The Custodian may substitute a revised fee
schedule from time to time upon 30 days' written notice to the Employer or
Employee. The Custodian shall be entitled to such reasonable additional fees as
it may from time to time determine for services required of it and not clearly
identified on the fee schedule.
6.05 RESIGNATION AND REMOVAL. The Custodian may resign at any time by
giving at least 30 days' written notice to the Employer or Employee. The
Distributor may remove the Custodian hereunder by giving at least 30 days'
written notice to the Custodian. In each case, the Distributor shall designate
a successor custodian qualified pursuant to Section 2.07 hereof, which
successor custodian shall accept such appointment by a writing to be submitted
to the Employer or Employee and the Custodian.
On the effective date of its resignation or removal, the Custodian
shall transfer to the designated successor custodian the assets and records (or
copies thereof) of the Account provided, however, that the Custodian may retain
whatever assets it deems necessary for payment of its fees, costs, expenses,
compensation and any other liabilities which constitute a charge on or against
the assets of the Account or on or against the Custodian.
ARTICLE VII. FEES, TAXES AND OTHER EXPENSES
Any income taxes or other taxes of any kind whatsoever that may be
levied or assessed upon or in respect of the Account (including any transfer
taxes incurred in connection with the investment and reinvestment of Account
assets), expenses, fees and administrative costs incurred by the Custodian in
the performance of its duties (including fees for legal services rendered to
the Custodian), and the Custodian's compensation as determined under Section
6.04, if any, shall constitute a charge upon the assets of the Account. At the
Custodian's option, such fee, tax or expense shall be paid from the Account or
directly by the Employee.
ARTICLE VIII. PROTECTION OF EMPLOYEE BENEFITS
At no time shall any part of the Account be used for purposes other
than for the exclusive benefit of the Employee. The Employee's rights to
Contributions shall be nonforfeitable at all times after such Contributions are
transferred to the Custodian.
ARTICLE IX. BENEFICIARY DESIGNATION
Each Employee may submit to the Custodian a properly executed written
Designation of Beneficiary acceptable to the Custodian who will receive any
undistributed assets held in the Account at the time of the Employee's death.
Any such Designation of Beneficiary shall not be effective unless it is filed
during the Employee's lifetime with the Custodian at the Custodian's home
office. Whether or not fully dispositive of the Account, the most recently
filed Designation of Beneficiary accepted by the Custodian shall be controlling
and all previously filed designations shall be considered superceded and shall
have no effect. To the extent that the Account is not fully disposed of at the
time of the Employee's death, it shall go to the Employee's surviving spouse,
if any; otherwise, to the Employee's estate. If a Beneficiary dies while
receiving distributions, the portion of the Account to which the Beneficiary
would have been entitled (had he or she survived) shall be paid to the
Beneficiary's beneficiary or beneficiaries (or if impossible, to the
Beneficiary's estate) in a lump sum within 90 days after the Custodian receives
notification of the Beneficiary's death.
ARTICLE X. AMENDMENT
10.01. BY THE DISTRIBUTOR. The Distributor may amend this Agreement in
its entirety or any portion thereof. The Distributor shall provide copies of
such amendment to the Employer and/or Employee. Neither this Section nor any
other portion of this agreement shall impose on the Distributor an affirmative
obligation to amend the Agreement.
10.02. LIMITATIONS. No amendment shall be made:
(a) Which would cause or permit any part of the Account to be
diverted to purposes other than for the exclusive benefit of the Employee
and/or his or her Beneficiary, or cause or permit any portion of such assets to
revert to or become the property of the Employer;
(b) Without the written consent of the Custodian; or
(c) Which would retroactively deprive any Employee of any benefit to
which he or she was entitled under the Agreement, unless such amendment is
necessary, in the opinion of counsel, to conform the Agreement to, or satisfy
the conditions of, Code Section 403(b), any other law, or any Governmental
regulation or ruling, provided that this prohibition shall not be construed to
prohibit prospective amendment of the Agreement (including prospective
amendment to eliminate a benefit) where such prospective amendment is permitted
by law.
ARTICLE XI. TERMINATION
11.01. AUTOMATIC TERMINATION ON DISTRIBUTION. This Agreement shall
terminate when all the assets held in the Account established hereunder have
been distributed or otherwise transferred out of the Account.
11.02. TERMINATION ON AUTOMATIC DISQUALIFICATION. This Agreement shall
terminate if, after notification by the Internal Revenue Service that the
Employee's Account does not qualify under Code Section 403(b)(7), the Employer
and/or Distributor do not make the amendments necessary to so qualify the
Account. On such
23
<PAGE> 12
termination of this Agreement, the Custodian shall distribute in cash or in
kind, to the Employee or, in the event of the Employee's death, to the
Beneficiary, subject to the Custodian's right to reserve funds as provided in
Section 6.05.
Article XII. Loans
12.01. LOAN APPLICATION AND CONDITIONS. The Custodian may make a loan
to an Employee from the Employee's Account upon the Custodian's receipt of the
Employee's written application in a form acceptable to the Custodian, provided
the following conditions are satisfied:
(i) each loan shall satisfy rules adopted by the Custodian regarding
the minimum and maximum loan amounts permitted, which rules may be changed at
any time, provided, however, that in no event shall the total of all
outstanding loans to any Employee exceed the lesser of $50,000 (reduced by the
highest outstanding balance of loans from Account during the one year period
ending the day before the day on which such loan is made), or 50% of the
balance in the Employee's Account;
(ii) each loan shall be evidenced by the Employee's execution of a
personal demand note on a form supplied or approved by the Custodian, and each
note shall specify a reasonable rate of interest as determined by the Custodian
and shall require that the loan be repaid by the Employee in approximately
equal installments (not less frequently than quarterly) over a specified period
of time not exceeding five years;
(iii) each loan shall be secured by the Employee's Account balance.
12.02. DEFAULT. If the Employee dies or fails to pay any installment of
the loan when due, the unpaid balance of the loan shall become immediately due
and payable. The Employee may satisfy the loan by paying the outstanding
balance of the loan within such time as may be specified in the note and
according to rules adopted by the Custodian. If the loan and interest are not
repaid within the time specified, the Custodian shall treat the unpaid balance
as a deemed distribution from the Employee's Account, and shall offset the
unpaid balance before making any distribution payment otherwise due under this
Agreement to the Employee or his Beneficiary.
If an Employee does not repay any portion of the principal amount of a
loan within the required term, the Employee shall continue to be liable for the
unpaid balance of the loan including interest owed on principal payments not
made.
12.03. RULES OF ADMINISTRATION. The Custodian shall adopt such rules as
from time to time it deems proper under this Article XII (including, but not
limited to rule regarding maximum and minimum amounts of loans, and permitted
number of loans outstanding) which rules shall be applied on a uniform and
non-discriminatory basis. The Custodian reserves the right to charge an
administrative fee for processing and maintaining loans.
Article XIII. Miscellaneous.
13.01. APPLICABLE LAW. To the extent not preempted by Federal law, this
Agreement shall be construed and administered in accordance with the laws of
the state in which the home office of the Custodian is located. No provision of
this Agreement shall be construed to conflict with any provision of an Internal
Revenue Service regulation, ruling or order affecting the status of this
Agreement under Code Section 403(b)(7).
13.02. EMPLOYER'S SIGNATURE. If the Employer does not sign the
Application and is not required to do so under the Code and the regulations
thereunder, the Employee, to the extent allowed by law, assumes all obligations
and responsibilities of the Employer under this Agreement.
13.03. CHANGE OF ADDRESS. The Employer or if permitted the Custodian,
the Employee, shall notify the Custodian in writing of any change of address
within 30 days of such change.
13.04. NOTICE. Any notice from the Custodian to the Employee pursuant
to this Agreement shall be effective when sent by U.S. Mail to the address of
record of the Employer or Employee. Any notice to the Custodian pursuant to
this Agreement shall be by first class mail addressed to its home of office.
13.05. SUCCESSORS. This Agreement shall be binding upon and shall inure
the benefit of the successors in interest of the parties hereto.
13.06. CONSTRUCTION. It is intended that this Agreement, together with
the other documents that compose the 403(b)(7) arrangement pursuant to which
the Employee's funds are invested under this Agreement, qualify as a custodial
account under Code Section 403(b)(7). This Agreement shall be construed and
limited by applicable laws, and the powers and discretions conferred hereunder
shall be exercised in a manner consistent with that purpose. Subject to the
foregoing provisions of this Section 12.06, in the event of any conflict
between these Articles I through XII and the documents incorporated in this
Agreement by reference, the provisions of these Articles I through XII shall
prevail.
13.07. SEPARABILITY. If any provision of this Agreement shall be held
invalid or illegal for any reason, such determination shall not affect any
remaining provisions of this Agreement, but this Agreement shall not be
construed and enforced as if such invalid or illegal provision had never been
included in this Agreement.
13.08. STATUTORY REQUIREMENTS. In the event any applicable state or
local law, regulating or rule conflicts with and/or supplements the terms of
this Agreement, such law, regulation or rule shall be deemed to supersede
and/or supplement the terms of this Agreement, provided that the Distributor and
the Custodian receive written notice of such law, regulation or rule.
13.09. RETIREMENT PLAN PROVISIONS SHALL CONTROL. In the event
Contributions are being made to the Account pursuant to any retirement plan or
program sponsored by the Employer, to the extent any provisions of this
Agreement are inconsistent with such retirement plan or program, the provisions
of the Employer's retirement plan or program shall control, provided:
(a) such provisions are not contrary to the rules and regulations under
Section 403(b)(7) of the Code; and
(b) such provisions do not impose any additional responsibilities or
duties on the Custodian without its prior written consent. The Employer shall
be responsible for delivering the most recent copy of any such retirement plan
or program to the Custodian.
13.10. ERISA REQUIREMENTS. If the Agreement is determined to constitute
part of an "employee benefit plan" established or maintained by the Employer
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, as amended, then the Employer shall have sole responsibility and be
solely responsible for ensuring that such employee benefit plan complies at all
times within such law, including, but not limited to, any reporting disclosure
requirement thereunder.
13.11. PLAN ADMINISTRATION. Absent a separate written agreement to the
contrary, neither the Custodian nor the Distributor shall be considered the
plan administrator for any purpose under the Code or the Employee Retirement
Income Security Act of 1974, as amended.
24
<PAGE> 1
EXHIBIT 15(a)(8)
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(CLASS A SHARES)
SECTION 1. AIM International Funds, Inc. (the "Fund") on behalf
of the series of its common stock set forth in Schedule A to this plan (the
"Portfolios"), may act as a distributor of the shares, other than the Class B
shares, of such Portfolios (hereinafter referred to as "Class A Shares") of
which the Fund is the issuer, pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"), according to the terms of this
Distribution Plan (the "Plan").
SECTION 2. The Fund may incur as a distributor of the Class A
Shares, expenses at the annual rates set forth on Schedule A hereto of the
average daily net assets of each class of shares of the Class A Shares, subject
to any limitations imposed from time to time by applicable rules of the
National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Section 2 may be used to finance
any activity which is primarily intended to result in the sale of the Class A
Shares, including, but not limited to, expenses of organizing and conducting
sales seminars, advertising programs, finders fees, printing of prospectuses
and statements of additional information (and supplements thereto) and reports
for other than existing shareholders, preparation and distribution of
advertising material and sales literature, overhead, supplemental payments to
dealers and other institutions as asset-based sales charges. Amounts set forth
in Section 2 may also be used to finance payments of service fees under a
shareholder service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund has suspended or
otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by Distributors
of shareholder service arrangements with respect to the Class
A Shares. The maximum service fee paid to any service
provider shall be twenty-five one-hundredths of one percent
(0.25%) per annum of the average daily net assets of the Fund
attributable to the Class A Shares owned by the customers of
such service provider.
<PAGE> 2
(b) Pursuant to this program, Distributors may
enter into agreements substantially in the form attached
hereto as Exhibit A ("Service Agreements") with such
broker-dealers ("Dealers") as may be selected from time to
time by Distributors for the provision of distribution-related
personal shareholder services in connection with the sale of
Class A Shares to the Dealers' clients and customers
("Customers") who may from time to time directly or
beneficially own Class A Shares. The distribution-related
personal continuing shareholder services to be rendered by
Dealers under the Service Agreements may include, but shall
not be limited to, the following: (i) distributing sales
literature; (ii) answering routine Customer inquiries
concerning the Fund and the Class A Shares; (iii) assisting
Customers in changing dividend options, account designations
and addresses, and in enrolling into any of several retirement
plans offered in connection with the purchase of Class A
Shares; (iv) assisting in the establishment and maintenance of
customer accounts and records, and in the processing of
purchase and redemption transactions; (v) investing dividends
and capital gains distributions automatically in Class A
Shares; and (vi) providing such other information and services
as the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit B ("Bank Agreements") with selected
banks acting in an agency capacity for their customers
("Banks"). Banks acting in such capacity will provide some or
all of the shareholder services to their customers as set
forth in the Bank Agreements from time to time.
(d) Distributors may also enter into Agency
Pricing Agreements substantially in the form attached hereto
as Exhibit C ("Pricing Agreements") with selected retirement
plan service providers acting in an agency capacity for their
customers ("Retirement Plan Providers"). Retirement Plan
Providers acting in such capacity will provide some or all of
the shareholder services to their customers as set forth in
the Pricing Agreements from time to time.
(e) Distributors may also enter into Shareholder
Service Agreements substantially in the form attached hereto
as Exhibit D ("Bank Trust Department Agreements and Brokers
for Bank Trust Department Agreements") with selected bank
trust departments and brokers for bank trust departments.
Such bank trust departments and brokers for bank trust
departments will provide some or all of the shareholder
services to their customers as set forth in the Bank Trust
Department Agreements and Brokers for Bank Trust Department
Agreements from time to time.
SECTION 5. This Plan shall not take effect until it has been
approved by a vote of at least a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of such Class A Shares.
SECTION 6. This Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority of
both (a) the Board of Directors of the Fund, and (b) those directors of the
Fund who are not "interested persons" of the Fund (as defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Dis-interested Directors"), cast in
person at a meeting called for the purpose of voting on this Plan or such
agreements.
<PAGE> 3
SECTION 7. Unless sooner terminated pursuant to Section 9, this
Plan shall continue in effect until June 30, 1998 and thereafter shall continue
in effect so long as such continuance is specifically approved, at least
annually, in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of
Directors and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 9. This Plan may be terminated, with respect to the
Class A Shares of each Portfolio, at any time by vote of a majority of the
Dis-interested Directors, or by vote of a majority of the outstanding voting
securities of the Class A Shares of such Portfolios. If this Plan is
terminated, the obligation of the Fund to make payments pursuant to this Plan
will also cease and the Fund will not be required to make any payments beyond
the termination date even with respect to expenses incurred prior to the
termination date.
SECTION 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of
the Dis-interested Directors or by a vote of the outstanding
voting securities of the Class A Shares of each Portfolio, on
not more than sixty (60) days' written notice to any other
party to the agreement; and
(b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially
the amount of distribution expenses provided for in Section 2 hereof unless
such amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
AIM INTERNATIONAL FUNDS, INC.
(on behalf of its Class A Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ CAROL F. RELIHAN
----------------------------- ------------------------------
Assistant Secretary Senior Vice President
Effective as of September 10, 1994, as amended as of September 10, 1994.
Amended and restated for all Portfolios as of June 30, 1997.
-3-
<PAGE> 4
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ----------------- ----------
<S> <C> <C> <C>
AIM International Equity Fund 0.05% 0.25% 0.30%
(Class A Shares)
AIM Global Aggressive Growth Fund 0.25% 0.25% 0.50%
(Class A Shares)
AIM Global Growth Fund 0.25% 0.25% 0.50%
(Class A Shares)
AIM Global Income Fund 0.25% 0.25% 0.50%
(Class A Shares)
</TABLE>
-4-
<PAGE> 1
EXHIBIT 15(a)(9)
SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(CLASS B SHARES)
(SECURITIZATION FEATURE)
SECTION 1. AIM International Funds, Inc. (the "Fund"), on behalf
of the series of common stock set forth in Schedule A to this plan (the
"Portfolios"), may pay for distribution of the Class B Shares of such
Portfolios (the "Shares") which the Fund issues from time to time, pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), according
to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur expenses for and pay any
institution selected to act as the Fund's agent for distribution of the Shares
of any Portfolio from time to time (each, a "Distributor") at the rates set
forth on Schedule A hereto based on the average daily net assets of each class
of Shares subject to any applicable limitations imposed by the Conduct Rules of
the National Association of Securities Dealers, Inc. in effect from time to
time (the "Conduct Rules"). All such payments are the legal obligation of the
Fund and not of any Distributor or its designee.
SECTION 3.
(a) Amounts set forth in Section 2 may be used to
finance any activity which is primarily intended to result in
the sale of the Shares, including, but not limited to,
expenses of organizing and conducting sales seminars and
running advertising programs, payment of finders fees,
printing of prospectuses and statements of additional
information (and supplements thereto) and reports for other
than existing shareholders, preparation and distribution of
advertising material and sales literature, payment of overhead
and supplemental payments to dealers and other institutions as
asset-based sales charges. Amounts set forth in Section 2 may
also be used to finance payments of service fees under a
shareholder service arrangement, which may be established by
each Distributor in accordance with Section 4, the costs of
administering the Plan. To the extent that amounts paid
hereunder are not used specifically to reimburse the
Distributor for any such expense, such amounts may be treated
as compensation for the Distributor's distribution-related
services. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund
has suspended or otherwise limited sales.
(b) Subject to the provisions of Sections 8 and 9
hereof, amounts payable pursuant to Section 2 in respect of
Shares of each Portfolio shall be paid by the Fund to the
Distributor in respect of such Shares or, if more than one
institution has acted or is acting as Distributor in respect
of such Shares, then amounts payable pursuant to Section 2 in
respect of such Shares shall be paid to each such Distributor
in proportion to the number of such Shares sold by or
attributable to such Distributor's distribution efforts in
respect of such Shares in accordance with
- 1 -
<PAGE> 2
allocation provisions of each Distributor's distribution
agreement (the "Distributor's 12b-1 Share") notwithstanding
that such Distributor's distribution agreement with the Fund
may have been terminated. That portion of the amounts paid
under the Plan that is not paid or advanced by the Distributor
to dealers or other institutions that provide personal
continuing shareholder service as a service fee pursuant to
Section 4 shall be deemed an asset-based sales charge.
(c) Any Distributor may assign, transfer or
pledge ("Transfer") to one or more designees (each an
"Assignee"), its rights to all or a designated portion of its
Distributor's 12b-1 Share from time to time (but not such
Distributor's duties and obligations pursuant hereto or
pursuant to any distribution agreement in effect from time to
time, if any, between such Distributor and the Fund), free and
clear of any offsets or claims the Fund may have against such
Distributor. Each such Assignee's ownership interest in a
Transfer of a specific designated portion of a Distributor's
12b-1 Share is hereafter referred to as an "Assignee's 12b-1
Portion." A Transfer pursuant to this Section 3(c) shall not
reduce or extinguish any claims of the Fund against the
Distributor.
(d) Each Distributor shall promptly notify the
Fund in writing of each such Transfer by providing the Fund
with the name and address of each such Assignee.
(e) A Distributor may direct the Fund to pay an
Assignee's 12b-1 Portion directly to such Assignee. In such
event, the Distributor shall provide the Fund with a monthly
calculation of the amount of (i) the Distributor's 12b-1
Share, and (ii) each Assignee's 12b-1 Portion, if any, for
such month (the "Monthly Calculation"). In such event, the
Fund shall, upon receipt of such notice and Monthly
Calculation from the Distributor, make all payments required
under such distribution agreement directly to the Assignee in
accordance with the information provided in such notice and
Monthly Calculation upon the same terms and conditions as if
such payments were to be paid to the Distributor.
(f) Alternatively, in connection with a Transfer,
a Distributor may direct the Fund to pay all of such
Distributor's 12b-1 Share from time to time to a depository or
collection agent designated by any Assignee, which depository
or collection agent may be delegated the duty of dividing such
Distributor's 12b-1 Share between the Assignee's 12b-1 Portion
and the balance of the Distributor's 12b-1 Share (such
balance, when distributed to the Distributor by the depository
or collection agent, the "Distributor's 12b-1 Portion"), in
which case only the Distributor's 12b-1 Portion may be subject
to offsets or claims the Fund may have against such
Distributor.
SECTION 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by the
Distributor of shareholder service arrangements with respect
to the Shares. The maximum service fee payable to any
provider of such shareholder service shall be twenty-five
one-hundredths of one percent (0.25%) per annum of the average
daily net assets of the Shares attributable to the customers
of such service provider. All such payments are the legal
obligation of the Fund and not of any Distributor or its
designee.
- 2 -
<PAGE> 3
(b) Pursuant to this Plan, the Distributor may
enter into agreements substantially in the form attached
hereto as Exhibit A ("Service Agreements") with such
broker-dealers ("Dealers") as may be selected from time to
time by the Distributor for the provision of continuing
shareholder services in connection with Shares held by such
Dealers' clients and customers ("Customers") who may from time
to time directly or beneficially own Shares. The personal
continuing shareholder services to be rendered by Dealers
under the Service Agreements may include, but shall not be
limited to, some or all of the following: (i) distributing
sales literature; (ii) answering routine Customer inquiries
concerning the Fund and the Shares; (iii) assisting Customers
in changing dividend options, account designations and
addresses, and enrolling in any of several retirement plans
offered in connection with the purchase of Shares; (iv)
assisting in the establishment and maintenance of Customer
accounts and records, and in the processing of purchase and
redemption transactions; (v) investing dividends and capital
gains distributions automatically in Shares; (vi) performing
sub-accounting; (vii) providing periodic statements showing a
Customer's shareholder account balance and the integration of
such statements with those of other transactions and balances
in the Customer's account serviced by such institution; (viii)
forwarding applicable prospectuses, proxy statements, and
reports and notices to Customers who hold Shares; and (ix)
providing such other information and administrative services
as the Fund or the Customer may reasonably request.
(c) The Distributor may also enter into Bank
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit B ("Bank Agreements") with selected
banks and financial institutions acting in an agency capacity
for their customers ("Banks"). Banks acting in such capacity
will provide some or all of the shareholder services to their
customers as set forth in the Bank Agreements from time to
time.
(d) The Distributor may also enter into Agency
Pricing Agreements substantially in the form attached hereto
as Exhibit C ("Pricing Agreements") with selected retirement
plan service providers acting in an agency capacity for their
customers ("Retirement Plan Providers"). Retirement Plan
Providers acting in such capacity will provide some or all of
the shareholder services to their customers as set forth in
the Pricing Agreements from time to time.
(e) The Distributor may also enter into
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit D ("Bank Trust Department
Agreements and Brokers for Bank Trust Department Agreements")
with selected bank trust departments and brokers for bank
trust departments. Such bank trust departments and brokers
for bank trust departments will provide some or all of the
shareholder services to customers as set forth in the Bank
Trust Department Agreements and Brokers for Bank Trust
Department Agreements from time to time.
- 3 -
<PAGE> 4
SECTION 5. This Plan shall not take effect until (i) it has
been approved, together with any related agreements, by votes of the majority
of both (a) the Board of Directors of the Fund, and (b) those directors of the
Fund who are not "interested persons" of the Fund (as defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Dis-interested Directors"), cast in
person at a meeting called for the purpose of voting on this Plan or such
agreements, and (ii) the execution by the Fund and A I M Distributors, Inc. of
a Master Distribution Agreement in respect of the Shares.
SECTION 6. Unless sooner terminated pursuant to Section 8, this
Plan shall continue in effect until June 30, 1998, and thereafter shall
continue in effect so long as such continuance is specifically approved, at
least annually, in the manner provided for approval of this Plan in Section 5.
SECTION 7. Each Distributor shall provide to the Fund's Board of
Directors and the Board of Directors shall review, at least quarterly, a
written report of the amounts expended for distribution of the Shares and the
purposes for which such expenditures were made.
SECTION 8. This Plan may be terminated with respect to the
Shares of any Portfolio at any time by vote of a majority of the Dis-interested
Directors, or by vote of a majority of outstanding Shares of such Portfolio.
Upon termination of this Plan with respect to any or all such Classes, the
obligation of the Fund to make payments pursuant to this Plan with respect to
such Classes shall terminate, and the Fund shall not be required to make
payments hereunder beyond such termination date with respect to expenses
incurred in connection with Shares sold prior to such termination date,
provided, in each case that each of the requirements of a Complete Termination
of this Plan in respect of such class, as defined below, are met. A
termination of this Plan with respect to any or all Shares of any or all
Portfolios shall not affect the obligation of the Fund to withhold and pay to
any Distributor contingent deferred sales charges to which such distributor is
entitled pursuant to any distribution agreement. For purposes of this Section
8 a "Complete Termination" of this Plan in respect of any Portfolio shall mean
a termination of this Plan in respect of such Portfolio, provided that: (i) the
Dis-interested Directors of the Fund shall have acted in good faith and shall
have determined that such termination is in the best interest of the Fund and
the shareholders of such Portfolio; (ii) and the Fund does not alter the terms
of the contingent deferred sales charges applicable to Shares outstanding at
the time of such termination; and (iii) unless the applicable Distributor at
the time of such termination was in material breach under the distribution
agreement in respect of such Portfolio, the Fund shall not, in respect of such
Portfolio, pay to any person or entity, other than such Distributor or its
designee, either the asset-based sales charge or the service fee (or any
similar fee) in respect of the Shares sold by such Distributor prior to such
termination.
SECTION 9. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated with
respect to the Shares of any or all Portfolios at any time,
without payment of any penalty, by vote of a majority of the
Dis-interested Directors or by a vote of the majority of the
outstanding Shares of such Portfolio, on not more than sixty
(60) days' written notice to any other party to the agreement;
and
- 4 -
<PAGE> 5
(b) that such agreement shall terminate
automatically in the event of its assignment; provided,
however, that, subject to the provisions of Section 8 hereof,
if such agreement is terminated for any reason, the obligation
of the Fund to make payments of (i) the Distributor's Share in
accordance with the directions of the Distributor pursuant to
Section 3(e) or (f) hereof if there exist Assignees for all or
any portion of such Distributor's 12b-1 Share, and (ii) the
remainder of such Distributor's 12b-1 Share to such
Distributor if there are no Assignees for such Distributor's
Share, pursuant to such agreement and this Plan will continue
with respect to the Shares until such Shares are redeemed or
automatically converted into another class of shares of the
Fund.
SECTION 10. This Plan may not be amended to increase materially
the amount of distribution expenses provided for in Section 2 hereof unless
such amendment is approved by a vote of at least a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Shares, and no material
amendment to the Plan shall be made unless approved in the manner provided for
in Section 5 hereof.
AIM INTERNATIONAL FUNDS, INC.
(on behalf of its Class B Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ CAROL F. RELIHAN
----------------------------- ------------------------------
Assistant Secretary Senior Vice President
Effective as of September 10, 1994, as amended as of September 10, 1994, and as
amended and restated as of May 2, 1995.
Amended and restated for all Portfolios as of June 30, 1997.
- 5 -
<PAGE> 6
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ----------------- ----------
<S> <C> <C> <C>
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Global Growth Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM Global Income Fund 0.75% 0.25% 1.00%
(Class B Shares)
AIM International Equity Fund 0.75% 0.25% 1.00%
(Class B Shares)
</TABLE>
- 6 -
<PAGE> 1
EXHIBIT 15(a)(10)
FORM OF
SECONDED
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(CLASS A AND CLASS C SHARES)
SECTION 1. AIM International Funds, Inc. (the "Fund") on behalf
of the series of its common stock set forth in Schedule A to this plan (the
"Portfolios"), may act as a distributor of the shares, other than the Class B
shares, of such Portfolios (hereinafter referred to as "Class A and Class C
Shares") of which the Fund is the issuer, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"), according to the terms of this
Distribution Plan (the "Plan").
SECTION 2. The Fund may incur as a distributor of the Class A
and Class C Shares, expenses at the annual rates set forth on Schedule A hereto
of the average daily net assets of the Fund attributable to the Class A and
Class C Shares, subject to any limitations imposed from time to time by
applicable rules of the National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Section 2 may be used to finance
any activity which is primarily intended to result in the sale of the Class A
and Class C Shares, including, but not limited to, expenses of organizing and
conducting sales seminars, advertising programs, finders fees, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature, overhead, supplemental payments
to dealers and other institutions as asset-based sales charges. Amounts set
forth in Section 2 may also be used to finance payments of service fees under a
shareholder service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund has suspended or
otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by Distributors
of shareholder service arrangements with respect to the Class
A and Class C Shares. The maximum service fee paid to any
service provider shall be twenty-five one-hundredths of one
percent (0.25%) per annum of the average daily net assets of
the Fund attributable to the Class A and Class C Shares owned
by the customers of such service provider.
<PAGE> 2
(b) Pursuant to this program, Distributors may
enter into agreements substantially in the form attached
hereto as Exhibit A ("Service Agreements") with such
broker-dealers ("Dealers") as may be selected from time to
time by Distributors for the provision of distribution-related
personal shareholder services in connection with the sale of
Class A and Class C Shares to the Dealers' clients and
customers ("Customers") who may from time to time directly or
beneficially own Class A and Class C Shares. The
distribution-related personal continuing shareholder services
to be rendered by Dealers under the Service Agreements may
include, but shall not be limited to, the following: (i)
distributing sales literature; (ii) answering routine Customer
inquiries concerning the Fund and the Class A and Class C
Shares; (iii) assisting Customers in changing dividend
options, account designations and addresses, and in enrolling
into any of several retirement plans offered in connection
with the purchase of Class A and Class C Shares; (iv)
assisting in the establishment and maintenance of customer
accounts and records, and in the processing of purchase and
redemption transactions; (v) investing dividends and capital
gains distributions automatically in Class A and Class C
Shares; and (vi) providing such other information and services
as the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit B ("Bank Agreements") with selected
banks acting in an agency capacity for their customers
("Banks"). Banks acting in such capacity will provide some or
all of the shareholder services to their customers as set
forth in the Bank Agreements from time to time.
(d) Distributors may also enter into Agency
Pricing Agreements substantially in the form attached hereto
as Exhibit C ("Pricing Agreements") with selected retirement
plan service providers acting in an agency capacity for their
customers ("Retirement Plan Providers"). Retirement Plan
Providers acting in such capacity will provide some or all of
the shareholder services to their customers as set forth in
the Pricing Agreements from time to time.
(e) Distributors may also enter into Shareholder
Service Agreements substantially in the form attached hereto
as Exhibit D ("Bank Trust Department Agreements and Brokers
for Bank Trust Department Agreements") with selected bank
trust departments and brokers for bank trust departments.
Such bank trust departments and brokers for bank trust
departments will provide some or all of the shareholder
services to their customers as set forth in the Bank Trust
Department Agreements and Brokers for Bank Trust Department
Agreements from time to time.
SECTION 5. Any amendment to this Plan that requires the
approval of the shareholders of a Class pursuant to Rule 12b-1 under the 1940
Act shall become effective as to such Class upon the approval of such amendment
by a "majority of the outstanding voting securities" (as defined in the 1940
Act) of such Class, provided that the Board of Directors of the Fund has
approved such amendment in accordance with the provisions of Section 6 of this
Plan.
SECTION 6. This Plan, any amendment to this Plan and any
agreements related to this Plan shall become effective immediately upon the
receipt by the Fund of both (a) the affirmative vote of a majority of the Board
of Directors of the Fund, and (b) the affirmative vote of a majority of those
directors of the Fund who are not "interested persons" of the Fund (as defined
in the 1940 Act) and
<PAGE> 3
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Dis-interested Directors"), cast in person
at a meeting called for the purpose of voting on this Plan or such agreements.
Notwithstanding the foregoing, no such amendment that requires the approval of
the shareholders of a Class of a Fund shall become effective as to such Class
until such amendment has been approved by the shareholders of such Class in
accordance with the provisions of Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this
Plan shall continue in effect until June 30, 1998 and thereafter shall continue
in effect so long as such continuance is specifically approved, at least
annually, in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of
Directors and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 9. This Plan may be terminated, with respect to the
Class A and Class C Shares of each Portfolio, at any time by vote of a majority
of the Dis-interested Directors, or by vote of a majority of the outstanding
voting securities of the Class A and Class C Shares of such Portfolios. If
this Plan is terminated, the obligation of the Fund to make payments pursuant
to this Plan will also cease and the Fund will not be required to make any
payments beyond the termination date even with respect to expenses incurred
prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of
the Dis-interested Directors or by a vote of the outstanding
voting securities of the Class A and Class C Shares of each
Portfolio, on not more than sixty (60) days' written notice to
any other party to the agreement; and
(b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially
the amount of distribution expenses provided for in Section 2 hereof unless
such amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
AIM INTERNATIONAL FUNDS, INC.
(on behalf of its Class A and
Class C Shares)
Attest: By:
----------------------------- ------------------------------
Assistant Secretary President
Effective as of September 10, 1994, as amended as of September 10, 1994.
Amended and restated for all Portfolios as of June 30, 1997.
Amended and restated for all Portfolios as of August 2, 1997.
-3-
<PAGE> 4
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ----------------- ----------
<S> <C> <C> <C>
Class A Shares
--------------
AIM Asia-Pacific Growth Fund 0.10% 0.25% 0.35%
AIM European Capital Growth Fund 0.10% 0.25% 0.35%
AIM International Equity Fund 0.05% 0.25% 0.30%
AIM Global Aggressive Growth Fund 0.25% 0.25% 0.50%
AIM Global Growth Fund 0.25% 0.25% 0.50%
AIM Global Income Fund 0.25% 0.25% 0.50%
Class C Shares
--------------
AIM Asia-Pacific Growth Fund 0.75% 0.25% 1.00%
AIM European Capital Growth Fund 0.75% 0.25% 1.00%
AIM International Equity Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM Global Income Fund 0.75% 0.25% 1.00%
</TABLE>
-4-
<PAGE> 1
EXHIBIT 15(b)(1)
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between A I M
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
Fund's shares, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares and providing such other services as the Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
7/97
<PAGE> 2
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written notice. It will
be terminated by any act which terminates either the Selected Dealer
Agreement between your firm and us or the Fund's Distribution Plan, and in
any event, it shall terminate automatically in the event of its assignment
as that term is defined in the 1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so long
as you provide such services.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor Income Fund A Shares 0.25 August 4, 1997
AIM Advisor Income Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 Ocotober 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 July 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
7/97
<PAGE> 4
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
7/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Income Fund) is paid as an asset-based sales charge, as those
terms are defined under the rules of the National Association of Security
Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
7/97
<PAGE> 1
EXHIBIT 15(c)(1)
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
7/97
<PAGE> 2
7 In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assigment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor Income Fund A Shares 0.25 August 4, 1997
AIM Advisor Income Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
7/97
<PAGE> 4
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ----------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
7/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Income Fund) is paid as an asset-based sales charge, as those
terms are defined under the rules of the National Association of Security
Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
7/97
<PAGE> 1
EXHIBIT 15(d)(1)
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the____ of ____________, 1997,
between _______________________(the "Plan Provider") and A I M Distributors,
Inc. (the "Distributor").
RECITAL
Plan Provider acts as a trustee and/or servicing agent for defined
contribution plans and/or deferred compensation plans (the "Plans") and invests
and reinvests such Plans' assets as specified by an investment advisor, sponsor
or administrative committee of the Plan (a "Plan Representative") generally
upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and
redemption of shares (the "Shares") of the funds listed on Exhibit A hereto
(the "Fund" or "Funds"), registered investment companies distributed by
Distributor, on behalf of the Plans, through one or more accounts (not to
exceed one per Plan) in each Fund (individually an "Account" and collectively
the "Accounts"), subject to the terms and conditions of this Agreement.
Distributor shall, on behalf of the Funds, pay to Plan Provider a fee in
accordance with Exhibit A hereto.
AGREEMENT
1. SERVICES
Plan Provider shall provide shareholder and administration services
for the Plans and/or their Participants, including, without
limitation: answering questions about the Funds; assisting in changing
dividend options, account designations and addresses; establishing and
maintaining shareholder accounts and records; and assisting in
processing purchase and redemption transactions (the "Services").
Plan Provider shall comply with all applicable laws, rules and
regulations, including requirements regarding prospectus delivery and
maintenance and preservation of records. To the extent allowed by
law, Plan Provider shall provide Distributor with copies of all
records that Distributor may reasonably request. Distributor or its
affiliate will recognize each Plan as an unallocated account in each
Fund, and will not maintain separate accounts in each Fund for each
Participant. Except to the extent provided in Section 3, all Services
performed by Plan Provider shall be as an independent contractor and
not as an employee or agent of Distributor or any of the Funds. Plan
Provider and Plan Representatives, and not Distributor, shall take all
necessary action so that the transactions contemplated by this
Agreement shall not be "Prohibited Transactions" under section 406 of
the Employee Retirement Income Security Act of 1974, or section 4975
of the Internal Revenue Code.
2. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business
day that the New York Stock Exchange is open for business ("Business
Day"), with (i) net asset value information as of the close of trading
(currently 4:00 p.m. Eastern Time) on the New York Stock Exchange or
as at such later times at which a Fund's net asset value is calculated
as specified in such Fund's prospectus ("Close of Trading"), (ii)
dividend and capital gains
<PAGE> 2
information as it becomes available, and (iii) in the case of income
Funds, the daily accrual or interest rate factor (mil rate). The Funds
shall use their best efforts to provide such information to Plan
Provider by 6:00 p.m. Central Time on the same Business Day.
Distributor or its affiliate will provide Plan Provider (a) daily
confirmations of Account activity within five Business Days after each
day on which a purchase or redemption of Shares is effected for the
particular Account, (b) if requested by Plan Provider, quarterly
statements detailing activity in each Account within fifteen Business
Days after the end of each quarter, and (c) such other reports as may
be reasonably requested by Plan Provider.
3. ORDERS AND SETTLEMENT
If Plan Provider receives instructions in proper form from
Participants or Plan Representatives before the Close of Trading on a
Business Day, Plan Provider will process such instructions that same
evening. On the next Business Day, Plan Provider will transmit orders
for net purchases or redemptions of Shares to Distributor or its
designee by 9:00 a.m. Central Time and wire payment for net purchases
by 2:00 p.m. Central Time. Distributor or its affiliate will wire
payment for net redemptions on the Business Day following the day the
order is executed for the Accounts. In doing so, Plan Provider will
be considered the Funds' agent, and Shares will be purchased and
redeemed as of the Business Day on which Plan Provider receives the
instructions. Plan Provider will record time and date of receipt of
instructions and will, upon request, provide such instructions and
other records relating to the Services to Distributor's auditors. If
Plan Provider receives instructions in proper form after the Close of
Trading on a Business Day, Plan Provider will treat the instructions
as if received on the next Business Day.
4. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall limit representations concerning a
Fund or Shares to those contained in the then current prospectus of
such Fund, in current sales literature furnished by Distributor to
Plan Provider, in publicly available databases, such as those
databases created by Standard & Poor's and Morningstar, and in current
sales literature created by Plan Provider and submitted to and
approved in writing by Distributor prior to its use.
5. USE OF NAMES
Plan Provider and its affiliates will not, without the prior written
approval of Distributor, make public references to A I M Management
Group Inc. or any of its subsidiaries, or to the Funds. For purposes
of this provision, the public does not include Plan Providers'
representatives who are actively engaged in promoting the Funds. Any
brochure or other communication to the public that mentions the Funds
shall be submitted to Distributor for written approval prior to use.
Plan Provider shall provide copies of its regulatory filings that
include any reference to A I M Management Group Inc. or its
subsidiaries or the Funds to Distributor. If Plan Provider or its
affiliates should make unauthorized references or representations,
Plan Provider agrees to indemnify and hold harmless the Funds, A I M
Management Group Inc. and its subsidiaries from any claims, losses,
expenses or liability arising in any way out of or connected in any
way with such references or representations.
-2-
<PAGE> 3
6. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at
any time without any penalty by the vote of a majority of the
directors of such Fund who are "disinterested directors", as
that term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), or by a vote of a majority of the
Fund's outstanding shares, on sixty (60) days' written notice.
It will be terminated by any act which terminates either the
Fund's Distribution Plan, or any related agreement thereunder,
and in any event, it shall terminate automatically in the
event of its assignment as that term is defined in the 1940
Act.
(b) Either party may terminate this Agreement upon ninety (90)
days' prior written notice to the other party at the address
specified below.
7. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless the
Distributor, its affiliates, the Funds, the Funds' investment
advisors, and each of their directors, officers, employees,
agents and each person, if any, who controls them within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), (the "Distributor Indemnitees") against any
losses, claims, damages, liabilities or expenses to which a
Distributor Indemnitee may become subject insofar as those
losses, claims, damages, liabilities or expenses or actions in
respect thereof, arise out of or are based upon (i) Plan
Provider's negligence or willful misconduct in performing the
Services, (ii) any breach by Plan Provider of any material
provision of this Agreement, or (iii) any breach by Plan
Provider of a representation, warranty or covenant made in
this Agreement; and Plan Provider will reimburse the
Distributor Indemnitee for any legal or other expenses
reasonably incurred, as incurred, by them in connection with
investigating or defending such loss, claim or action. This
indemnity agreement will be in addition to any liability which
Plan Provider may otherwise have.
(b) Distributor agrees to indemnify and hold harmless Plan
Provider and its affiliates, and each of its directors,
officers, employees, agents and each person, if any, who
controls Plan Provider within the meaning of the Securities
Act (the "Plan Provider Indemnitees") against any losses,
claims, damages, liabilities or expenses to which a Plan
Provider Indemnitee may become subject insofar as such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement or Prospectus of a
Fund, or the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make statements therein not misleading, (ii) any breach by
Distributor of any material provision of this Agreement, (iii)
Distributor's negligence or willful misconduct in carrying out
its duties and responsibilities under this Agreement, or (iv)
any breach by Distributor of a representation, warranty or
covenant made in this Agreement; and Distributor will
reimburse the Plan Provider Indemnitees for any legal or other
expenses reasonably incurred, as incurred, by them, in
connection with investigating or defending any such loss,
claim or action. This indemnity agreement will be in addition
to any liability which Distributor may otherwise have.
-3-
<PAGE> 4
(c) If any third party threatens to commence or commences any
action for which one party (the "Indemnifying Party") may be
required to indemnify another person hereunder (the
"Indemnified Party"), the Indemnified Party shall promptly
give notice thereof to the Indemnifying Party. The
Indemnifying Party shall be entitled, at its own expense and
without limiting its obligations to indemnify the Indemnified
Party, to assume control of the defense of such action with
counsel selected by the Indemnifying Party which counsel shall
be reasonably satisfactory to the Indemnified Party. If the
Indemnifying Party assumes the control of the defense, the
Indemnified Party may participate in the defense of such claim
at its own expense. Without the prior written consent of the
Indemnified Party, which consent shall not be withheld
unreasonably, the Indemnifying Party may not settle or
compromise the liability of the Indemnified Party in such
action or consent to or permit the entry of any judgment in
respect thereof unless in connection with such settlement,
compromise or consent each Indemnified Party receives from
such claimant an unconditional release from all liability in
respect of such claim.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas applicable to agreements fully
executed and to be performed therein.
9. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party represents that it is free to enter into this Agreement and
that by doing so it will not breach or otherwise impair any other
agreement or understanding with any other person, corporation or other
entity. Each party represents that it has full power and authority
under applicable law, and has taken all action necessary to enter into
and perform this Agreement and the person executing this Agreement on
its behalf is duly authorized and empowered to execute and deliver
this Agreement. Additionally, each party represents that this
Agreement, when executed and delivered, shall constitute its valid,
legal and binding obligation, enforceable in accordance with its
terms.
Plan Provider further represents, warrants, and covenants that:
(a) it is registered as a transfer agent pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), or is not required to be registered as such;
(b) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives; and
(c) it is registered as a broker-dealer under the 1934 Act or any
applicable state securities laws, or, including as a result of
entering into and performing the services set forth in this
Agreement, is not required to be registered as such.
Distributor further represents, warrants and covenants, that:
(a) it is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws; and
-4-
<PAGE> 5
(b) the Funds' advisors are registered as investment advisors
under the Investment Advisers Act of 1940, the Funds are
registered as investment companies under the 1940 Act and Fund
Shares are registered under the Securities Act.
10. MODIFICATION
This Agreement and Exhibit A may be amended at any time by Distributor
without Plan Provider's consent by Distributor mailing a copy of an
amendment to Plan Provider at the address set forth below. Such
amendment shall become effective thirty (30) days from the date of
mailing unless this Agreement is terminated by the Plan Provider
within such thirty (30) days.
11. ASSIGNMENT
This Agreement shall not be assigned by a party hereto, without the
prior written consent of the other parties hereto, except that a party
may assign this Agreement to an affiliate having the same ultimate
ownership as the assigning party without such consent.
12. SURVIVAL
The provisions of Sections 1, 5 and 7 shall survive termination of
this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of the date first above written.
______________________________________
(PLAN PROVIDER)
By:___________________________________
Print Name:___________________________
Title:________________________________
Address: _____________________________
______________________________________
______________________________________
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
By:___________________________________
Print Name:___________________________
Title:________________________________
11 Greenway Plaza
Suite 1919
Houston, Texas 77210
-5-
<PAGE> 6
EXHIBIT A
For the term of this Agreement, Distributor, or its affiliates, shall
pay Plan Provider the following amounts for each of the following Funds with
respect to the average daily net asset value of the Class A and Class C Shares
of the Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---------- ----------
<S> <C>
AIM Equity Funds, Inc.
- ----------------------
AIM Aggressive Growth Fund* .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group
- ---------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Growth Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc.
- -----------------------------
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds
- -------------------------------
Limited Maturity Treasury Portfolio (AIM
Limited Maturity Treasury Shares) .15%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan Provider. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made to Plan Provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
* AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(e)(1)
A I M DISTRIBUTORS, INC.
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
(BANK TRUST DEPARTMENTS)
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 2
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not
<PAGE> 3
Shareholder Service Agreement Page 3
(Bank Trust Departments)
constitute a waiver of AIM Distributors's right to terminate at a later
date for any such cause. This Agreement may be terminated with respect
to any Fund at any time by the vote of a majority of the directors or
trustees of such Fund who are disinterested directors or by a vote of a
majority of the Fund's outstanding shares, on not less than 60 days'
written notice to us at our principal place of business. This Agreement
will be terminated by any act which terminates a Fund's Distribution
Agreement with AIM Distributors, the Agreement for Purchase of Shares of
The AIM Family of Funds--Registered Trademark-- between us and AIM
Distributors or a Fund's Distribution Plan, and in any event, it shall
terminate automatically in the event of its assignment by us, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM
Family of Funds--Registered Trademark-- through Bank Trust Departments
constitute the entire agreement between us and AIM Distributors and
supersede all prior oral or written agreements between the parties
hereto. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute the same
instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------
(Firm Name)
-------------------------------------
(Address)
-------------------------------------
City/State/Zip/County
By:
------------------------------
Name:
--------------------------------
Title:
------------------------------
Dated:
-------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Dated:
----------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
</TABLE>
__________________________________
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE]
A I M Distributors, Inc. (BROKERS FOR BANK TRUST DEPARTMENTS)
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 7
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
<PAGE> 8
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation
by us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for any such cause. This Agreement may be terminated
with respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates a Fund's
Distribution Agreement with AIM Distributors, the Selected Dealer
Agreement between us and AIM Distributors or a Fund's Distribution Plan,
and in any event, shall terminate automatically in the event of its
assignment by us, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors
from any obligations either may have under any other agreements between
us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------------------
(Firm Name)
-------------------------------------------------
(Address)
-------------------------------------------------
City/State/Zip/County
By:
------------------------------------------
Name:
--------------------------------------------
Title:
------------------------------------------
Dated:
-------------------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
</TABLE>
__________________________________
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 1
EXHIBIT 18
AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Amended and Restated Multiple Class Plan (the "Plan") adopted in
accordance with Rule 18f-3 under the Act shall govern the terms and
conditions under which the Funds may issue separate Classes of Shares
representing interests in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC upon
redemption.
d. Class - a class of Shares of a Fund representing an interest
in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class A
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class B
Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class C
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class C Shares for purposes of this Plan.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which
are primarily intended to result in the distribution and sale
of Shares as defined in a Plan of Distribution and/or
agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
l. Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
m. Institutional Shares - shall mean Shares of a Fund
representing an interest in a Portfolio offered for sale to
institutional customers as may be approved by the Directors
from time to time and as set forth in the Fund's prospectus.
n. Plan of Distribution - Any plan adopted under Rule 12b-1 under
the Act with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders
and/or the maintenance of shareholder accounts.
q. Share - a share of common stock of or beneficial interest in
a Fund, as applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear
directly any and all Distribution Fees and/or Service Fees
payable by such Class pursuant to a Plan of Distribution
adopted by the Fund with respect to such Class.
b. Transfer Agency and Shareholder Recordkeeping Fees - Each
Class shall bear directly the transfer agency fees and
expenses and other shareholder recordkeeping fees and
expenses specifically attributable to that Class.
c. Allocation of Other Expenses - Each Class shall bear
proportionately all other expenses incurred by a Fund based
on the relative net assets attributable to each such Class.
d. Allocation of Income, Gains and Losses - Except to the extent
provided in the following sentence, each Portfolio will
allocate income and realized and unrealized capital gains and
losses to a Class based on the relative net assets of each
Class. Notwithstanding the foregoing, each Portfolio that
declares dividends on a daily basis will allocate income on
the basis of settled shares.
e. Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the
Portfolio may waive or reimburse the expenses of a particular
Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below will apply for the following
Classes offered by a Fund with respect to a Portfolio. The provisions
of the Fund's prospectus describing the distribution and servicing
arrangements in detail are incorporated herein by this reference.
a. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Directors and set forth in the Fund's prospectus,
may be reduced or eliminated for certain money market fund
2
<PAGE> 3
shares, for larger purchases, under a combined
purchase privilege, under a right of accumulation,
under a letter of intent or for certain categories of
purchasers as permitted by Rule 22(d) of the Act and as set
forth in the Fund's prospectus. Class A Shares that are not
subject to a front-end sales charge as a result of the
foregoing shall be subject to a CDSC for the CDSC Period set
forth in Section 5(a) of this Plan if so provided in the
Fund's prospectus. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with
Rule 22c-1 and Section 22(d) of the Act and the rules and
regulations thereunder. Class A Shares shall be subject to
ongoing Service Fees and/or Distribution Fees approved from
time to time by the Directors and set forth in the Fund's
prospectus. Although AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Free Intermediate Shares
and shares of AIM Tax-Exempt Bond Fund of Connecticut and AIM
Tax Exempt Cash Fund are not designated as "Class A", they
are substantially similar to Class A Shares as defined herein
and shall be deemed to be Class A Shares for the purposes of
this Plan.
b. Class B Shares. Class B Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(b), (iii) subject to ongoing Service Fees
and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus, and (iv)
converted to Class A Shares eight years from the end of the
calendar month in which the shareholder's order to purchase
was accepted as set forth in the Fund's prospectus.
c. Class C Shares. Class C Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(c), and (iii) subject to ongoing Service
Fees and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus.
d. Institutional Shares. Institutional Shares shall be (i)
offered at net asset value, (ii) offered only to certain
categories of institutional customers as approved from time
to time by the Directors and as set forth in the Fund's
prospectus and (iii) may be subject to ongoing Service Fees
and/or Distribution Fees as approved from time to time by the
Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that
do not incur a front-end sales charge and of Class B Shares and Class
C Shares as follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be 18
months. The CDSC Rate shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A
Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares shall
be six years. The CDSC Rate for the Class B Shares shall be
as set forth in the Fund's prospectus, the relevant portions
of which are incorporated herein by this reference.
3
<PAGE> 4
c. Class C Shares. The CDSC Period for the Class C Shares shall
be one year. The CDSC Rate for the Class C Shares shall be as
set forth in the Fund's prospectus, the relevant portions of
which are incorporated herein by reference.
d. Method of Calculation. The CDSC shall be assessed on an
amount equal to the lesser of the then current market value
or the cost of the Shares being redeemed. No sales charge
shall be imposed on increases in the net asset value of the
Shares being redeemed above the initial purchase price. No
CDSC shall be assessed on Shares derived from reinvestment of
dividends or capital gains distributions. The order in which
Shares are to be redeemed when not all of such Shares would
be subject to a CDSC shall be determined by the Distributor
in accordance with the provisions of Rule 6c-10 under the Act.
e. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares and disclosed in
the Fund's prospectus or statement of additional information
and, for the Class A Shares, as allowed under Rule 6c-10 under
the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between
Funds as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the
Fund's prospectus as it may be amended from time to time,
relevant portions of which are incorporated herein by this
reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class C Shares of any
other Portfolio at their relative net asset value.
d. Depending upon the Portfolio from which and into which an
exchange is being made and when the shares were purchased,
shares being acquired in an exchange may be acquired at their
offering price, at their net asset value or by paying the
difference in sales charges, as disclosed in the Fund's
prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class A
Shares, Class B Shares and Class C Shares subject to a CDSC
shall be computed in the manner described in the Fund's
prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's
prospectus, relevant portions of which are incorporated herein by this
reference. All other terms and conditions with respect to Service Fees
and Distribution Fees shall be governed by the Plan of Distribution
adopted by the Fund with respect to such fees and Rule 12b-1 of the
Act.
4
<PAGE> 5
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and
Distributions - Shares purchased through the reinvestment of
dividends and distributions paid on Shares subject to
conversion shall be treated as if held in a separate
sub-account. Each time any Shares in a Shareholder's account
(other than Shares held in the sub-account) convert to Class A
Shares, a proportionate number of Shares held in the
sub-account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All
conversions shall be effected on the basis of the relative
net asset values of the two Classes without the imposition of
any sales load or other charge.
c. Amendments to Plan of Distribution for Class A Shares - If
any amendment is proposed to the Plan of Distribution under
which Service Fees and Distribution Fees are paid with
respect to Class A Shares of a Fund that would increase
materially the amount to be borne by those Class A Shares,
then no Class B Shares shall convert into Class A Shares of
that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of
such Class B Shares do not approve the proposed amendment, the
Directors of the Fund and the Distributor shall take such
action as is necessary to ensure that the Class voting
against the amendment shall convert into another Class
identical in all material respects to Class A Shares of the
Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested
persons of the Fund, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each
Class individually and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of
this Plan unless such amendment is approved in the manner specified in
Section 9 above.
5
