<PAGE> 1
As filed with the Securities and Exchange Commission on February 20, 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 ]
Pre-Effective Amendment No. [ ]
-----
Post-Effective Amendment No. 10 [ X ]
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 12 [ X ]
-----
(Check appropriate box or boxes.)
AIM INTERNATIONAL FUNDS, INC.
------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 1919, Houston, TX 77046
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 1919, Houston, TX 77046
------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
P. Michelle Grace, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed As soon as practicable after the
Public Offering: effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ X ] on February 24, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
(continued on next page)
<PAGE> 2
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant continues its election to register an indefinite number of its
shares 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)
I. AIM INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
N-1A ITEM NO. PROSPECTUS LOCATION
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<S> <C>
PART A
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 . . . . . . . . . . . . . . . [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
STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
PART B
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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>
<PAGE> 4
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
II. AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
<S> <C>
N-1A ITEM NO. PROSPECTUS LOCATION
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PART A
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
STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
PART B
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>
<PAGE> 5
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
[APPLICATION INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
AIM INTERNATIONAL EQUITY FUND
(A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
FEBRUARY 24, 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 February 24,
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.
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
---- ----
<S> <C> <C> <C>
SUMMARY............................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUND............................ 5 FUNDS--Registered Trademark--...... A-1
Table of Fees and Expenses........ 5 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
Hedging Strategies and Other the AIM Funds................... A-2
Investment Techniques.......... 9 Special Plans...................... A-8
Risk Factors...................... 11 Exchange Privilege................. A-10
Investment Restrictions........... 11 How to Redeem Shares............... A-12
Management........................ 12 Determination of Net Asset Value... A-15
Organization of the Company....... 14 Dividends, Distributions and Tax
Matters......................... A-16
General Information................ A-18
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 four separate series portfolios. This Prospectus
relates to AIM International Equity Fund (the "Fund"). The other portfolios of
the Company are offered to investors pursuant to a separate prospectus.
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 and (until March 1, 1997) with their
predecessors, have been in continuous operation for three years or more. 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 and (until March 1, 1997) with their predecessors, have
been in continuous operation for three years or more. See "Summary -- Material
Events" for changes in the Fund's investment restrictions effective March 1,
1997. 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."
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 43 investment company
portfolios. As of January 31, 1997, the total assets advised or managed by AIM
or its subsidiaries were approximately $66.5 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
2
<PAGE> 8
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 or Class B 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.
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 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 either class of shares must be at
least $500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc., 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 and Class B
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."
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 paid with respect to Class A shares of
the Fund may be paid by check, may be reinvested in additional Class A shares of
the Fund or, subject to certain conditions, in Class A shares (or shares which
normally involve payment of initial sales charges) of other funds in The AIM
Family of Funds at current net asset value (without payment of a sales charge).
Dividends and distributions paid with respect to Class B shares of the Fund may
be paid by check or reinvested in additional Class B shares of the Fund or Class
B shares of other funds in The AIM Family of Funds, subject to certain
conditions. See "Dividends, Distributions and Tax Matters" and "Special Plans."
MATERIAL EVENTS
MERGER. On November 4, 1996, A I M Management Group Inc. ("AIM Management")
announced that it had entered into an Agreement and Plan of Merger with INVESCO
plc ("INVESCO") and INVESCO Group Services Inc., pursuant to which AIM
Management will be merged with a subsidiary of INVESCO. Subject to a number of
conditions being met, it is anticipated that the transaction will occur in the
early part of 1997. The Fund's investment advisor, AIM, is a wholly owned
subsidiary of AIM Management.
APPROVAL OF NEW ADVISORY, ADMINISTRATIVE SERVICES AND DISTRIBUTION
AGREEMENTS. On December 11, 1996, the Board of Directors (the "Board") of the
Company approved, subject to shareholder approval, a new investment advisory
agreement between AIM and the Company with respect to the Fund. Shareholders
approved the proposed advisory agreement at an annual meeting of shareholders on
February 7, 1997 (the "Annual Meeting"). The Board has also approved a new
administrative services agreement with AIM and a new distribution agreement with
AIM Distributors. There have been no material changes to the terms of the new
agree-
3
<PAGE> 9
ments, including the fees payable by the Fund. No change is anticipated in the
investment advisory or other personnel responsible for the Fund as a result of
these new agreements or the merger.
The Board approved these new agreements because the Fund's corresponding
existing agreements will terminate upon the consummation of the proposed merger
of AIM Management, the parent of AIM, into a subsidiary of INVESCO. INVESCO and
its subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. Provided that the merger is
consummated, the new advisory agreement with respect to the Fund, as well as the
new administrative services and distribution agreements, will automatically
become effective as of the closing of the merger.
CHANGES TO FUNDAMENTAL INVESTMENT POLICIES. The Board has unanimously approved
the elimination of and changes to the fundamental investment policies of the
Fund described below, subject to shareholder approval. Shareholders approved
these changes at the Annual Meeting and they will become effective on March 1,
1997.
Investment in Other Investment Companies
The Fund is currently prohibited from investing more than 5% of its assets in
securities of a single issuer or holding more than 10% of the outstanding voting
securities of an issuer, except that the Fund may invest up to 25% of all assets
without regard to such restrictions. The Board and shareholders have approved
amendment of these fundamental investment policies to permit investment in other
investment companies to the extent permitted by the Investment Company Act of
1940, and rules and regulations thereunder, and, if applicable, exemptive orders
granted by the SEC.
Investment in Unseasoned Issuers
The Fund is currently prohibited from investing in securities of issuers that,
together with their predecessors, have less than three years of continuous
operations. The Board and shareholders have approved the elimination of this
prohibition. Investments in securities of issuers with less than three years of
continuous operations may provide opportunities for long term capital growth.
Greater risks are associated with investments in securities of unseasoned
issuers than in the securities of more established companies because unseasoned
issuers have only a brief operating history and may have more limited markets
and financial resources. As a result, securities of unseasoned issuers tend to
be more volatile than securities of more established companies.
For additional information regarding the proposed changes described above, see
the Fund's Statement of Additional Information dated February 24, 1997.
PURCHASES AT NET ASSET VALUE. Upon consummation of the proposed merger of AIM
Management, the following additional persons may purchase shares of The AIM
Family of Funds through AIM Distributors without payment of an initial sales
charge: (a) INVESCO 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 INVESCO or its affiliates or any trust established exclusively for the
benefit of such persons and (c) any employee benefit plan established for
employees of INVESCO or its affiliates.
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E, THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK AND AIM INSTITUTIONAL FUNDS ARE REGISTERED
SERVICE MARKS AND LA FAMILIA AIM DE FONDOS, LA FAMILIA AIM DE FONDOS AND DESIGN
AND AIMFUNDS.COM ARE SERVICE MARKS OF A I M MANAGEMENT GROUP INC.
4
<PAGE> 10
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 average net assets of the
respective classes of the Fund for the year ended October 31, 1996. 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
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<S> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a %
of offering price)...................................... 5.50% 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)................ None* 5.0%
Redemption fee............................................ None None
Exchange fee.............................................. None None
Annual Fund Operating Expenses (as a % of average net
assets)
Management fees** (after fee waivers)..................... 0.92% 0.92%
Rule 12b-1 distribution plan payments..................... 0.30% 1.00%
Other expenses............................................ 0.36% 0.43%
----- -----
Total fund operating expenses**....................... 1.58% 2.35%
===== =====
</TABLE>
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* 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.
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 and Class B shares, it is estimated that it would
require a substantial number of years to exceed the maximum permissible
front-end sales charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF 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> 11
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below are per share income and capital changes for a Class A share of
the Fund 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 of the Fund 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. The
information 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.
<TABLE>
<CAPTION>
PERIOD
NOVEMBER 5, 1991,
YEAR ENDED OCTOBER 31, THROUGH
---------------------------------------------------- OCTOBER 31,
1996 1995 1994 1993 1992
---------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARE:
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 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 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.
6
<PAGE> 12
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15, 1994
YEAR ENDED OCTOBER 31, THROUGH
----------------------- OCTOBER 31,
1996 1995 1994
--------- -------- -------------------
<S> <C> <C> <C>
CLASS B SHARE:
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.
- --------------------------------------------------------------------------------
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.
The Fund will also include performance data on Class A and Class B shares in any
advertisement or promotional material which includes Fund performance data. If
any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the 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
Fund's maximum initial sales charge at the time of purchase. Standardized total
return for Class B shares reflects the deduction of the maximum applicable
contingent deferred sales charge on a redemption of shares held for the period.
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> 13
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 and, (until March 1, 1997) with their
predecessors, have been in continuous operation for three years or more. 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 and, (until
March 1, 1997) with their predecessors, have been in continuous operation for
three years or more. See "Summary -- Material Events" for changes in the Fund's
investment restrictions effective March 1, 1997.
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
8
<PAGE> 14
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."
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.
- --------------------------------------------------------------------------------
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
9
<PAGE> 15
indices and futures contracts) if, at the time of investment, the aggregate
premiums paid for such options will 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 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.
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 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 securi-
10
<PAGE> 16
ties 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
11
<PAGE> 17
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.
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. Purchase a security if, as a result, the Fund would own securities
of an issuer (including predecessors and unconditional guarantors) which
has a record of less than three years of continuous operations.
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. 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. See "Summary -- Material
Events" for changes in the Fund's investment restrictions effective March 1,
1997.
- --------------------------------------------------------------------------------
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.
Certain directors and officers of the Company are affiliated with AIM and A I M
Management Group Inc. ("AIM Management"), the parent corporation of AIM. AIM
Management is a holding company engaged in the financial services business.
Information concerning the Board of Directors may be found in the Statement of
Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite
1919, Houston, Texas 77046, serves as the investment advisor to the Fund
pursuant to an investment advisory agreement dated as of October 18, 1993 (the
"Advisory Agreement"). AIM was organized in 1976 and, together with its
subsidiaries, manages or advises 43 investment company portfolios (including the
Fund). As of January 31, 1997, the total assets advised or managed by AIM or its
subsidiaries were approximately $66.5 billion. See "Summary -- Material Events"
for a description of AIM Management's proposed merger with a subsidiary of
INVESCO.
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 October 18, 1993, 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. See "Summary -- Material Events" for a description of AIM
Management's proposed merger with a subsidiary of INVESCO.
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 117
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, Paul A. Rogge, Barrett K. Sides and Dominic H. R. Moross.
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. Rogge is Vice President of AIM Capital and also has been
responsible for the Fund since its inception in
12
<PAGE> 18
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. Mr. Moross is Assistant Vice President
of AIM Capital and has been responsible for the Fund since 1995. Mr. Moross has
been associated with AIM since 1993 and has a total of three years of experience
as an investment professional. Prior to joining AIM, he was a management
graduate trainee with Maxwell Communications PLC.
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 .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 and Class B 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. See
"Summary -- Material Events" for a description of AIM Management's proposed
merger with a subsidiary of INVESCO.
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. The Company has adopted a master distribution plan
applicable to Class A shares of the Fund (the "Class A Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Class A Plan, the Fund pays compensation of
0.30% per annum of the average daily net assets attributable to the Class A
shares to AIM Distributors for the purpose of financing any activity which is
primarily intended to result in the sale of Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs. Of the total 0.30% compensation payable, the Fund pays a service
fee of 0.25% to implement a program which provides periodic payments to selected
dealers and financial institutions who furnish continuing personal shareholder
services to their customers who purchase and own Class A shares of the Fund. Any
amounts not paid as a service fee would constitute an asset based sales charge.
The Company has also adopted a master distribution plan applicable to Class B
shares of 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.
13
<PAGE> 19
Activities that may be financed under the Class A Plan and the Class B Plan
(collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements and the cost of administering the Plans.
These amounts payable by a Fund under the Plans need not be directly related to
the expenses actually incurred by AIM Distributors on behalf of the Fund. Thus,
even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Company will not be obligated to
pay more than that fee, and, if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by the
rules of the National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of 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 four investment portfolios: the 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 a separate
prospectus. The authorized capital stock of the Company consists of
2,000,000,000 shares of common stock with a par value of $0.001 per share, of
which 200,000,000 shares are designated Class A shares and 200,000,000 shares
are designated Class B shares of the Fund, and the balance of which are
designated shares of the Company's other portfolios or are unclassified.
Class A shares and Class B 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 and Class B
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 February 3, 1997, Merrill Lynch,
Pierce, Fenner & Smith was the owner of record of 29.23% and 36.55% of the
outstanding Class A and Class B shares, respectively, of the Fund. As long as
Merrill Lynch, Pierce, Fenner & Smith 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.
14
<PAGE> 20
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 5:30 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS -- Registered Trademark --
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BLUE CHIP FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL EQUITY FUND
AIM CHARTER FUND AIM LIMITED MATURITY TREASURY SHARES
AIM CONSTELLATION FUND AIM MONEY MARKET FUND*
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM MUNICIPAL BOND FUND
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL INCOME FUND AIM TAX-EXEMPT CASH FUND*
AIM GLOBAL UTILITIES FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GROWTH FUND AIM VALUE FUND
AIM WEINGARTEN FUND
</TABLE>
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C shares of AIM MONEY MARKET
FUND, are offered to investors at net asset value, without payment of a sales
charge, as described below. Other funds, including the Class A and Class B
shares of AIM MONEY MARKET FUND, are sold with an initial sales charge or
subject to a contingent deferred sales charge upon redemption, as described
below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
MCF 02/97*
A-1
<PAGE> 21
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 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
(other than AIM AGGRESSIVE GROWTH FUND and AIM CONSTELLATION FUND, collectively,
the "Multiple Class Funds") may be purchased at their respective net asset value
plus a sales charge as indicated below, except that shares of AIM TAX-EXEMPT
CASH FUND and Class C shares (the "Class C shares") of AIM MONEY MARKET FUND are
sold without a sales charge and Class B shares (the "Class B shares") of the
Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A or Class B
shares (or, if applicable, Class C shares) of a Multiple Class Fund are
described below under "Special Information Relating to Multiple Class Funds."
For information on purchasing any of the AIM Funds and to receive a prospectus,
please call (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 02/97*
A-2
<PAGE> 22
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM AGGRESSIVE GROWTH FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND,
AIM MONEY MARKET FUND, AIM VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
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 $ 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: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A
shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME
FUND, AIM INTERMEDIATE GOVERNMENT FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
--------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ---------------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and 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.
MCF 02/97*
A-3
<PAGE> 23
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 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 4.0% 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.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds, other than AIM MONEY MARKET FUND, currently offer two classes of shares,
and AIM MONEY MARKET FUND currently offers three classes of shares, through
separate distribution systems (the "Multiple Distribution System"). Although the
Class A and Class B shares (and with respect to AIM MONEY MARKET FUND, Class C
shares) of a particular Multiple Class Fund represent an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by Class A or Class B shares and, if applicable, Class C shares,
and other relevant factors, such as whether his or her investment goals are
long-term or short-term.
MCF 02/97*
A-4
<PAGE> 24
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Class B Plan payments of 1.00% per
annum on the average daily net assets of a Multiple Class Fund attributable
to Class B shares. See the discussion under the caption "Management --
Distribution Plans." In addition, Class B shares redeemed within six years
from the 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 Class B Plan payments associated
with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. Such
shares are, however, subject to the other fees and expenses described in
the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon or NYSE Close on any business day of
the Fund will be confirmed at the price next determined. Net asset value is
normally determined at 12:00 noon and NYSE Close on each business day of AIM
MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that either Money Market Fund can maintain a
$1.00 net asset value per share. In order to earn dividends with respect to AIM
MONEY MARKET FUND on the same day that a purchase is made, purchase payments in
the form of federal funds must be received by the Transfer Agent before 12:00
noon Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position. Class B shares of AIM MONEY MARKET
FUND are designed for temporary investment as part of an investment program in
the Class B shares and, unlike shares of most money market funds, are subject to
a contingent deferred sales charge as well as Rule 12b-1 distribution fees and
service fees.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of shares of AIM
TAX-EXEMPT CASH FUND, Class C shares of AIM MONEY MARKET FUND and Class B shares
of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
MCF 02/97*
A-5
<PAGE> 25
The term "purchaser" means:
o an individual and his or her spouse and minor children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
o a 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;
o any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
o the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and
(ii) Class B shares of the Multiple Class Funds) within the following 13
consecutive months. By marking the LOI section on the account application and by
signing the account application, the purchaser indicates that he understands and
agrees to the terms of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Trans-
MCF 02/97*
A-6
<PAGE> 26
fer 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) AIM TAX-EXEMPT CASH
FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the
Multiple Class Funds) at the time of the proposed purchase. Rights of
Accumulation are also available to holders of the Connecticut General Guaranteed
Account, established for tax-qualified group annuities, for contracts purchased
on or before June 30, 1992. To determine whether or not a reduced initial sales
charge applies to a proposed purchase, AIM Distributors takes into account not
only the money which is invested upon such proposed purchase, but also the value
of all shares of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH FUND and
Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple
Class Funds) owned by such purchaser, calculated at their then current public
offering price. If a purchaser so qualifies for a reduced sales charge, the
reduced sales charge applies to the total amount of money then being invested by
such purchaser and not just to the portion that exceeds the breakpoint above
which a reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum initial sales charge of 5.50%,
the reduced initial sales charge of 5.25% will apply to the full $20,000
purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To
qualify for obtaining the discount applicable to a particular purchase, the
purchaser or his dealer must furnish AFS with a list of the account numbers and
the names in which such accounts of the purchaser are registered at the time the
purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the initial amount invested in
the fund(s) is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3)
such shares are purchased by an
MCF 02/97*
A-7
<PAGE> 27
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single omnibus account per fund and
the financial institution or service organization has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms up to 1.00% of the net asset value of any shares of the Load Funds
(as defined on page A-10 herein) up to 0.10% of the net asset value of any
shares of AIM LIMITED MATURITY TREASURY SHARES, and up to 0.25% of the net asset
value of any shares of all other AIM Funds sold at net asset value to an
employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
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: (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 Class A shares of a Multiple Class Fund, Class C shares of AIM Money
Market Fund, or shares of another AIM Fund can arrange for monthly, quarterly or
annual checks in any amount (but not less than $50) to be drawn against the
balance of his account in the designated AIM Fund. Shareholders who own Class B
shares of a Multiple Class Fund can only arrange for monthly or quarterly
withdrawals under a Systematic Withdrawal Plan. Payment of this amount 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. No
contingent deferred sales charge with respect to Class B shares of a Multiple
Class Fund will be imposed on withdrawals made under a Systematic Withdrawal
Plan, provided that the amounts withdrawn under such a plan do not exceed on an
annual basis 12% of the account value at the time the shareholder elects to
participate in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with
respect to Class B shares that exceed on an annual basis 12% of such account
will be subject to a contingent deferred sales charge on the amounts exceeding
12% of the initial account value.
MCF 02/97*
A-8
<PAGE> 28
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 Shares and Class C Shares of the Multiple Class Funds), it
is disadvantageous to effect such purchases while a Systematic Withdrawal Plan
is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly 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
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; and dividends and distributions attributable to
Class C shares of AIM MONEY MARKET FUND may be reinvested in additional shares
of such fund, in Class A shares of another Multiple Class Fund or in shares of
another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; and SEP plans
(collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF 02/97*
A-9
<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, referred to
herein as the "Load Funds," are sold at a public offering price that includes a
maximum sales charge of 5.50% or 4.75% of the public offering price of such
shares; shares of certain of the AIM Funds, referred to herein as the "Lower
Load Funds," are sold at a public offering price that includes a maximum sales
charge of 1.00% of the public offering price of such shares; and shares of
certain other funds, including the Class C shares of AIM MONEY MARKET FUND,
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
----------- -----------------
AIM AGGRESSIVE GROWTH AIM HIGH YIELD FUND -- CLASS A AIM LIMITED MATURITY TREASURY SHARES
FUND -- CLASS A AIM INCOME FUND -- CLASS A AIM TAX-FREE INTERMEDIATE SHARES
AIM BALANCED FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A NO LOAD FUNDS:
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY --------------
FUND -- CLASS A FUND -- CLASS A AIM MONEY MARKET FUND
AIM CHARTER FUND -- CLASS A AIM MONEY MARKET -- CLASS C
AIM CONSTELLATION FUND -- CLASS A AIM TAX-EXEMPT CASH FUND
FUND -- CLASS A AIM MUNICIPAL BOND
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL INCOME AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
AIM GLOBAL UTILITIES
FUND -- CLASS A
AIM GROWTH FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund,
except that (i) Load Fund share purchases of $1,000,000 or more which are
subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (ii) LOWER LOAD FUND SHARE PURCHASES
OF $1,000,000 OR MORE AND NO LOAD FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND
SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
and shares of all other AIM Funds may not be exchanged for Class B shares; (iv)
Class B shares may be exchanged only for Class B shares; and (v) Class C shares
of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY
MARKET FUND or for Class B shares. DEPENDING UPON THE FUND FROM WHICH AND INTO
WHICH AN EXCHANGE IS BEING MADE, SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE
ACQUIRED AT THEIR OFFERING PRICE OR AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF
A SALES CHARGE) AS SET FORTH IN THE TABLE BELOW FOR SHARES INITIALLY PURCHASED
PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE
CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
- ----- ----------------- --------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable
Lower Load Funds Net Asset Value Net Asset Value Net Asset Value Not Applicable
No Load Funds... Offering Price if No Load shares were Net Asset Value if Net Asset Value Not Applicable
directly purchased. Net Asset Value No Load shares were
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund exchange of shares of
or any Lower Load Fund. any Load Fund or any
Lower Load Fund;
otherwise,
Offering Price.
</TABLE>
(Table continued on following page)
MCF 02/97*
A-10
<PAGE> 30
<TABLE>
<CAPTION>
MULTIPLE
CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
- ----- ----------------- --------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Multiple Class
Funds:
Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable
Funds......... acquired upon exchange of any Load
Fund. Otherwise, difference in sales
charge will apply.
No Load Funds... Offering Price if No Load shares were Net Asset Value if Net Asset Value Not Applicable
directly purchased. Net Asset Value No Load shares were
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund. exchange of shares of
Difference in sales charge will apply any Load Fund or any
if No Load shares were acquired upon Lower Load Fund;
exchange of Lower Load Fund shares. otherwise, Offering
Price.
Multiple Class
Funds:
Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A and Class B shares of a Multiple Class Fund cannot be
exchanged for each other), except that Class C shares of AIM MONEY MARKET FUND
may be exchanged for Class A shares of another Multiple Class Fund; (b) the
dollar amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the fund acquired through such exchange; (c) the
shares of the fund acquired through exchange must be qualified for sale in the
state in which the shareholder resides; (d) the exchange must be made between
accounts having identical registrations and addresses; (e) the full amount of
the purchase price for the shares being exchanged must have already been
received by the fund; (f) the account from which shares have been exchanged must
be coded as having a certified taxpayer identification number on file or, in the
alternative, an appropriate 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.
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
MCF 02/97*
A-11
<PAGE> 31
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 SHARES. A contingent deferred sales charge will not be
imposed in connection with exchanges among Class B shares of Multiple Class
Funds. For purposes of determining a shareholder's holding period of Class B
shares in the calculation of the applicable contingent deferred sales charge,
the period of time during which Class B shares were held prior to an exchange
will be added to the holding period of Class B shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares purchased under the Multiple
Distribution System may be redeemed on any business day of a Multiple Class Fund
at the net asset value per share next determined following receipt of the
redemption order, as described under the caption "Timing and Pricing of
Redemption Orders," less the applicable contingent deferred sales charge shown
in the table below. No deferred sales charge will be imposed (i) on redemptions
of Class B shares following six years from the date such shares were purchased,
(ii) on Class B shares acquired through reinvestments of dividends and
distributions attributable to Class B shares or (iii) on amounts that represent
capital appreciation in the shareholder's account above the purchase price of
the Class B shares.
<TABLE>
<CAPTION>
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.
Contingent deferred sales charges on Class B shares will be waived on
redemptions (1) following the registered shareholder's (or in the case of joint
accounts, all registered joint owners') death or disability, as defined in
Section 72(m)(7) of the Code (provided AIM Distributors is notified of such
death or disability at the time of the redemption request and is provided with
satisfactory evidence of such death or disability), (2) in connection with
certain distributions from individual retirement accounts, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B shares at the
MCF 02/97*
A-12
<PAGE> 32
time the shareholder elects to participate in the Systematic Withdrawal Plan,
(4) effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund and (5) effected by AIM of its investment
in Class B shares.
Waiver category (1) above applies only to redemptions:
(i) made within one year following death or initial determination of
disability; and
(ii) of Class B shares held at the time of death or initial
determination of disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B shares of a Multiple Class Fund and purchases of shares of
the No Load Funds 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 or Class C shares
of AIM MONEY MARKET FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load
Fund or a No Load Fund which previously were not subject to the 1% contingent
deferred sales charge will not be credited with the period of time such
exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the initial amount invested
by a Plan in one or more of the AIM Funds is at least $1,000,000, (b) the
sponsor of a Plan signs a letter of intent to invest at least $1,000,000 in one
or more of the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided,
however, that Plans created under Section 403(b) of the Code which are
sponsored by public educational institutions shall qualify under (a), (b) or
(c) above on the basis of the value of each Plan participant's aggregate
investment in the AIM Funds, and not on the aggregate investment made by the
Plan or on the number of eligible employees; (2) redemptions of shares
following the registered shareholder's (or in the case of joint accounts, all
registered joint owners') death or disability, as defined in Section 72(m)(7)
of the Code; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; and (4) redemptions of shares purchased by an investor in amounts
of $1,000,000 or more where such investor's dealer of record, due to the nature
of the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for re-
MCF 02/97*
A-13
<PAGE> 33
demption by corporations, partnerships, trusts or other entities. The burden is
on the shareholder to inquire as to whether any additional documentation is
required. Any request not in proper form may be rejected and in such case must
be renewed in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information; and (e) the proceeds
of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth at that item of the account application if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and Class C Shares of AIM MONEY
MARKET FUND). After completing the appropriate authorization form, shareholders
may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the Class
C Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement
accounts or qualified plans. Checks may be drawn in any amount of $250 or more.
Checks drawn against insufficient shares in the account, 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 Class B shares of the Multiple Class Funds,
and Class A shares of the Multiple Class Funds and shares of the other AIM Funds
that are subject to the contingent deferred sales charge program for large
purchases described above, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form 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.
MCF 02/97*
A-14
<PAGE> 34
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 certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in shares of any
AIM Fund at the net asset value next computed after receipt by the Transfer
Agent of the funds to be reinvested; provided, however, if the redemption was
made from AIM LIMITED MATURITY TREASURY SHARES or AIM TAX-FREE INTERMEDIATE
SHARES, however, 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 of the Multiple Class Funds or shares of
any other AIM Fund, and who subsequently reinvest a portion or all of the value
of the redeemed shares in shares of 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 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 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 contract closing prices which are available
15 minutes after the close of trading of the NYSE will generally be used. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the Money Market Funds, are valued at amortized cost as
reflecting fair value. AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
MCF 02/97*
A-15
<PAGE> 35
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- ----------------------- --------------- ---------------
<S> <C> <C> <C>
AIM AGGRESSIVE GROWTH FUND................... declared and paid annually annually annually
AIM BALANCED FUND............................ declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................... declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND................. declared and paid annually annually annually
AIM CHARTER FUND............................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND....................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND............ declared and paid annually annually annually
AIM GLOBAL GROWTH FUND....................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND....................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND.................... declared daily; paid monthly annually annually
AIM GROWTH FUND.............................. declared and paid annually annually annually
AIM HIGH YIELD FUND.......................... declared daily; paid monthly annually annually
AIM INCOME FUND.............................. declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND............. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND................ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES......... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND........................ declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND...................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT...... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND..................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE SHARES............. declared daily; paid monthly annually annually
AIM VALUE FUND............................... declared and paid annually annually annually
AIM WEINGARTEN FUND.......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Class A, Class B or Class C shares
are reinvested in additional shares of such Class, absent an election by a
shareholder to receive cash or to have such dividends and distributions
reinvested in Class A or Class B shares of another Multiple Class Fund, to the
extent permitted. For funds that do not declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date. Shareholders may elect, by written notice to 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 A shares may not be reinvested in Class B
shares, and (iii) dividends and distributions attributable to the Class C shares
of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that
Fund or in any Class B shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact 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.
MCF 02/97*
A-16
<PAGE> 36
Dividends on Class B shares are expected to be lower than those for Class A or
Class C shares because of higher distribution fees paid by Class B shares.
Dividends on Class A, Class B and Class C shares may also be affected by other
class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to 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 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. No gain or loss will be recognized by
shareholders upon the automatic conversion of Class B shares of a Multiple Class
Fund into Class A shares of such Fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on 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 02/97*
A-17
<PAGE> 37
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 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 and AIM LIMITED MATURITY TREASURY 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 02/97*
A-18
<PAGE> 38
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF 02/97*
B-1
<PAGE> 39
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 02/97*
B-2
<PAGE> 40
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 41
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston TX 77210-4739
Custodian
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> 42
STATEMENT OF ADDITIONAL INFORMATION
AIM INTERNATIONAL EQUITY FUND
(A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(713) 626-1919
-------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE ABOVE-NAMED FUND,
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: February 24, 1997
Relating to the Prospectus Dated: February 24, 1997
<PAGE> 43
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Stock Index Options and Futures and Financial Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Restrictions on the Use of Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Asset Coverage for Futures and Options Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Risk Factors in Options, Futures, Forward and Currency Transactions . . . . . . . . . . . . . . . . . . . . 11
Repurchase Agreements and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Material Changes to Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 21
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Investment Advisory and Administrative Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 23
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
i
<PAGE> 44
<TABLE>
<S> <C>
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 45
INTRODUCTION
AIM International Funds, Inc. (the "Company") is a series mutual fund.
The rules and regulations of the Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information, which relates to the Company's AIM International Equity Fund
series (the "Fund"), is included in a Prospectus, dated February 24, 1997 (the
"Prospectus"). Copies of the Prospectus and additional copies of this
Statement of Additional Information may be obtained without charge by writing
the 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 Fund.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Fund. Some of
the information required to be in this Statement of Additional Information is
also included in the Fund's current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Company's Registration Statement filed
with the SEC. Copies of the Registration Statement, including items omitted
from the Prospectus and this Statement of Additional Information, may be
obtained from the SEC by paying the charges prescribed under its rules and
regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1991 as a Maryland corporation, and is
registered with the SEC as a diversified, open-end, series, management
investment company. The Company currently consists of four portfolios, one of
which is the Fund. Other portfolios of the Company, whose shares are offered
through a separate prospectus and statement of additional information are: AIM
Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income
Fund. Each portfolio of the Company offers both Class A shares and Class B
shares.
As used in the Prospectus, the term "majority of the outstanding
shares" of the Company, the Fund, or a class of the Fund means, respectively,
the vote of the lesser of (i) 67% or more of the shares of the Company, the
Fund or such class present at a meeting of shareholders, if the holders of more
than 50% of the outstanding shares of the Company, the Fund or such class are
present or represented by proxy or (ii) more than 50% of the outstanding shares
of the Company, the Fund or such class.
Each share of the Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to the 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.
PERFORMANCE
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the 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 the 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
1
<PAGE> 46
investment alternatives, investors should realize that the Fund's performance
is not constant over time, but changes from year to year, and that average
annual total return does not represent the actual year-to-year performance of
the Fund.
In addition to average annual total return, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions, over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns and other performance information
may be quoted numerically or in tables, graphs or similar illustrations. Total
returns may be quoted with or without taking the Class A shares' 5.50% maximum
sales charge, or the Class B shares' 5% maximum contingent deferred sales
charge ("CDSC") into account. Excluding sales charges from a total return
calculation produces a higher total return figure.
HISTORICAL PORTFOLIO RESULTS
Total returns for Class A shares of the Fund for the one-year period
ended October 31, 1996 and the period April 7, 1992 (dated of effectiveness of
the Fund's registration's 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
-------------- -----------------
<S> <C> <C>
One year ended 10/31/96 9.42% 9.42%
Period 04/07/92 - 10/31/96 13.51% 78.36%
</TABLE>
Total returns for Class B shares of the 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
-------------- -----------------
<S> <C> <C>
One year ended 10/31/96 9.88% 9.88%
Period 09/15/94 - 10/31/96 7.88% 17.51%
</TABLE>
During the one-year period ended October 31, 1996 and for the period
from April 7, 1992 through October 31, 1996, a hypothetical $1,000 investment
in the Class A shares of the Fund at the beginning of each such period would
have been worth $1,094.20 and $1,783.60, respectively. Both of such figures
assume the maximum sales charge was paid and all distributions were reinvested.
During the one-year period ended October 31, 1996 and the period September 15,
1994 through October 31, 1996, a hypothetical $1,000 investment in the Class B
shares of the Fund at the beginning of each such period would have been worth
$1,098.80 and $1,175.10, respectively. Both of such figures assume the maximum
contingent deferred sales charge was paid and all distributions were
reinvested.
The Fund's performance may be compared in advertising to the
performance of other mutual funds in general, or of particular types of mutual
funds, especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc. and other independent services
which monitor the performance of mutual funds. The Fund may also advertise
mutual fund performance rankings which have been assigned to the Fund by such
monitoring services. The Fund's performance may also be compared in
2
<PAGE> 47
advertising and other materials to the performance of comparative benchmarks
such as the Consumer Price Index, the Standard and Poor's 500 Stock Index, The
Financial Times - Actuaries World Indices (a wide range of comprehensive
measures of stock price performance for the world's major stock markets and
regional areas), Morgan Stanley Capital International Indices, including the
EAFE Index, Pacific Basin Index and Pacific Ex Japan Index (a widely recognized
series of indices in international market performance), and indices of stocks
comparable to those in which the Fund invests.
From time to time, the 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). The 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, the 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 Fund may disclose (i)
the largest holdings in the Fund's portfolio (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 the Fund, for the selection of broker-dealers, for the
execution of the Fund's investment portfolio transactions, for the allocation
of brokerage fees in connection with such transactions, and where applicable,
for the negotiation of commissions and spreads on transactions. 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 Fund does not necessarily pay the
lowest commission or spread available.
A portion of the securities in which the Fund invests are traded in
over-the-counter ("OTC") markets, and in such transactions, the Fund deals
directly with the dealers who make markets in the securities involved, except
in those circumstances where better prices and executions are available
elsewhere. Portfolio transactions placed through dealers serving as primary
market makers are effected at net prices, generally without commissions as
such, but which include compensation in the form of mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. In recent years, however, an increasing
number of overseas stock markets have adopted a system of negotiated rates,
although a number of markets continue to be subject to an established schedule
of minimum commission rates.
Foreign equity securities may be held by the Fund 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.
3
<PAGE> 48
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 Fund) over a certain time period. The target levels will be
determined based upon the following factors, among others: (1) the execution
services provided by the broker; (2) the research services provided by the
broker; and (3) the broker's attitude toward and interest in mutual funds in
general and in the Fund 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 Fund, AIM may also consider sales of shares of the
Fund and of the other AIM Funds as a factor in the selection of broker-dealers
to execute portfolio transactions for the Fund. 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 the
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 an account's portfolio securities in a
tender or exchange offer.
The Fund is 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 the 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 the 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, the 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 ("1940
Act") and rules and regulations thereunder have been construed to prohibit the
Fund from purchasing securities or instruments from, or selling securities or
instruments to, any holder of 5% or more of the voting securities of any
investment company managed or advised by AIM. The Fund has obtained an order
of exemption from the SEC which permits the fund to engage in certain
transactions with such 5% holders, if the Fund complies with conditions and
procedures designed to ensure that such transactions are executed at fair
market value and present no conflicts of interest.
AIM and its affiliates manage several other investment accounts, some
of which may have investment objectives similar to those of the Fund. It is
possible that, at times, identical securities will be appropriate for
investment by the Fund and by one or more of such investment accounts. The
position of each account, however, in the securities of the same issue may vary
and the length of time that each account may choose to hold its investment in
the securities of the same issue may likewise vary. The timing and amount of
purchase by each account will also be determined by its cash position. If the
purchase or sale of securities is consistent with the investment policies of
the Fund 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 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 the 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 the 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,
4
<PAGE> 49
the availability of cash for investment, the size of investment commitments
generally held and the judgments of the persons responsible for recommending
the investment.
SECTION 28(e) STANDARDS
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 the 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
Fund's investment program. Research services received from brokers supplement
AIM's own research (and the research of sub-advisors to other clients of AIM),
and may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to United States and foreign economies,
securities, markets, specific industry groups and individual companies;
information on political developments; portfolio management strategies;
performance information on securities and information concerning prices of
securities; and information supplied by specialized services to AIM and to the
Company's directors with respect to the performance, investment activities and
fees and expenses of other mutual funds. Such information may be communicated
electronically, orally or in written form. Research services may also include
the providing of equipment used to communicate research information, the
arranging of meetings with management of companies and the providing of access
to consultants who supply research information.
The outside research assistance is useful to AIM since the brokers
utilized by AIM as a group tend to follow a broader universe of securities and
other matters than AIM's staffs 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 Fund. 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 Fund. AIM is of the opinion that this
material is beneficial in supplementing AIM's research and analysis and
therefore it may benefit the Fund by improving the quality of AIM's investment
advice. The advisory fee paid by the Fund is not reduced because AIM receives
such services.
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 Fund.
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As of October 31, 1996, the 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.
BROKERAGE COMMISSIONS PAID
For the years ended October 31, 1996, 1995 and 1994 the 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 the Fund's net assets during such period. For
the fiscal year ended October 31, 1996, AIM allocated certain of the 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.
HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES
The following discussion of certain investment strategies supplements
the discussion set forth in the Prospectus under the heading "Hedging
Strategies and Other Investment Techniques."
The 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. The 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 Fund
may also deal in certain forward contracts, including forward foreign exchange
transactions, foreign currency options and futures, and related options on such
futures. The Fund is 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 Fund will only engage in
these transactions for hedging purposes, the options and futures portfolio
strategies of the Fund will not subject the Fund to the risks frequently
associated with the speculative use of options and futures transactions. While
the Fund's use of hedging strategies is intended to reduce the volatility of
the net asset value of the Fund's shares, the Fund's net asset value will
nevertheless fluctuate. There can be no assurance that the Fund's hedging
transactions will be effective.
HEDGING FOREIGN CURRENCY RISKS
Generally, the foreign exchange transactions of the 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
Fund has 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. The 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 Fund 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 its portfolio denominated
or quoted in that particular foreign currency. The Fund will not attempt to
hedge all of its portfolio positions and will enter into such transactions only
to the extent, if any, deemed appropriate by AIM. The Fund will not enter into
a position hedging commitment if, as a result thereof, the Fund would have more
than 10% of the value of its total assets committed to such contracts. The
Fund will not enter into a forward contract with a term of more than one year.
In addition to the forward exchange contracts, the Fund 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 the 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
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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."
WRITING COVERED CALL OPTIONS
The 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 the
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, the 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, the Fund would seek to
mitigate the effects of a price decline. By writing covered call options,
however, the 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, the 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
The 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 the 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,
the 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.
The 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 the 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.
The Fund may write put options as an alternative to purchasing actual
securities. If security prices rise, the 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 the Fund will also profit, because it should be able to close out
the option at a lower price. If security prices fall, the Fund would expect to
suffer a loss. This loss should be less than the loss the 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
The 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 the 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 the 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 the 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. The Fund will not 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 the Fund would exceed 5% of the market value of the Fund's total assets.
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PURCHASING CALL OPTIONS
The Fund is also authorized to purchase call options. The features of
call options are essentially the same as those of put options, except that the
purchaser of a call option obtains the right to purchase, rather than sell, the
underlying instrument at the option's strike price (call options on futures
contracts are settled by purchasing the underlying futures contract). The Fund
will purchase call options only in connection with "closing purchase
transactions."
COMBINED OPTION POSITIONS
The 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, the 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 contract. This technique, called a "straddle," enables
the 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,
the 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
The Fund is authorized to engage in transactions in stock index
options and futures and financial futures, and related options. The 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. The 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 Fund's 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 the 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, the Fund will not make such investments.
The 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. The 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 the Fund in stock
index futures and financial futures are subject to limitations as described
below under "Restrictions on the Use of Futures Transactions."
The 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 the 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
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<PAGE> 53
contracts will be terminated by offsetting sales. The Fund does not consider
purchases of futures contracts to be a speculative practice under these
circumstances. It is anticipated that, in a substantial majority of these
transactions, the Fund will purchase such securities upon termination of the
long futures position, whether the long position results from the purchase of a
futures contract or the purchase of a call option, but under unusual
circumstances (e.g., the Fund experiences a significant amount of redemptions)
a long futures position may be terminated without the corresponding purchase of
securities.
The Fund also is authorized to purchase and write call and put options
on futures contracts and stock indices in connection with its 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 the Fund enters into futures transactions. The
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, the
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.
The 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.
The 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, the 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 Fund will not speculate in foreign security or currency
options, futures or related options. The Fund will not hedge a currency
substantially in excess of the market value of securities which it has
committed or anticipates to purchase which are denominated in such currency,
and in the case of securities which have been sold by the Fund but not yet
delivered, the proceeds thereof in its denominated currency. The Fund will not
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
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<PAGE> 54
known as "marking to market." At any time prior to the settlement date of the
futures contract, the position may be closed out by taking an opposite position
which will operate to terminate the position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid to or released by the broker and the purchaser realizes a loss or gain.
In addition, a nominal commission is paid on each completed sale transaction.
Regulations of the CFTC applicable to the Fund require that all of the
Fund's futures and options on futures transactions constitute bona fide hedging
transactions and that the Fund not enter into such transactions if, immediately
thereafter, the sum of the amount of initial margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed
5% of the market value of the 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 Fund 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 Fund will acquire only
those OTC options for which AIM believes the 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 Fund has adopted an operating policy pursuant to which it 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 the Fund, (ii) the market value
of the underlying securities covered by OTC call options currently outstanding
which were sold by the 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 15% of the net assets of the Fund, taken at market value. However, if
an OTC option is sold by the 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 the 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 Fund and may be amended by the Board of Directors of the Company without
approval of the Fund's shareholders. However, the Fund 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 Fund will not use leverage in its options and futures strategies.
Such investments will be made for hedging purposes only. The Fund will hold
securities or other options or futures positions whose values are expected to
offset its obligations under the hedge strategies. The Fund will not enter
into an option or futures position that exposes the 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 Fund 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. Securities which are
segregated will not be sold while the futures or option strategy is
outstanding, unless they are replaced with similar securities. As a result,
there is a possibility that segregation of a large
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percentage of the 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 the 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 options or futures
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 Fund 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 Fund 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 the 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 Fund intends 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 the 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 the Fund's ability to
effectively hedge its portfolio. There is also the risk of loss by the Fund of
margin deposits or collateral in the event of bankruptcy of a broker with whom
the Fund has an open position in an option, a futures contract or related
option.
The exchanges on which options on portfolio securities and currency
options are traded have generally established limitations governing the maximum
number of call or put options on the same underlying security or currency
(whether or not covered) which may be written by a single investor, whether
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written in one or
more account or through one or more brokers). "Trading limits" are imposed on
the maximum number of contracts which any person may trade on a particular
trading day. AIM does not believe that these trading and position limits will
have any adverse impact on the portfolio strategies for hedging the Fund's
portfolio.
Because the Fund will engage in the options and futures transactions
described above solely in connection with its hedging activities, AIM does not
believe such options and futures transactions necessarily will have any
significant effect on the Fund's portfolio turnover rate.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements and reverse repurchase
agreements. A repurchase agreement is an instrument under which the Fund
acquires ownership of a debt security and the seller (usually a broker or bank)
agrees, at the time of the sale, to repurchase the obligation at a mutually
agreed upon time and price, thereby determining the yield during the Fund's
holding period. In the event of bankruptcy or other default of a seller of a
repurchase agreement, the Fund may experience both delays in liquidating the
underlying securities and losses, including: (a) a possible decline in the
value of the underlying security during the period in which the Fund seeks to
enforce its rights thereto; (b) a possible subnormal level of income and lack
of access to income during this period; and (c) expenses of enforcing its
rights. A repurchase agreement
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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
the Fund, with an agreement that the Fund will repurchase such securities at an
agreed-upon price, date, and interest payment. It is the current operating
policy of the Fund to enter into reverse repurchase agreements (which are
considered to be borrowings under the 1940 Act) only for temporary or emergency
purposes and not as a means to increase income. The Fund will enter into a
reverse repurchase agreement only when the interest income to be earned from
the investment of the proceeds of the transaction is greater than the interest
expense of the transaction. During the time a reverse repurchase agreement is
outstanding, the Fund will segregate U.S. Treasury obligations having a value
equal to the repurchase price under such reverse repurchase agreement. Any
investment gains made by the Fund with monies borrowed through reverse
repurchase agreements will cause the net asset value of the Fund's shares to
rise faster than would be the case if the Fund had no such borrowings. On the
other hand, if the investment performance resulting from the investment of
borrowings obtained through reverse repurchase agreements fails to cover the
cost of such borrowings to the Fund, the net asset value of the Fund will
decrease faster than would otherwise be the case.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make
secured loans of portfolio securities amounting to not more than 33-1/3% of its
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 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 Fund has a right to call each loan 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 Fund will not have the right to vote securities while they are
being lent, but it 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
The Fund may from time to time enter into short sales transactions.
The 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
Fund 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 the Fund's
total assets be deposited or pledged as collateral for such sales at any time.
RULE 144A SECURITIES
The 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 Fund, 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 the
Fund's restriction
12
<PAGE> 57
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, 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. 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 Fund may from time to time hold cash
balances in the form of foreign currencies and multinational currency units.
Such foreign currencies and multinational currency units will usually be
acquired on a spot (i.e. cash) basis at the spot rate prevailing in foreign
exchange markets and will result in currency conversion costs to the Fund. The
Fund attempts to purchase and sell foreign currencies on as favorable a basis
as practicable; however, some price spread on foreign exchange transactions (to
cover service charges) may be incurred, particularly when the Fund changes
investments from one country to another, or when U.S. dollars are used to
purchase foreign securities. Certain countries could adopt policies which
would prevent the Fund from transferring cash out of such countries, and the
Fund may be affected either favorably or unfavorably by fluctuations in
relative exchange rates while the Fund holds foreign currencies.
INVESTMENT RESTRICTIONS
MATERIAL CHANGES TO INVESTMENT RESTRICTIONS
On December 11, 1996, the Board of Directors of the Company approved,
subject to shareholder approval, the elimination of and a change to certain
fundamental investment policies of the Fund. Shareholders approved these
changes at an annual meeting of shareholders on February 7, 1997 and they will
become effective as of March 1, 1997.
Reference is made to Investment Restrictions 8, 10, and 11, set forth
below. The Board of Directors and shareholders approved the elimination of
Investment Restriction 8 and a change to Investment Restrictions 10 and 11.
Effective as of March 1, 1997, Investment Restriction 8 will no longer apply
and Investment Restrictions 10 and 11 will read in full as follows:
10. 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.
11. 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.
13
<PAGE> 58
The following fundamental policies and investment restrictions have
been adopted by the 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 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. Invest in securities of an issuer (including
predecessors and unconditional guarantors) which has
a record of less than three years of continuous
operations. See "Material Changes to Investment
Restrictions" above.
9. 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
14
<PAGE> 59
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.
10. 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. See "Material Changes to
Investment Restrictions" above.
11. Purchase a security if, as a result, more than 10% of
the outstanding voting securities of any issuer would
be held by the Fund. See "Material Changes to
Investment Restrictions" above.
12. 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:
13. Make investments for the purpose of exercising
control or management.
14. 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."
15. 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.
16. 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.
Subject to investment restriction number 14 above, the Fund may from
time to time lend securities from its portfolio 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 Fund. Such loans will not be for
more than 30 days and will be terminable at any time. The Fund 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 Fund may pay reasonable fees to persons
unaffiliated with the Fund 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 Fund may 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 the Fund's net assets. Included in that
15
<PAGE> 60
amount, but not to exceed 2% of the value of the Fund's net assets, may be
warrants which are not listed on national exchanges.
In order to permit the sale of the Fund's shares in certain states,
the Fund may from time to time make commitments that are more restrictive than
the restrictions described above. For example, as of the date of this
Statement of Additional Information, the 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 the 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.
The 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 the Fund are
redeemable on a daily basis in U.S. dollars, the Fund intends to manage its
portfolio so as to give reasonable assurance that it 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 its portfolio strategy.
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 WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (77) Director and Director, Chairman and Chief Executive
11 Greenway Plaza, Suite 1919 Chairman Officer, A I M Management Group Inc.;
Houston, TX 77046 Chairman of the Board of Directors,
A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc. and
Fund Management Company.
</TABLE>
- ----------------------------------
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
16
<PAGE> 61
<TABLE>
<CAPTION>
POSITIONS HELD WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
BRUCE L. CROCKETT (52) Director Formerly, Director, President and Chief
906 Frome Lane Executive Officer, COMSAT Corporation
McLean, VA 22102 (includes COMSAT World Systems, COMSAT Mobile
Communications, COMSAT Video Enterprises,
COMSAT RSI and COMSAT International
Ventures). Previously, President and Chief
Operating Officer, COMSAT Corporation;
President, World Systems Division, COMSAT
Corporation; and Chairman, Board of Governors
of INTELSAT; (each of the COMSAT companies
listed above is an international
communication, information and entertainment-
distribution services company).
OWEN DALY II (72) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation.
**CARL FRISCHLING (60) Director Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm). Formerly, Partner, Reid & Priest
New York, NY 10022 (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling
(law firm).
*ROBERT H. GRAHAM (50) Director and Director, President and Chief Operating
11 Greenway Plaza, Suite 1919 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.
</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.
17
<PAGE> 62
<TABLE>
<CAPTION>
POSITIONS HELD WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
JOHN F. KROEGER (72) Director Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund,
Morristown, NJ 07960 Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Equity Partners Fund,
Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund,
Inc., Managed Municipal Fund, Inc., Flag
Investors Value Builder Fund, Inc., Flag
Investors Maryland Intermediate Tax-Free
Income Fund, Inc., Flag Investors Real Estate
Securities Fund, Inc., Alex. Brown Cash
Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment
companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK (54) Director Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
IAN W. ROBINSON (73) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
LOUIS S. SKLAR (57) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (real estate development).
Houston, TX 77056
</TABLE>
18
<PAGE> 63
<TABLE>
<CAPTION>
POSITIONS HELD WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
***JOHN J. ARTHUR (52) Senior Vice Senior Vice President and Treasurer,
11 Greenway Plaza, President and A I M Advisors, Inc.; and Vice President and
Suite 1919 Treasurer Treasurer, A I M Management Group 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.
GARY T. CRUM (49) Senior Vice Director and President, A I M Capital
11 Greenway Plaza, Suite 1919 President Management, Inc.; Director and Senior Vice
Houston, TX 77046 President, A I M Management Group Inc.,
A I M Advisors, Inc.; and Director,
A I M Distributors, Inc.
SCOTT G. LUCAS (37) Senior Vice Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 1919 President Management, Inc.; and Vice President,
Houston, TX 77046 A I M Management Group Inc. and
A I M Advisors, Inc.
***CAROL F. RELIHAN (42) Senior Vice Senior Vice President, General Counsel and
11 Greenway Plaza, President and Secretary, A I M Advisors, Inc.; Vice
Suite 1919 Secretary President, General Counsel and Secretary,
Houston, TX 77046 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 and Vice President and Fund Controller,
11 Greenway Plaza, Suite 1919 Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
Houston, TX 77046 President and Assistant Treasurer, Fund
Management Company.
ROBERT G. ALLEY (48) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 1919 Management, Inc.; and Vice President, A I M
Houston, TX 77046 Advisors, Inc. Formerly, Senior Fixed Income
Money Manager, Waddell and Reed, Inc.
</TABLE>
- ----------------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
19
<PAGE> 64
<TABLE>
<CAPTION>
POSITIONS HELD WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
MELVILLE B. COX (53) Vice President Vice President and Chief Compliance Officer,
11 Greenway Plaza, Suite 1919 A I M Advisors, Inc., A I M Capital
Houston, TX 77046 Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc. and
Fund Management Company. Formerly, Vice
President, Charles Schwab & Co., Inc.;
Assistant Secretary, Charles Schwab Family of
Funds and Schwab Investments; Chief
Compliance Officer, Charles Schwab Investment
Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and
Capitol Life Insurance Co.
JONATHAN C. SCHOOLAR (35) Vice President Director and Senior Vice President,
11 Greenway Plaza, Suite 1919 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. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for
meeting with the Company's auditors to review audit procedures and results and
to consider any matters arising from an audit to be brought to the attention of
the directors as a whole with respect to the Company's fund accounting or its
internal accounting controls, and for considering such matters as may from time
to time be set forth in a charter adopted by the Board of Directors and such
committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as directors who are not interested persons
as long as the Company maintains a distribution plan pursuant to Rule 12b-1
under the 1940 Act, reviewing from time to time the compensation payable to the
disinterested directors, and considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such committee.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who
is not also an officer of the Company is compensated for his or her services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. Each such director
receives a fee, allocated among the AIM Funds for which
20
<PAGE> 65
he serves as a director or trustee, which consists of an annual retainer
component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
for each 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(4)
Carl Frischling 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 of Messrs. Bauer, Crockett, Daly, Frischling, Graham,
Kroeger, Pennock, Robinson and Sklar serves as director or
trustee of a total of 10 AIM Funds. Data reflect total compensation
earned during the calendar year ended December 31, 1996.
(4) See also page 23 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 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
21
<PAGE> 66
(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 various compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar
are 9, 10, 19, 19, 15, 9 and 7 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
Number of Annual Compensation
Years of Service Paid By All AIM Funds
With the AIM Funds
------------------ -----------------------------------------
<S> <C> <C> <C>
60,000 $65,000 $70,000
-----------------------------------------
10 $45,000 $48,750 52,500
9 $40,500 $43,875 47,250
8 $36,000 $39,000 42,000
7 $31,500 $34,125 36,750
6 $27,000 $29,250 31,500
5 $22,500 $24,375 26,250
</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 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. See "Summary - Material Events" in the
Prospectus for information regarding AIM Management's proposed merger with a
subsidiary of INVESCO plc.
22
<PAGE> 67
During the year ended October 31, 1996, the Fund paid $5,247 in legal
fees to Kramer, Levin, Naftalis & Frankel, as counsel to the Company's
directors. Mr. Frischling, a Director of the Company, is a partner in such
firm.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
AIM is a wholly-owned subsidiary of A I M Management Group Inc., a
holding company that has been engaged in the financial services business since
1976. See "Summary - Material Events" in the Prospectus for information
regarding AIM Management's proposed merger with a subsidiary of INVESCO plc.
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 Fund, has entered into an Investment
Advisory Agreement and an Administrative Services Agreement with AIM. See
"Management" in the Prospectus.
The Investment Advisory Agreement provides that the Fund will pay or
cause to be paid all expenses of the Fund not assumed by AIM, including,
without limitation: brokerage commissions; taxes, legal, accounting, auditing
or governmental fees; the cost of preparing share certificates; custodian,
transfer and shareholder service agent costs; expenses of issue, sale,
redemption and repurchase of shares; expenses of registering and qualifying
shares for sale; expenses relating to 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 Fund in
connection with membership in investment company organizations; the cost of
printing copies of prospectuses and statements of additional information
distributed to the Fund's shareholders; and all other charges and costs of the
Fund's operations unless otherwise expressly provided.
The Investment Advisory Agreement provides that if, for any fiscal
year, the total of all ordinary business expenses of the Fund, including all
investment advisory fees, but excluding brokerage commissions and fees, taxes,
interest and extraordinary expenses, such as litigation costs, exceed the
applicable expense limitations imposed by state securities regulations in any
state in which the Fund's shares are qualified for sale, as such limitations
may be raised or lowered from time to time, the aggregate of all such
investment advisory fees shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by AIM shall be deducted from the
monthly investment advisory fee otherwise payable to AIM during such fiscal
year. If required pursuant to such state securities regulations, AIM will
reimburse the Fund no later than the last day of the first month of the next
succeeding fiscal year for any such annual operating expenses (after reduction
of all investment advisory fees in excess of such limitation).
The Investment Advisory Agreement for the Fund provides that such
agreement will continue in effect until June 30, 1997, and from year to year
thereafter only if such continuance is specifically approved at least annually
by the 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 Company's Board of Directors (including the affirmative vote of
all of the Non-Interested Directors) on July 19, 1993, and was approved by the
Fund's shareholders on September 27, 1993. The agreement became effective as
of October 18, 1993. The agreement provides that the Fund or AIM may terminate
such agreement on sixty (60) days' written notice without penalty. The
Investment Advisory Agreement terminates automatically in the event of its
assignment. Under the agreement, AIM is entitled to receive from the Fund a fee
calculated
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<PAGE> 68
at the annual rates 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 has voluntarily agreed to waive advisory fees under the
Investment 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. AIM may terminate such fee waiver at any time without notice to
Shareholders.
For the fiscal years ended October 31, 1996, 1995 and 1994, AIM
received advisory fees from the Fund of $10,384,642, $6,225,765, and
$5,526,858, respectively. For the fiscal years ended October 31, 1996, 1995
and 1994, AIM waived advisory fees for the Fund in the amounts of $299,147,
$77,672, and $43,159, respectively. Pursuant to a sub- advisory agreement
which has since been terminated, AIM paid to Nationale-Nederlanden
International Investment Advisors B.V. sub-advisory fees during the year ended
October 31, 1994 of $429,520.
The Administrative Services Agreement for the Fund provides that AIM
may perform, or arrange for the performance of, certain accounting, shareholder
servicing and other administrative services to the Fund which are not required
to be performed by AIM under the Investment Advisory Agreement. For such
services, AIM is entitled to receive from the 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 July 19, 1993.
The agreement became effective as of October 18, 1993.
For the fiscal years ended October 31, 1996, 1995 and 1994, AIM
received reimbursement of administrative services costs, including accounting
and shareholder servicing costs (for the fiscal year ended October 31, 1994),
from the Fund pursuant to the Administrative Services Agreement in the amount
of $94,250, $29,858 and $381,864, respectively.
In addition, the Transfer Agency and Service Agreement for the Fund
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 Fund 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 Fund, maintain shareholder accounts and provide
shareholders with information regarding the Fund 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 of the Fund in
the amounts of $1,170,699 and $757,067, respectively.
For the fiscal year ended October 31, 1994, AIM reimbursed AFS
$351,680 pursuant to a services agreement which was terminated during the
fourth quarter of 1994 for providing shareholder servicing for the Fund.
THE DISTRIBUTION PLANS
THE CLASS A PLAN. The Company has adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares of the
Fund (the "Class A Plan"). The Class A Plan provides that the Class A shares
pay 0.30% 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. Activities appropriate for
financing under the Class A Plan include, but are not limited to, the
following: printing of prospectuses and statements of additional information
and reports for other than existing shareholders; overhead; preparation and
distribution of advertising material and sales literature; expenses of
24
<PAGE> 69
organizing and conducting sales seminars; supplemental payments to dealers and
other institutions such as asset-based sales charges or as payments of service
fees under shareholder service arrangements; and costs of administering the
Class A Plan.
THE CLASS B PLAN. The Company has also adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of
the Fund (the "Class B Plan", and collectively with the Class A Plan, the
"Plans"). Under the Class B Plan, the 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, the Fund pays a service fee of
0.25% of the average daily net assets attributable to Class B shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to 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 Fund's 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 Fund. 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 Fund; 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 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 any capital gains distributions automatically in the Fund's
shares; and providing such other information and services as the Fund or the
customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding the 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
the 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, the 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 Fund during such period at the annual rate
of 0.25% of the average daily net asset value of the Fund's shares purchased or
acquired through exchange. Fees calculated in this manner shall be paid only
to those selected dealers or other institutions who are dealers or institutions
of record at the close of
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<PAGE> 70
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 Fund to no more than 0.25% per annum of the average daily net assets of the
fund 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 Fund and its 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.
The Fund's Class A shares had a different Rule 12b-1 plan (the "Former
Plan") for the period prior to September 27, 1993. The Former Plan provided
that the Class A shares' of the Fund would pay AIM Distributors a fee of up to
0.30% of the average daily net asset value of such shares' to reimburse AIM
Distributors for its distribution expenses.
For the fiscal year ended October 31, 1996, the Fund paid a total of
$2,684,486 under the Class A Plan, which constituted 0.30% of the Class A
shares' average daily net assets. For the fiscal year ended October 31,
1996, the Fund paid $2,034,652 under the Class B Plan which constituted 1.00%
of the Class B shares' average daily net assets.
An estimate by category of actual fees paid by the Fund under the
Class A Plan during the year ended October 31, 1996 follows:
<TABLE>
<CAPTION>
CLASS A
<S> <C>
Advertising $ 201,447
Printing and mailing 31,069
prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders
Seminars 69,154
Compensation to Underwriters to
partially offset other marketing
expenses 0
Compensation to Dealers
including finder's fees 2,382,816
Compensation to Sales Personnel 0
</TABLE>
26
<PAGE> 71
As estimate by category of actual fees paid by the Fund under the
Class B Plan during the year ended October 31, 1996 follows:
<TABLE>
<CAPTION>
CLASS B
<S> <C>
Advertising $ 288,966
Printing and mailing prospectuses 43,995
semi-annual reports and annual
reports (other than to current
shareholders
Seminars 100,988
Compensation to Underwriters to 1,527,909
partially offset upfront dealer
commissions and other marketing
costs.
Compensation to Dealers 72,794
Compensation to Sales Personnel 0
</TABLE>
The Plans require AIM Distributors to provide the Board of Directors
at least quarterly with a written report of the amounts expended pursuant to
the Plans and the purposes for which such expenditures were made. The Board of
Directors reviews these reports in connection with their decisions with respect
to the Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans
("Qualified Directors"). In approving the Plans in accordance with the
requirements of Rule 12b-1, the directors considered various factors and
determined that there is a reasonable likelihood that the Plans would benefit
each class of the Fund and its respective shareholders.
The Plans do not obligate the Fund 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 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.
Unless terminated earlier in accordance with their terms, the Plans
continue in effect until June 30, 1997 and thereafter, as long as such
continuance is specifically approved at least annually by the Board of
Directors, including a majority of the Qualified Directors.
The Plans may be terminated by the vote of a majority of the
Independent Directors, or, with respect to a particular class, by the vote of a
majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the
distribution expenses paid by the applicable class requires shareholder
approval; otherwise, it may be amended by the directors, including a majority
of the Qualified Directors, by votes cast in person at a meeting called for the
purpose of voting upon such amendment. As long as the Plans are in effect, the
selection or nomination of the Qualified Directors is committed to the
discretion of the Qualified Directors. In the event the Class A Plan is
amended in a manner
27
<PAGE> 72
which the Board of Directors determines would materially increase the charges
paid under the Class A Plan, the Class B shares of the Fund will no longer
convert into Class A shares of the Fund 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 Fund 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 Fund will be exchanged or converted into
such new class of shares no later than the date the Class B shares were
scheduled to convert into Class A shares.
The principal differences between the Class A Plan, on the one hand,
and the Class B Plan, on the other hand, are: (i) the Class A Plan allows
payment to AIM Distributors or to dealers or financial institutions of up to
0.30% of average daily net assets of the Fund's Class A shares as compared to
1.00% of such assets of the 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.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Fund's shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement with AIM Distributors relating to the Class A
shares of the Fund was approved by the Board of Directors on September 10,
1994. A Master Distribution Agreement with AIM Distributors relating to the
Class B shares of the Fund was also approved by the Board of Directors on
September 10, 1994. Both such Master Distribution Agreements are hereinafter
collectively referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear
the expenses of printing from the final proof and distributing the Fund's
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 Fund), 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 Fund's 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
Fund.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B shares of the Fund 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
the 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.
The Company (on behalf of any class of the Fund) 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
28
<PAGE> 73
Distributors. Termination of the Class B Plan or Distribution Agreement does
not affect the obligation of the Fund and its Class B shareholders to pay
Contingent Deferred Sales Charges.
For the fiscal years ended October 31, 1996, 1995 and 1994, the total
sales charges paid in connection with the sale of Class A shares of the Fund
were $8,663,571, $3,662,531 and $8,535,232, respectively, of which AIM
Distributors retained $1,489,975, $565,101 and $1,177,691, respectively. For
the fiscal years ended October 31, 1996 and 1995 and the period September 15,
1994 (inception date) through October 31, 1994, contingent deferred sales
charges paid by Class A and Class B shareholders were $39,753, $106,168 and
$336, respectively.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of the 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 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 Fund or with AIM and its affiliates, are familiar with
the Fund, 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 Fund's 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 through AIM Distributors without payment of a sales charge. The persons
who may purchase Class A shares without a sales charge are set forth in the
Prospectus.
Complete information concerning the method of exchanging shares of the
Fund for shares of the other AIM Funds is set forth in the Prospectus under the
heading "Exchange Privilege."
Information concerning redemption of the Fund's shares is set forth in
the Prospectus under the heading "How to Redeem Shares." AIM intends to redeem
all shares of the Fund in cash. In addition to the Fund's obligation to redeem
shares, AIM Distributors may also repurchase shares as an accommodation to
shareholders. To effect a repurchase, those dealers who have executed Selected
Dealer Agreements with AIM Distributors must phone orders to the order desk of
the Fund (Telephone: (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 the 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 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. While there is no charge imposed by the Fund 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 the Fund not reasonably practicable.
29
<PAGE> 74
NET ASSET VALUE DETERMINATION
In accordance with current SEC rules and regulations, the net asset
value of a share of the 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 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 NYSE. 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 NYSE. 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 NYSE 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.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of the Fund unless the
shareholder has requested in writing to receive such dividends and
distributions in cash or that they be invested in shares of another AIM Fund,
subject to the terms and conditions set forth in the Prospectus under the
caption "Special Plans -- Automatic Dividend Investment Plan." If a
shareholder's account does not have any shares in it on a dividend or capital
gains distribution payment date, the dividend or distribution will be paid in
cash whether or not the shareholder has elected to have such dividends or
distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its shareholders that are not
described in the Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Fund's Prospectus is not intended as a substitute
for careful tax planning. Investors are urged to consult their tax advisors
with specific reference to their own tax situation.
Qualification as a Regulated Investment Company. As stated in the
Fund's Prospectus, the 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, the 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
30
<PAGE> 75
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 the 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 the Fund's assets must consist of cash and cash items, U.S. Government
securities, securities of other regulated investment companies, and securities
of other issuers (as to which the Fund has not invested more than 5% of the
value of 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, the 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 the Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits. Such distributions will
be eligible for the dividends received deduction in the case of corporate
shareholders.
Fund Distributions. Under the Code, the 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.
The 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.
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<PAGE> 76
For purposes of the excise tax, a regulated investment company shall
(1) offset a net ordinary loss (but not below 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). The Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and
capital gain net income prior to the end of each calendar year to avoid
liability for the excise tax.
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 the
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 Fund may enter into will be subject to special tax
treatment as "Section 1256 contracts." Section 1256 contracts are treated as
if they are sold for their fair market value on the last business day of the
taxable year, regardless of whether a taxpayer's obligations (or rights) under
such contracts have terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
combined with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. The net amount
of such gain or loss for the entire taxable year (including gain or loss
arising as a consequence of the year-end deemed sale of such contracts) is
deemed to be 60% long-term and 40% short-term gain or loss. However, in the
case of Section 1256 contracts that are forward foreign currency exchange
contracts, the net gain or loss is separately determined and (as discussed
above) generally treated as ordinary income or loss.
Generally, the hedging transactions in which the Fund 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 Fund. In addition, losses realized by the Fund on positions that are part
of the 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 Fund of hedging transactions are not entirely clear.
The hedging transactions may increase the amount of short-term capital gain
realized by the Fund (and if they are conversion transactions, the amount of
ordinary income) which is taxed as ordinary income when distributed to
shareholders.
The Fund may make one or more of the elections available under the
Code which are applicable to straddles. If the 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.
32
<PAGE> 77
Requirements relating to the Fund's tax status as a regulated
investment company, including (in particular) the Short-Short Gain Test, may
limit the extent to which the Fund will be able to engage in transactions in
options and futures contracts.
PFIC Investments. The 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.
The Fund may be able to elect alternative tax treatment with respect
to PFIC stock. Under one such election, the 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 Fund's intention to qualify annually as a
regulated investment company may limit its 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
Fund itself to tax on certain income from PFIC stock, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gains, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC stock.
Redemption or Exchange of Shares. Upon a redemption or exchange of
shares, a shareholder will recognize a taxable gain or loss depending upon his
or her basis in the shares. 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 Class A shares or Class B shares
disposed of are replaced within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of. 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 the 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 Fund 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 the Fund's assets
to be invested in various countries is not known.
If more than 50% of the value of the 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
33
<PAGE> 78
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 the Fund for this purpose, shareholders will be
required to allocate Fund distributions according to the source of the income
realized by the Fund. The 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 the Fund.
Backup Withholding. Under certain provisions of the Code, the Fund
may be required to withhold 31% of reportable dividends, capital gains
distributions and redemption payments ("backup withholding"). Generally,
shareholders subject to backup withholding will be those for whom a certified
taxpayer identification number is not on file with the Company or who, to the
Company's knowledge, have furnished an incorrect number, or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. When establishing an account, an investor must provide his or her
taxpayer identification number and certify under penalty of perjury that such
number is correct and that he or she is not otherwise subject to backup
withholding. Corporate shareholders and other shareholders specified in the
Code are exempt from backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against a shareholder's
U.S. federal income tax liability.
Foreign Shareholders. Dividends from the 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 the Fund or on
capital gain dividends. In the case of a foreign shareholder who is a
nonresident alien individual, however, gain realized upon the sale of shares of
the 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 Fund 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 Fund are
effectively connected with a U.S. trade or business of a foreign shareholder,
then dividends from the Fund's investment company taxable income, capital
gains, and any gains realized upon the sale or redemption 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 the 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.
34
<PAGE> 79
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in the
Fund.
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 February 12, 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 Fund.
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Board of Directors will issue to shareholders at least
semi-annually the Fund's 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 the 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 Fund. Under its contract with the Company relating to the Fund, the
Custodian is authorized to establish separate accounts in foreign currencies
and to cause foreign securities owned by the 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 the 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 transfer and dividend disbursing agent for
the Class A and Class B shares of the Fund. The Fund pays the Custodian and
the Transfer Agent such compensation as may be agreed upon from time to time.
Texas Commerce Bank National Association, 712 Main, Houston, Texas
77002, serves as Sub-Custodian for retail purchases of the AIM Funds.
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.
35
<PAGE> 80
PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each of the
Company's portfolios as of February 3, 1997, and the amount of outstanding
shares held by such holders are set forth below:
<TABLE>
<CAPTION> Percent
Name and Address Owned of
Fund of Record Owner Record Only*
- ---- --------------- -----------
<S> <C> <C>
AIM International Equity Fund - Merrill Lynch, Pierce, 29.23%**
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, 36.55%**
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, 17.80%
Class A shares Fenner & Smith
FBO The Sole Benefit of Custodian
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 27.21%**
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.
36
<PAGE> 81
<TABLE>
<CAPTION>
Percent
Name and Address Owned of
Fund of Record Owner Record Only*
- ---- --------------- -----------
<S> <C> <C>
AIM Global Growth Fund - Merrill Lynch, Pierce, 14.19%
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, 24.95%
Fenner & Smith
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
AIM Global Income Fund - Merrill Lynch, Pierce, 12.23%
Class B shares Fenner & Smith
Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246
</TABLE>
As of February 3, 1997, the directors and officers of the Company as a group
owned less than 1% of the outstanding shares of the Fund and the other
portfolios of the Company.
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.
- ----------------------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
37
<PAGE> 82
FINANCIAL STATEMENTS
FS
<PAGE> 83
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-1
<PAGE> 84
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-2
<PAGE> 85
<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-3
<PAGE> 86
<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-4
<PAGE> 87
<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-5
<PAGE> 88
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-6
<PAGE> 89
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-7
<PAGE> 90
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-8
<PAGE> 91
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-9
<PAGE> 92
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-10
<PAGE> 93
[APPLICATION INSIDE]
[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
FEBRUARY 24, 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. The Company also
offers shares of another series portfolio, AIM International Equity
Fund, pursuant to a separate prospectus.
AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"). The
investment objective of the AGGRESSIVE GROWTH FUND is to provide
above-average long-term growth of capital appreciation. The Fund
seeks to achieve its objective by investing in a portfolio of global
(i.e., U.S. and foreign) equity securities including securities of
selected companies with relatively small market capitalization.
AIM GLOBAL GROWTH FUND ("GROWTH FUND"). The investment objective of
the GROWTH FUND is to provide long-term growth of capital. The Fund
seeks to achieve its objective by investing in a portfolio of global
(i.e., U.S. and foreign) equity securities of selected companies that
are considered by the Fund's investment advisor to have strong
earnings momentum.
AIM GLOBAL INCOME FUND ("INCOME FUND"). The investment objective of
the INCOME FUND is to provide high current income. The Fund seeks to
achieve its objective by investing in a portfolio of U.S. and foreign
government and corporate debt securities. As a secondary objective,
the Fund seeks preservation of principal and capital appreciation.
This Prospectus sets forth basic information about the Funds that
prospective investors should know before investing. It should be read
and retained for future reference. A Statement of Additional
Information, dated February 24, 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.
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> 94
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY.................................. 2
THE FUNDS................................ 5
Table of Fees and Expenses............. 5
Financial Highlights................... 6
Performance............................ 11
Investment Objectives and Policies..... 11
Hedging Strategies..................... 14
Other Investment Techniques............ 15
Risk Factors........................... 18
Investment Restrictions................ 19
Portfolio Turnover..................... 19
Management............................. 20
Organization of the Company............ 23
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS --Registered Trademark-- ........ A-1
Introduction to The AIM Family of
Funds............................... A-1
How to Purchase Shares................. A-1
Terms and Conditions of Purchase of the
AIM Funds........................... A-2
Special Plans.......................... A-8
Exchange Privilege..................... A-10
How to Redeem Shares................... A-12
Determination of Net Asset Value....... A-15
Dividends, Distributions and Tax
Matters............................. A-16
General Information.................... A-18
APPENDIX A............................... A-19
APPENDIX B............................... A-21
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 four series comprising four separate investment
portfolios. Three of these series are offered pursuant to this Prospectus: AIM
GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"), AIM GLOBAL GROWTH FUND
("GROWTH FUND") and AIM GLOBAL INCOME FUND ("INCOME FUND")(individually, a
"Fund" and collectively, the "Funds"), each of which pursues unique investment
objectives. The AGGRESSIVE GROWTH FUND and the GROWTH FUND are diversified
investment portfolios; the INCOME FUND is a non-diversified investment
portfolio. For more complete information on the Funds' investment objectives and
policies, see "Investment Objectives and Policies."
RISK FACTORS. EACH FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING GLOBAL
DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH INVESTMENTS IN
FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND ECONOMIC RISK,
REGULATORY RISK AND MARKET RISK. THE INCOME FUND IS A NON-DIVERSIFIED PORTFOLIO,
AND MAY ALSO INVEST IN HIGH YIELD SECURITIES (I.E., "JUNK BONDS") THAT ENTAIL
CERTAIN RISKS. NONE OF THE FUNDS IS DESIGNED AS A COMPLETE INVESTMENT PROGRAM.
FOR A DISCUSSION OF THESE RISKS, SEE "RISK FACTORS." THE INCOME FUND MAY ENGAGE
IN LEVERAGING WHICH MAY INVOLVE AN INCREASE IN RISK. SEE "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 43 investment company
portfolios. As of January 31, 1997, the total assets advised or managed by AIM
or its subsidiaries were approximately $66.5 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.
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A or Class B shares
of the Funds which are offered by this Prospectus at an offering price that
reflects differing sales charges and expense levels. See "Terms and Conditions
of Purchase of the AIM Funds -- Sales Charges and Dealer Concessions."
Class A Shares -- Shares are offered at net asset value plus any
applicable initial sales charge.
Class B Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a maximum contingent deferred
sales charge of 5% on certain redemptions made within six years of the 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.
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
antic-
2
<PAGE> 95
ipated 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 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 either class of shares must be at
least $500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the 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 and Class B
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."
DISTRIBUTIONS. The AGGRESSIVE GROWTH FUND and the GROWTH FUND declare and pay
dividends from net investment income, if any, and make distributions of realized
capital gains, if any, on an annual basis. The INCOME FUND declares dividends
from net investment income on a daily basis and pays such dividends monthly. The
INCOME FUND declares and makes distributions of realized short-term capital
gains, if any, annually, and of realized long-term capital gains, if any,
annually. Dividends and distributions paid with respect to Class A shares of a
Fund may be paid by check, may be reinvested in additional Class A shares of the
Fund or, subject to certain conditions, in Class A shares (or shares which
normally involve payment of initial sales charges) of other funds in The AIM
Family of Funds at current net asset value (without payment of a sales charge).
Dividends and distributions paid with respect to Class B shares of a Fund may be
paid by check or reinvested in additional Class B shares of the Fund or Class B
Shares of other funds in The AIM Family of Funds, subject to certain conditions.
See "Dividends, Distributions and Tax Matters" and "Special Plans."
MATERIAL EVENTS
MERGER. On November 4, 1996, A I M Management Group Inc. ("AIM Management")
announced that it had entered into an Agreement and Plan of Merger with INVESCO
plc ("INVESCO") and INVESCO Group Services Inc., pursuant to which AIM
Management will be merged with a subsidiary of INVESCO. Subject to a number of
conditions being met, it is anticipated that the transaction will occur in the
early part of 1997. The Fund's investment advisor, AIM, is a wholly owned
subsidiary of AIM Management.
APPROVAL OF NEW ADVISORY, ADMINISTRATIVE SERVICES AND DISTRIBUTION
AGREEMENTS. On December 11, 1996, the Board of Directors (the "Board") of the
Company approved, subject to shareholder approval, a new investment advisory
agreement between AIM and the Company with respect to the Funds. Shareholders
approved the proposed advisory agreement at an annual meeting of shareholders on
February 7, 1997 (the "Annual Meeting"). The Board has also approved a new
administrative services agreement with AIM and a new distribution agreement with
AIM Distributors. There have been no material changes to the terms of the new
agreements, including the fees payable by the Funds. No change is anticipated in
the investment advisory or other personnel responsible for the Funds as a result
of these new agreements or the merger.
The Board approved these new agreements because the Funds' corresponding
existing agreements will terminate upon the consummation of the proposed merger
of AIM Management, the parent of AIM, into a subsidiary of INVESCO. INVESCO and
its subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. Provided that the merger is
consummated, the new advisory agreement with respect to the Funds, as well as
the new administrative services and distribution agreements, will automatically
become effective as of the closing of the merger.
CHANGES TO FUNDAMENTAL INVESTMENT POLICIES. The Board has unanimously approved
changes to the fundamental investment policies of the Funds as described below.
Shareholders approved these changes at the Annual Meeting and they will become
effective on March 1, 1997.
3
<PAGE> 96
Investment in Other Investment Companies
Each of the Funds is currently prohibited from investing more than 5% of its
assets in securities of a single issuer or holding more than 10% of the
outstanding voting securities of an issuer, except that the AGGRESSIVE GROWTH
FUND and the GROWTH FUND may invest up to 25% of all assets without regard to
such restrictions, and the INCOME FUND may invest up to 50% of all assets
without regard to such restrictions. The Board and shareholders have approved
amendment of these fundamental investment policies to permit investment in other
investment companies to the extent permitted by the Investment Company Act of
1940, and rules and regulations thereunder, and, if applicable, exemptive orders
granted by the SEC.
For additional information regarding the proposed changes described above, see
the Funds' Statement of Additional Information dated February 24, 1997.
PURCHASES AT NET ASSET VALUE. Upon consummation of the proposed merger of AIM
Management, the following additional persons may purchase shares of The AIM
Family of Funds through AIM Distributors without payment of an initial sales
charge: (a) INVESCO 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 INVESCO or its affiliates or any trust established exclusively for the
benefit of such persons and (c) any employee benefit plan established for
employees of INVESCO or its affiliates.
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK AND AIM INSTITUTIONAL FUNDS ARE REGISTERED
SERVICE MARKS AND LA FAMILIA AIM DE FONDOS, LA FAMILIA AIM DE FONDOS AND DESIGN
AND AIMFUNDS.COM ARE SERVICE MARKS OF A I M MANAGEMENT GROUP INC.
4
<PAGE> 97
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 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
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 A CLASS B CLASS A CLASS B
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase
of shares (as a % of offering price). 4.75% None 4.75% None 4.75% None
Maximum sales load on reinvested
dividends and distributions.......... None None None None None None
Deferred sales load (as a % of original
purchase price or redemption
proceeds, whichever is lower)........ None* 5.0% None* 5.0% None* 5.0%
Redemption fee.......................... None None None None None None
Exchange fee............................ None None None None None None
Annual Fund Operating Expenses (as a % of
average net assets)
Management fees......................... 0.90% 0.90% 0.85% 0.85% 0.00%** 0.00%**
Rule 12b-1 distribution plan payments... 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
Other expenses.......................... 0.43% 0.47% 0.58%** 0.63%** 0.75%** 0.75%**
----- ----- ----- ----- ----- -----
Total fund operating expenses... 1.83% 2.37% 1.93% 2.48% 1.25%** 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.
5
<PAGE> 98
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.
As a result of 12b-1 fees, a long-term shareholder may pay more than the
economic equivalent of the maximum front-end sales charges permitted by rules of
the National Association of Securities Dealers, Inc. Given the maximum front-end
sales charge applicable to Class A shares and the Rule 12b-1 fees applicable to
Class A shares and Class B shares, it is estimated that it would require a
substantial number of years to exceed the maximum permissible front-end sales
charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF A PARTICULAR
FUND'S ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN.
In addition, while the examples assume a 5% annual return, a Fund's actual
performance will vary and may result in an actual return that is greater or less
than 5%. The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total fund operating expenses remain the same
for each year.
- --------------------------------------------------------------------------------
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 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 information has been audited
by KPMG Peat Marwick LLP, independent auditors, whose unqualified reports on the
Funds' financial statements and the related notes appear in the Statement of
Additional Information.
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
----------------------- OCTOBER 31,
1996 1995 1994
-------- -------- -------------
<S> <C> <C> <C>
CLASS A SHARE
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>
(See footnotes on following page)
6
<PAGE> 99
- ---------------
(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>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
----------------------- OCTOBER 31,
1996 1995 1994
-------- -------- -------------
<S> <C> <C> <C>
CLASS B SHARE
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 from 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.
7
<PAGE> 100
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
----------------------- OCTOBER 31,
1996 1995 1994
-------- -------- -------------
<S> <C> <C> <C>
CLASS A SHARE
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.
8
<PAGE> 101
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
---------------------- OCTOBER 31,
1996 1995 1994
-------- -------- -------------
<S> <C> <C> <C>
CLASS B SHARE
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.
9
<PAGE> 102
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
--------------------- OCTOBER 31, --------------------- OCTOBER 31,
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 net
investmen 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.
10
<PAGE> 103
- --------------------------------------------------------------------------------
PERFORMANCE
The performance of each Fund may be quoted in advertising in terms of total
return, and the performance of the INCOME FUND may also be quoted in terms of
yield. All advertisements of a Fund will disclose the maximum sales charge
(including deferred sales charge) to which investments in shares of the Funds
may be subject. Each Fund will also include performance data on Class A and
Class B shares in any advertisement or promotional material which includes Fund
performance data. If any advertised performance data does not reflect the
maximum sales charge (if any), such advertisement will disclose that the sales
charge has not been deducted in computing the performance data, and that, if
reflected, the maximum sales charge would reduce the performance quoted. See the
Statement of Additional Information for further details concerning performance
comparisons used in advertisements by the Funds. 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 reflects the deduction of the
Fund's maximum initial sales charge at the time of purchase. Standardized total
return for Class B shares reflects the deduction of the maximum applicable
contingent deferred sales charge on a redemption of shares held for the period.
Each Fund's total return shows its overall change in value, including changes
in share price assuming that all the Fund's dividends and capital gain
distributions are reinvested and that all charges and expenses are deducted. A
cumulative total return reflects a Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN A FUND'S RETURN, INVESTORS SHOULD
RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To
illustrate the components of overall performance, a Fund may separate its
cumulative and average annual returns into income results and capital gains or
losses.
Yield is computed in accordance with a standardized formula described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, the
yield information may not provide a basis for comparison with investments which
pay a fixed rate of interest for a stated period of time. Yield reflects
investment income net of expenses over the relevant period attributable to a
share of the Fund, expressed as an annualized percentage of the maximum offering
price per share of the Fund. It is a function of the type and quality of a
Fund's investments, its maturity and its operating expense ratio.
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 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
11
<PAGE> 104
be more difficult for the Fund to buy and sell shares without an unfavorable
impact on prevailing market prices. Some of the companies in which the Fund may
invest may distribute, sell or produce products which have recently been brought
to market. Any of the foregoing may change suddenly and have an immediate impact
on the value of the Fund's investments. Furthermore, whenever the securities
markets have experienced rapid price changes due to national economic trends,
secondary growth securities have historically been subject to exaggerated price
changes.
AIM GLOBAL GROWTH FUND. The investment objective of the GROWTH FUND is to
provide long-term growth of capital. The Fund seeks to achieve its objective by
investing in a portfolio of global equity securities of selected companies that
are considered by AIM to have strong earnings momentum. Current income will not
be an important criterion of investment selection, and any such income should be
considered incidental.
In managing both the AGGRESSIVE GROWTH FUND and the GROWTH FUND, AIM seeks to
apply to each of the diversified portfolios of equity securities the same
investment strategy which it applies to several of its other managed portfolios
which have similar investment objectives but which invest primarily in United
States equities markets. Each of the AGGRESSIVE GROWTH FUND and the GROWTH FUND
will utilize to the extent practicable a fully managed investment policy
providing for the selection of securities which meet certain quantitative
standards determined by AIM. AIM reviews carefully the earnings history and
prospects for growth of each company considered for investment by each of the
two Funds. It is anticipated that common stocks will be the principal form of
investment of the AGGRESSIVE GROWTH FUND and the GROWTH FUND. The portfolio of
each of the two Funds is primarily comprised of securities of two basic
categories of companies: (a) "core" companies, which AIM considers to have
experienced above-average and consistent long-term growth in earnings and to
have excellent prospects for outstanding future growth, and (b) "earnings
acceleration" companies which AIM believes are currently enjoying a dramatic
increase in earnings.
Under normal market conditions, the AGGRESSIVE GROWTH FUND and the GROWTH FUND
will invest primarily in marketable equity securities (including common and
preferred stock and other securities having the characteristics of stock (such
as an equity or ownership interest in a company)) of companies which, with their
predecessors, have been in continuous operation for three years or more and
which are listed on a recognized securities exchange or traded in an
over-the-counter market. 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, with their
predecessors, have been in continuous operation for three years or more and
(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 investing in a portfolio of U.S. and foreign government and
corporate debt securities. The INCOME FUND intends to invest in
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<PAGE> 105
(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. See "Summary -- Material Events" for changes in the
Fund's investment restrictions effective March 1, 1997.
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.
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<PAGE> 106
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.
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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,
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<PAGE> 107
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> 108
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> 109
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> 110
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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> 111
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. See "Summary -- Material Events"
for changes in the Fund's investment restrictions effective March 1, 1997.
EMERGING MARKETS AND DEVELOPING COUNTRIES. Investors should also be aware that
the Funds may invest in companies located within emerging or developing
countries. Investments in emerging markets or developing countries involve
exposure to economic structures that are generally less diverse and mature and
to political systems which can be expected to have less stability than those of
more developed countries. Such countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
which trade only a small number of securities. Historical experience indicates
that emerging markets have been more volatile than the markets of more mature
economies; such markets have also from time to time provided higher rates of
return and greater risks to investors. AIM believes that these characteristics
of emerging markets can be expected to continue in the future. In addition,
throughout the countries commonly referred to as the Eastern Bloc, the lack of a
capital market structure or market-oriented economy and the possible reversal of
recent favorable economic, political and social events in some of those
countries present greater risks than those associated with more developed,
market-oriented Western European countries and markets.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The following restrictions are matters of fundamental policy and may not be
changed without approval of a Fund's shareholders.
No Fund may:
1. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by the Fund.
2. Purchase a security if, as a result, 25% or more of the value of
the Fund's total assets, taken at market value, would be invested in the
securities of issuers having their principal business activities in the
same industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. Government or by any of its agencies or
instrumentalities but will apply to foreign government obligations unless
the 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.
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. See "Summary -- Material
Events" for changes in the Funds' investment restrictions effective March 1,
1997.
- --------------------------------------------------------------------------------
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> 112
- --------------------------------------------------------------------------------
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.
Certain directors and officers of the Company are affiliated with AIM and A I M
Management Group Inc. ("AIM Management"), the parent corporation of AIM. AIM
Management is a holding company engaged in the financial services business.
Information concerning the Board of Directors may be found in the Statement of
Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite
1919, Houston, Texas 77046, serves as the investment advisor to each Fund
pursuant to an investment advisory agreement, dated as of July 1, 1994 (the
"Advisory Agreement"). AIM was organized in 1976 and, together with its
subsidiaries, manages or advises 43 investment company portfolios. As of January
31, 1997, the total assets advised or managed by AIM or its subsidiaries were
approximately $66.5 billion. AIM is a wholly-owned subsidiary of AIM Management.
See "Summary -- Material Events" for a description of AIM Management's proposed
merger with a subsidiary of INVESCO.
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 July 1, 1994 (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. See "Summary -- Material Events" for a
description of AIM Management's proposed merger with a subsidiary of INVESCO.
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 117
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, Paul A. Rogge, Barrett K. Sides and
Dominic H.R. Moross 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. Moross is Assistant Vice President of AIM
Capital and has been responsible for the Fund since 1995. Mr. Moross has been
associated with AIM since 1993 and has a total of three years of experience as
an investment professional. Prior to joining AIM, he was a management graduate
trainee with Maxwell Communications PLC.
A. Dale Griffin, III, Paul A. Rogge, Jonathan C. Schoolar, Barrett K. Sides
and Dominic H.R. Moross are responsible for the day-to-day management of the
GROWTH FUND. Background information for Mr. Griffin, Mr. Rogge, Mr. Sides and
Mr. Moross 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. Sides and Mr. Moross have been responsible for the
Fund since 1995. Mr. Schoolar is Senior Vice President and Director 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. Schoolar has been
associated with AIM since 1986 and has a total of 13 years of experience as an
investment professional.
20
<PAGE> 113
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>
21
<PAGE> 114
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.
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 and Class B shares of
the Funds. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. Certain directors and officers of the Company are affiliated with
AIM Distributors. See "Summary -- Material Events" for a description of AIM
Management's proposed merger with a subsidiary of INVESCO.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Funds directly and through institutions with whom
AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to Class B shares) of each Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges in respect of the outstanding Class B shares attributable to AIM
Distributors; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments to AIM Distributors. Termination of the Class B shares distribution
plan or Distribution Agreement does not affect the obligation of Class B
shareholders to pay Contingent Deferred Sales Charges.
DISTRIBUTION PLANS. The Company has adopted a master distribution plan
applicable to Class A shares of each Fund (the "Class A Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Class A Plan, each Fund pays compensation of
0.50% per annum of the average daily net assets attributable to its Class A
shares to AIM Distributors for the purpose of financing any activity which is
primarily intended to result in the sale of Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs. Of the total 0.50% compensation payable, each Fund pays a service
fee of 0.25% to implement a program which provides periodic payments to selected
dealers and financial institutions who furnish continuing personal shareholder
services to their customers who purchase and own Class A shares of such Fund.
Any amounts not paid as a service fee would constitute an asset based sales
charge.
The Company has also adopted a master distribution plan applicable to Class B
shares of each Fund (the "Class B Plan"). Under the Class B Plan, each Fund pays
distribution expenses at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares. Of such amount, each Fund pays a service fee
of 0.25% of the average daily net assets attributable to its Class B shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class B shares of
such Fund. Any amounts not paid as a service fee would constitute an asset based
sales charge. Amounts paid in accordance with the Class B Plan may be used to
finance any activity primarily intended to result in the sale of Class B shares.
Activities that may be financed under the Class A Plan and the Class B Plan
(collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements and the cost of administering the Plans.
These amounts payable by a Fund under the Plans need not be directly related to
the expenses actually incurred by AIM Distributors on behalf of the Fund. Thus,
even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Company will not be obligated to
pay more than that fee, and, if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by the
rules of the National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of a Fund on an agency basis, may
receive payments from the Fund pursuant to the Fund's Plans. AIM Distributors
does not act as principal, but rather
22
<PAGE> 115
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 four investment portfolios: the Funds and AIM
International Equity Fund. The Board of Directors may authorize additional
portfolios in the future. Shares of the Funds are offered to investors pursuant
to this Prospectus, while shares of the AIM International Equity Fund are
offered to investors pursuant to a separate prospectus. The authorized capital
stock of the Company consists of 2,000,000,000 shares of common stock with a par
value of $0.001 per share, of which 200,000,000 shares are designated Class A
shares and 200,000,000 shares are designated Class B shares of each investment
portfolio of the Company, and the balance of which are unclassified.
Class A shares and Class B shares of the same Fund represent interests in that
Fund's assets and have identical voting, dividend, liquidation and other rights
on the same terms and conditions, except that each class of shares bears
differing class-specific expenses (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 and Class B
shares of a Fund. However, on matters affecting one portfolio of the Company or
one class of shares, a separate vote of shareholders of that portfolio or class
is required. Shareholders of a portfolio or class are not entitled to vote on
any matter which does not affect that portfolio or class but which requires a
separate vote of another portfolio or class. An example of a matter which would
be voted on separately by shareholders of a portfolio is the approval of an
advisory agreement, and an example of a matter which would be voted on
separately by shareholders of a class of shares is approval of a distribution
plan. When issued, shares of each Fund are fully paid and nonassessable, have no
preemptive or subscription rights, and are fully transferable. Other than the
automatic conversion of Class B shares to Class A shares, there are no
conversion rights. Shares do not have cumulative voting rights, which means that
in situations in which shareholders elect directors, holders of more than 50% of
the shares voting for the election of directors can elect all of the directors
of the Company, and the holders of less than 50% of the shares voting for the
election of directors will not be able to elect any directors.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is otherwise required under the
1940 Act to elect directors. Shareholders may remove directors from office, and
a meeting of shareholders may be called at the request of the holders of 10% or
more of the Company's outstanding shares. As of February 3, 1997, Merrill
Lynch, Pierce, Fenner & Smith was the owner of record of 27.21% of the
outstanding Class B shares of AGGRESSIVE GROWTH FUND. As long as Merrill Lynch,
Pierce, Fenner & Smith 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> 116
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 5:30 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS -- Registered Trademark --
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM AGGRESSIVE GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BLUE CHIP FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL EQUITY FUND
AIM CHARTER FUND AIM LIMITED MATURITY TREASURY SHARES
AIM CONSTELLATION FUND AIM MONEY MARKET FUND*
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM MUNICIPAL BOND FUND
AIM GLOBAL GROWTH FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL INCOME FUND AIM TAX-EXEMPT CASH FUND*
AIM GLOBAL UTILITIES FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GROWTH FUND AIM VALUE FUND
AIM WEINGARTEN FUND
</TABLE>
* Shares of AIM TAX-EXEMPT CASH FUND, and Class C shares of AIM MONEY MARKET
FUND, are offered to investors at net asset value, without payment of a sales
charge, as described below. Other funds, including the Class A and Class B
shares of AIM MONEY MARKET FUND, are sold with an initial sales charge or
subject to a contingent deferred sales charge upon redemption, as described
below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
MCF 02/97*
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<PAGE> 117
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 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
(other than AIM AGGRESSIVE GROWTH FUND and AIM CONSTELLATION FUND, collectively,
the "Multiple Class Funds") may be purchased at their respective net asset value
plus a sales charge as indicated below, except that shares of AIM TAX-EXEMPT
CASH FUND and Class C shares (the "Class C shares") of AIM MONEY MARKET FUND are
sold without a sales charge and Class B shares (the "Class B shares") of the
Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A or Class B
shares (or, if applicable, Class C shares) of a Multiple Class Fund are
described below under "Special Information Relating to Multiple Class Funds."
For information on purchasing any of the AIM Funds and to receive a prospectus,
please call (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 02/97*
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<PAGE> 118
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM AGGRESSIVE GROWTH FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND,
AIM MONEY MARKET FUND, AIM VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
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 $ 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: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT; and the Class A
shares of each of AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME
FUND, AIM INTERMEDIATE GOVERNMENT FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
--------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
- ---------------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and 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.
MCF 02/97*
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<PAGE> 119
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 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 4.0% 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.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class
Funds, other than AIM MONEY MARKET FUND, currently offer two classes of shares,
and AIM MONEY MARKET FUND currently offers three classes of shares, through
separate distribution systems (the "Multiple Distribution System"). Although the
Class A and Class B shares (and with respect to AIM MONEY MARKET FUND, Class C
shares) of a particular Multiple Class Fund represent an interest in the same
portfolio of investments, each class is subject to a different distribution
structure and, as a result, differing expenses. This Multiple Distribution
System allows investors to select the class that is best suited to the
investor's needs and objectives. In considering the options afforded by the
Multiple Distribution System, investors should consider both the applicable
initial sales charge or contingent deferred sales charge, as well as the ongoing
expenses borne by Class A or Class B shares and, if applicable, Class C shares,
and other relevant factors, such as whether his or her investment goals are
long-term or short-term.
MCF 02/97*
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<PAGE> 120
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Class B Plan payments of 1.00% per
annum on the average daily net assets of a Multiple Class Fund attributable
to Class B shares. See the discussion under the caption "Management --
Distribution Plans." In addition, Class B shares redeemed within six years
from the 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 Class B Plan payments associated
with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. Such
shares are, however, subject to the other fees and expenses described in
the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon or NYSE Close on any business day of
the Fund will be confirmed at the price next determined. Net asset value is
normally determined at 12:00 noon and NYSE Close on each business day of AIM
MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that either Money Market Fund can maintain a
$1.00 net asset value per share. In order to earn dividends with respect to AIM
MONEY MARKET FUND on the same day that a purchase is made, purchase payments in
the form of federal funds must be received by the Transfer Agent before 12:00
noon Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position. Class B shares of AIM MONEY MARKET
FUND are designed for temporary investment as part of an investment program in
the Class B shares and, unlike shares of most money market funds, are subject to
a contingent deferred sales charge as well as Rule 12b-1 distribution fees and
service fees.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem Shares --
Redemptions by Telephone" for restrictions applicable to shares issued in
certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of shares of AIM
TAX-EXEMPT CASH FUND, Class C shares of AIM MONEY MARKET FUND and Class B shares
of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
MCF 02/97*
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<PAGE> 121
The term "purchaser" means:
o an individual and his or her spouse and minor children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
o a 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;
o any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
o the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) AIM TAX-EXEMPT CASH FUND and Class C shares of AIM MONEY MARKET FUND and
(ii) Class B shares of the Multiple Class Funds) within the following 13
consecutive months. By marking the LOI section on the account application and by
signing the account application, the purchaser indicates that he understands and
agrees to the terms of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Trans-
MCF 02/97*
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<PAGE> 122
fer 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) AIM TAX-EXEMPT CASH
FUND and Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the
Multiple Class Funds) at the time of the proposed purchase. Rights of
Accumulation are also available to holders of the Connecticut General Guaranteed
Account, established for tax-qualified group annuities, for contracts purchased
on or before June 30, 1992. To determine whether or not a reduced initial sales
charge applies to a proposed purchase, AIM Distributors takes into account not
only the money which is invested upon such proposed purchase, but also the value
of all shares of the AIM Funds (except for (i) AIM TAX-EXEMPT CASH FUND and
Class C shares of AIM MONEY MARKET FUND and (ii) Class B shares of the Multiple
Class Funds) owned by such purchaser, calculated at their then current public
offering price. If a purchaser so qualifies for a reduced sales charge, the
reduced sales charge applies to the total amount of money then being invested by
such purchaser and not just to the portion that exceeds the breakpoint above
which a reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum initial sales charge of 5.50%,
the reduced initial sales charge of 5.25% will apply to the full $20,000
purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To
qualify for obtaining the discount applicable to a particular purchase, the
purchaser or his dealer must furnish AFS with a list of the account numbers and
the names in which such accounts of the purchaser are registered at the time the
purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the initial amount invested in
the fund(s) is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3)
such shares are purchased by an
MCF 02/97*
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<PAGE> 123
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single omnibus account per fund and
the financial institution or service organization has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms up to 1.00% of the net asset value of any shares of the Load Funds
(as defined on page A-10 herein) up to 0.10% of the net asset value of any
shares of AIM LIMITED MATURITY TREASURY SHARES, and up to 0.25% of the net asset
value of any shares of all other AIM Funds sold at net asset value to an
employee benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
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: (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 Class A shares of a Multiple Class Fund, Class C shares of AIM Money
Market Fund, or shares of another AIM Fund can arrange for monthly, quarterly or
annual checks in any amount (but not less than $50) to be drawn against the
balance of his account in the designated AIM Fund. Shareholders who own Class B
shares of a Multiple Class Fund can only arrange for monthly or quarterly
withdrawals under a Systematic Withdrawal Plan. Payment of this amount 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. No
contingent deferred sales charge with respect to Class B shares of a Multiple
Class Fund will be imposed on withdrawals made under a Systematic Withdrawal
Plan, provided that the amounts withdrawn under such a plan do not exceed on an
annual basis 12% of the account value at the time the shareholder elects to
participate in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with
respect to Class B shares that exceed on an annual basis 12% of such account
will be subject to a contingent deferred sales charge on the amounts exceeding
12% of the initial account value.
MCF 02/97*
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<PAGE> 124
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 Shares and Class C Shares of the Multiple Class Funds), it
is disadvantageous to effect such purchases while a Systematic Withdrawal Plan
is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly 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
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; and dividends and distributions attributable to
Class C shares of AIM MONEY MARKET FUND may be reinvested in additional shares
of such fund, in Class A shares of another Multiple Class Fund or in shares of
another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; and SEP plans
(collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF 02/97*
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<PAGE> 125
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, referred to
herein as the "Load Funds," are sold at a public offering price that includes a
maximum sales charge of 5.50% or 4.75% of the public offering price of such
shares; shares of certain of the AIM Funds, referred to herein as the "Lower
Load Funds," are sold at a public offering price that includes a maximum sales
charge of 1.00% of the public offering price of such shares; and shares of
certain other funds, including the Class C shares of AIM MONEY MARKET FUND,
referred to herein as the "No Load Funds," are sold at net asset value, without
payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
----------- -----------------
AIM AGGRESSIVE GROWTH AIM HIGH YIELD FUND -- CLASS A AIM LIMITED MATURITY TREASURY SHARES
FUND -- CLASS A AIM INCOME FUND -- CLASS A AIM TAX-FREE INTERMEDIATE SHARES
AIM BALANCED FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A NO LOAD FUNDS:
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY --------------
FUND -- CLASS A FUND -- CLASS A AIM MONEY MARKET FUND
AIM CHARTER FUND -- CLASS A AIM MONEY MARKET -- CLASS C
AIM CONSTELLATION FUND -- CLASS A AIM TAX-EXEMPT CASH FUND
FUND -- CLASS A AIM MUNICIPAL BOND
AIM GLOBAL AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL INCOME AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
AIM GLOBAL UTILITIES
FUND -- CLASS A
AIM GROWTH FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund,
except that (i) Load Fund share purchases of $1,000,000 or more which are
subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (ii) LOWER LOAD FUND SHARE PURCHASES
OF $1,000,000 OR MORE AND NO LOAD FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND
SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
and shares of all other AIM Funds may not be exchanged for Class B shares; (iv)
Class B shares may be exchanged only for Class B shares; and (v) Class C shares
of AIM MONEY MARKET FUND may not be exchanged for Class A shares of AIM MONEY
MARKET FUND or for Class B shares. DEPENDING UPON THE FUND FROM WHICH AND INTO
WHICH AN EXCHANGE IS BEING MADE, SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE
ACQUIRED AT THEIR OFFERING PRICE OR AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF
A SALES CHARGE) AS SET FORTH IN THE TABLE BELOW FOR SHARES INITIALLY PURCHASED
PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE
CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
- ----- ----------------- --------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable
Lower Load Funds Net Asset Value Net Asset Value Net Asset Value Not Applicable
No Load Funds... Offering Price if No Load shares were Net Asset Value if Net Asset Value Not Applicable
directly purchased. Net Asset Value No Load shares were
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund exchange of shares of
or any Lower Load Fund. any Load Fund or any
Lower Load Fund;
otherwise,
Offering Price.
</TABLE>
(Table continued on following page)
MCF 02/97*
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<PAGE> 126
<TABLE>
<CAPTION>
MULTIPLE
CLASS
LOWER LOAD NO LOAD FUNDS:
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B
- ----- ----------------- --------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Multiple Class
Funds:
Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds...... Net Asset Value Net Asset Value Net Asset Value Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable
Funds......... acquired upon exchange of any Load
Fund. Otherwise, difference in sales
charge will apply.
No Load Funds... Offering Price if No Load shares were Net Asset Value if Net Asset Value Not Applicable
directly purchased. Net Asset Value No Load shares were
if No Load shares were acquired upon acquired upon
exchange of shares of any Load Fund. exchange of shares of
Difference in sales charge will apply any Load Fund or any
if No Load shares were acquired upon Lower Load Fund;
exchange of Lower Load Fund shares. otherwise, Offering
Price.
Multiple Class
Funds:
Class B....... Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A and Class B shares of a Multiple Class Fund cannot be
exchanged for each other), except that Class C shares of AIM MONEY MARKET FUND
may be exchanged for Class A shares of another Multiple Class Fund; (b) the
dollar amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the fund acquired through such exchange; (c) the
shares of the fund acquired through exchange must be qualified for sale in the
state in which the shareholder resides; (d) the exchange must be made between
accounts having identical registrations and addresses; (e) the full amount of
the purchase price for the shares being exchanged must have already been
received by the fund; (f) the account from which shares have been exchanged must
be coded as having a certified taxpayer identification number on file or, in the
alternative, an appropriate 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.
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
MCF 02/97*
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<PAGE> 127
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 SHARES. A contingent deferred sales charge will not be
imposed in connection with exchanges among Class B shares of Multiple Class
Funds. For purposes of determining a shareholder's holding period of Class B
shares in the calculation of the applicable contingent deferred sales charge,
the period of time during which Class B shares were held prior to an exchange
will be added to the holding period of Class B shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares purchased under the Multiple
Distribution System may be redeemed on any business day of a Multiple Class Fund
at the net asset value per share next determined following receipt of the
redemption order, as described under the caption "Timing and Pricing of
Redemption Orders," less the applicable contingent deferred sales charge shown
in the table below. No deferred sales charge will be imposed (i) on redemptions
of Class B shares following six years from the date such shares were purchased,
(ii) on Class B shares acquired through reinvestments of dividends and
distributions attributable to Class B shares or (iii) on amounts that represent
capital appreciation in the shareholder's account above the purchase price of
the Class B shares.
<TABLE>
<CAPTION>
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.
Contingent deferred sales charges on Class B shares will be waived on
redemptions (1) following the registered shareholder's (or in the case of joint
accounts, all registered joint owners') death or disability, as defined in
Section 72(m)(7) of the Code (provided AIM Distributors is notified of such
death or disability at the time of the redemption request and is provided with
satisfactory evidence of such death or disability), (2) in connection with
certain distributions from individual retirement accounts, custodial accounts
maintained pursuant to Code Section 403(b), deferred compensation plans
qualified under Code Section 457 and plans qualified under Code Section 401
(collectively, "Retirement Plans"), (3) pursuant to a Systematic Withdrawal
Plan, provided that amounts withdrawn under such plan do not exceed on an annual
basis 12% of the value of the shareholder's investment in Class B shares at the
MCF 02/97*
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<PAGE> 128
time the shareholder elects to participate in the Systematic Withdrawal Plan,
(4) effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund and (5) effected by AIM of its investment
in Class B shares.
Waiver category (1) above applies only to redemptions:
(i) made within one year following death or initial determination of
disability; and
(ii) of Class B shares held at the time of death or initial
determination of disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B shares of one or more Multiple Class Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B shares of a Multiple Class Fund and purchases of shares of
the No Load Funds 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 or Class C shares
of AIM MONEY MARKET FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load
Fund or a No Load Fund which previously were not subject to the 1% contingent
deferred sales charge will not be credited with the period of time such
exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the initial amount invested
by a Plan in one or more of the AIM Funds is at least $1,000,000, (b) the
sponsor of a Plan signs a letter of intent to invest at least $1,000,000 in one
or more of the AIM Funds, or (c) the shares being redeemed were purchased by an
employer-sponsored Plan with at least 100 eligible employees; provided,
however, that Plans created under Section 403(b) of the Code which are
sponsored by public educational institutions shall qualify under (a), (b) or
(c) above on the basis of the value of each Plan participant's aggregate
investment in the AIM Funds, and not on the aggregate investment made by the
Plan or on the number of eligible employees; (2) redemptions of shares
following the registered shareholder's (or in the case of joint accounts, all
registered joint owners') death or disability, as defined in Section 72(m)(7)
of the Code; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; and (4) redemptions of shares purchased by an investor in amounts
of $1,000,000 or more where such investor's dealer of record, due to the nature
of the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for re-
MCF 02/97*
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<PAGE> 129
demption by corporations, partnerships, trusts or other entities. The burden is
on the shareholder to inquire as to whether any additional documentation is
required. Any request not in proper form may be rejected and in such case must
be renewed in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information; and (e) the proceeds
of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth at that item of the account application if they reasonably believe such
request to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and Class C Shares of AIM MONEY
MARKET FUND). After completing the appropriate authorization form, shareholders
may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND and the Class
C Shares of AIM MONEY MARKET FUND. This privilege does not apply to retirement
accounts or qualified plans. Checks may be drawn in any amount of $250 or more.
Checks drawn against insufficient shares in the account, 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 Class B shares of the Multiple Class Funds,
and Class A shares of the Multiple Class Funds and shares of the other AIM Funds
that are subject to the contingent deferred sales charge program for large
purchases described above, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form 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.
MCF 02/97*
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<PAGE> 130
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 certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in shares of any
AIM Fund at the net asset value next computed after receipt by the Transfer
Agent of the funds to be reinvested; provided, however, if the redemption was
made from AIM LIMITED MATURITY TREASURY SHARES or AIM TAX-FREE INTERMEDIATE
SHARES, however, 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 of the Multiple Class Funds or shares of
any other AIM Fund, and who subsequently reinvest a portion or all of the value
of the redeemed shares in shares of 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 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 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 contract closing prices which are available
15 minutes after the close of trading of the NYSE will generally be used. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the Money Market Funds, are valued at amortized cost as
reflecting fair value. AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
MCF 02/97*
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Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- ----------------------- --------------- ---------------
<S> <C> <C> <C>
AIM AGGRESSIVE GROWTH FUND................... declared and paid annually annually annually
AIM BALANCED FUND............................ declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................... declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND................. declared and paid annually annually annually
AIM CHARTER FUND............................. declared and paid quarterly annually annually
AIM CONSTELLATION FUND....................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND............ declared and paid annually annually annually
AIM GLOBAL GROWTH FUND....................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND....................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND.................... declared daily; paid monthly annually annually
AIM GROWTH FUND.............................. declared and paid annually annually annually
AIM HIGH YIELD FUND.......................... declared daily; paid monthly annually annually
AIM INCOME FUND.............................. declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND............. declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND................ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES......... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND........................ declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND...................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT...... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND..................... declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE SHARES............. declared daily; paid monthly annually annually
AIM VALUE FUND............................... declared and paid annually annually annually
AIM WEINGARTEN FUND.......................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Class A, Class B or Class C shares
are reinvested in additional shares of such Class, absent an election by a
shareholder to receive cash or to have such dividends and distributions
reinvested in Class A or Class B shares of another Multiple Class Fund, to the
extent permitted. For funds that do not declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date. Shareholders may elect, by written notice to 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 A shares may not be reinvested in Class B
shares, and (iii) dividends and distributions attributable to the Class C shares
of AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that
Fund or in any Class B shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact 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.
MCF 02/97*
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<PAGE> 132
Dividends on Class B shares are expected to be lower than those for Class A or
Class C shares because of higher distribution fees paid by Class B shares.
Dividends on Class A, Class B and Class C shares may also be affected by other
class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to 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 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. No gain or loss will be recognized by
shareholders upon the automatic conversion of Class B shares of a Multiple Class
Fund into Class A shares of such Fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on 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 02/97*
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<PAGE> 133
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 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 and AIM LIMITED MATURITY TREASURY 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 02/97*
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APPENDIX A
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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> 135
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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<PAGE> 136
APPENDIX B
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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.
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<PAGE> 137
The minimum size of a FNMA pool is $1 million of mortgage loans. Registered
holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually through
securities dealers. The lender of a single lender pool typically markets all
Certificates based on that pool, and lenders of multiple lender pools market
Certificates based on a pro rata interest in the aggregate pool. The amount of
FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE
MAES" -- are mortgage-backed securities which represent a partial ownership
interest in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Each mortgage loan included
in the pool is either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled, and, after being approved by GNMA, is offered to investors through
securities dealers. GNMA is a U.S. Government corporation within the Department
of Housing and Urban Development.
GNMA Certificates differ from bonds in that the principal is paid back monthly
by the borrower over the term of the loan rather than returned in a lump sum at
maturity. GNMA Certificates are called "modified pass-through" securities
because they entitle the holder to receive its proportionate share of all
interest and principal payments owed on the mortgage pool, net of fees paid to
the issuer and GNMA, regardless of whether or not the mortgagor actually makes
the payment. Payment of principal of and interest on GNMA Certificates of the
"modified pass-through" type is guaranteed by GNMA and backed by the full faith
and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially less than
the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return on the greater part of principal invested far in advance of
the maturity of the mortgages in the pool. Foreclosures impose little risk to
principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely, it is
not possible to accurately predict the average life of a particular issue of
GNMA Certificates. However, statistics published by the Federal Housing
Authority indicate that the average life of a single-family dwelling mortgage
with 25- to 30-year maturity, the type of mortgage which backs the vast majority
of GNMA Certificates, is approximately 12 years. It is therefore customary
practice to treat GNMA Certificates as 30-year mortgage-backed securities which
prepay fully in the twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates,
the coupon rate of interest of GNMA Certificates is lower than the interest paid
on the VA-guaranteed or FHA-insured mortgages underlying the Certificates.
The yield which will be earned on GNMA Certificates may vary from their coupon
rates for the following reasons: (i) Certificates may be issued at a premium or
discount, rather than at par; (ii) Certificates may trade in the secondary
market at a premium or discount after issuance; (iii) interest is earned and
compounded monthly which has the effect of raising the effective yield earned on
the Certificates; and (iv) the actual yield of each Certificate is affected by
the prepayment of mortgages included in the mortgage pool underlying the
Certificates and the rate at which principal so prepaid is reinvested. In
addition, prepayment of mortgages included in the mortgage pool underlying a
GNMA Certificate purchased at a premium may result in a loss to the Fund.
Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things, the
level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES -- are
participation certificates issued by the General Services Administration of the
U.S. Government.
MARITIME ADMINISTRATION BONDS -- are bonds issued and provided by the
Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES -- are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS -- are short-term project notes and long-term
bonds issued by public housing and urban renewal agencies in connection with
programs administered by the Department of Housing and Urban Development of the
U.S. Government, the payment of which is secured by the U.S. Government.
SBA DEBENTURES -- are debentures fully guaranteed as to principal and interest
by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES -- are debentures backed by the Student Loan Marketing
Association.
TITLE XI BONDS -- are bonds issued in accordance with the provisions of Title
XI of the Merchant Marine Act of 1936, as amended, the payment of which is
guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS -- are bonds issued by
the Washington Metropolitan Area Transit Authority and are guaranteed by the
Secretary of Transportation of the U.S. Government.
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<PAGE> 138
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF 02/97*
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<PAGE> 139
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 02/97*
B-2
<PAGE> 140
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 141
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS --Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, 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.
<PAGE> 142
STATEMENT OF
ADDITIONAL INFORMATION
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(713) 626-1919
-------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS,
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS
OR BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739,
OR BY CALLING (800) 347-4246
-------------------------
Statement of Additional Information Dated: February 24, 1997
Relating to the Prospectus Dated: February 24, 1997
<PAGE> 143
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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 TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Stock Index Options and Futures and Financial Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Restrictions on the Use of Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Asset Coverage for Futures and Options Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Risk Factors in Options, Futures, Forward and Currency Transactions . . . . . . . . . . . . . . . . . . . . 13
Repurchase Agreements and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Material Changes to Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 24
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Investment Advisory and Administrative Services Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 26
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
i
<PAGE> 144
<TABLE>
<S> <C>
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 145
INTRODUCTION
AIM International Funds, Inc. (the "Company") is a series mutual fund.
The rules and regulations of the Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information, which relates to the following portfolios of the Company: AIM
Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income
Fund (individually, a "Fund" and collectively, the "Funds"), is included in a
Prospectus, dated February 24, 1997 (the "Prospectus"). Copies of the
Prospectus and additional copies of this Statement of Additional Information
may be obtained without charge by writing the principal distributor of the
Fund's shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, Texas 77210-4739, or by calling (800) 347-4246. Investors must
receive a Prospectus before they invest in the Funds.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some
of the information required to be in this Statement of Additional Information
is also included in the Funds' current Prospectus, and in order to avoid
repetition, reference will be made herein to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the Company's Registration Statement filed
with the SEC. Copies of the Registration Statement, including items omitted
from the Prospectus and this Statement of Additional Information, may be
obtained from the SEC by paying the charges prescribed under its rules and
regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1991 as a Maryland corporation, and is
registered with the SEC as an open-end, series, management investment company.
The Company currently consists of four separate portfolios: AIM International
Equity Fund (the "Equity 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"). Each portfolio of the Company offers
both Class A and Class B shares. This Statement of Additional Information and
the associated Prospectus relate solely to the Funds. Shares of the Equity
Fund are offered through a separate prospectus and statement of additional
information.
As used in the Prospectus, the term "majority of the outstanding
shares" of the Company, of a particular Fund or of a class of a Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Company, such Fund or such class present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Company, such Fund or such class.
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to such Fund and, upon liquidation of the Fund, to participate proportionately
in the Fund's net assets remaining after satisfaction of the Fund's outstanding
liabilities. Fractional shares have proportionately the same rights, including
voting rights, as are provided for full shares.
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:
1
<PAGE> 146
<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 share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns and other performance information
may be quoted numerically or in tables, graphs or similar illustrations. Total
returns may be quoted with or without taking the Class A shares' 4.75% maximum
sales charge, or the Class B shares' 5% maximum contingent deferred sales
charge ("CDSC") into account. Excluding sales charges from a total return
calculation produces a higher total return figure.
2
<PAGE> 147
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]
<TABLE>
<S> <C> <C> <C>
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.
</TABLE>
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:
Class A . . . . . . . . . . . 6.09%
Class B . . . . . . . . . . . 5.90%
HISTORICAL PORTFOLIO RESULTS
The total returns for Class A shares of the Aggressive Growth Fund,
Growth Fund and Income Fund for the year 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) 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%
Growth Fund 11.69% 16.21% 11.69% 37.66%
Income Fund 4.99% 10.22% 4.99% 23.00%
</TABLE>
The total returns for Class B shares of the Aggressive Growth Fund,
Growth Fund and Income Fund for the year 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:
3
<PAGE> 148
<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%
Growth Fund 11.60% 17.12% 11.60% 39.95%
Income Fund 4.66% 10.93% 4.66% 24.72%
</TABLE>
During the one-year period ended October 31, 1996, a hypothetical
$1,000 investment in the Class A shares of the Aggressive Growth Fund, Growth
Fund and Income Fund at the beginning of such period would have been worth
$1,150.90, $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) through October 31, 1996, a hypothetical
$1,000 investment in the Class A shares of the Aggressive Growth Fund, Growth
Fund and Income Fund at the beginning of such period would have been worth
$1,506.50, $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, Growth
Fund and Income Fund at the beginning of such period would have been worth
$1,150.90, $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, Growth Fund and Income Fund at the beginning of such
period would have been worth $1,533.60, $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:
<TABLE>
<S> <C>
Standard & Poor's 500 Stock Index Dow Jones Industrial Average
Consumer Price Index Morgan Stanley Capital International Indices,
Bond Buyer Index 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 (a recognized series of indices in
wide range of comprehensive measures of international market
stock price performance for the world's (performance)
major stock markets and regional areas)
</TABLE>
Each Fund may also compare its performance to rates on
Certificates of Deposit and other fixed rate investments such as the
following:
10 year Treasuries
30 year Treasuries
90 Day Treasury Bills
4
<PAGE> 149
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.
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
5
<PAGE> 150
be determined based upon the following factors, among others: (1) the execution
services provided by the broker; (2) the research services provided by the
broker; and (3) the broker's attitude toward and interest in mutual funds in
general and in the Funds and other mutual funds advised by AIM or A I M Capital
Management, Inc. (collectively, the "AIM Funds") in particular. No specific
formula will be used in connection with any of the foregoing considerations in
determining the target levels. However, if a broker has indicated a certain
level of desired commissions in return for certain research services provided
by the broker, this factor will be taken into consideration by AIM.
Subject to the overall objective of obtaining best net price and most
favorable execution for the Funds, AIM may also consider sales of the Funds and
of the other AIM Funds as a factor in the selection of broker-dealers to
execute portfolio transactions for a Fund. 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.
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.
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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
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.
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Some broker-dealers may indicate that the provision of research
services is dependent upon the generation of certain specified levels of
commissions and underwriting concessions by AIM's clients, including the Funds.
With respect to the Income Fund, purchase and sales of portfolio
securities are generally transacted with the issuer or a primary market maker
for the securities on a net basis, without any brokerage commission being paid
by the Fund for such purchases. Purchases from dealers serving as primary
market makers reflect the spread between the bid and asked prices. Purchases
and sales for the Aggressive Growth Fund and Growth Fund generally involve a
broker, and consequently involve the payment of commissions.
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, 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.
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 TECHNIQUES
The following discussion of certain investment strategies supplements
the discussion set forth in the Prospectus under the heading "Hedging
Strategies and Other Investment Techniques."
Each Fund may seek to hedge its portfolio against movements in the
equity markets, interest rates and exchange rates between currencies through
the use of options, futures transactions, options on futures and foreign
forward exchange transactions. Each Fund has authority to write (sell) covered
call and put options on its portfolio securities, purchase put and call options
on securities and engage in transactions in stock index options, stock index
futures and financial futures, and related options on such futures. The Funds
may also deal in certain forward contracts, including forward foreign exchange
transactions, foreign currency options and futures, and related options on such
futures. The Funds are authorized to enter into such options and futures
transactions either on exchanges or in the OTC markets. Although certain risks
are involved in options and futures transactions (as discussed in the
Prospectus and below), AIM believes that, because the Funds will only engage in
these transactions for hedging purposes, the options and futures portfolio
strategies of the Funds will not subject the Funds to the risks frequently
associated with the speculative use of options and futures transactions. While
the Funds' use of hedging strategies is intended to reduce the volatility of
the respective net asset value of each Fund's shares, a Fund's net asset value
will nevertheless fluctuate. There can be no assurance that the hedging
transactions of any of the Funds will be effective.
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HEDGING FOREIGN CURRENCY RISKS
Generally, the foreign exchange transactions of a Fund will be
conducted on a spot (cash) basis at the spot rate then prevailing for
purchasing or selling currency in the foreign exchange market. However, the
Funds have authority to deal in forward foreign exchange between currencies
(including the U.S. dollar) as a hedge against possible variations in the
foreign exchange rate between such currencies. This is accomplished through
individually negotiated contractual agreements to purchase or to sell a
specified currency at a specified future date and price set at the time of the
contract. A Fund's dealings in forward foreign exchange may be with respect to
a specific purchase or sale of a security, or with respect to its portfolio
positions generally.
The Funds may not position hedge with respect to the currency of a
particular country to an extent greater than the aggregate market value (at the
time of making such sale) of the securities held in any such Fund's portfolio
denominated or quoted in that particular foreign currency. The Funds will not
attempt to hedge all of their respective portfolio positions and will enter
into such transactions only to the extent, if any, deemed appropriate by AIM.
None of the Funds will enter into a position hedging commitment if, as a result
thereof, (1) the Aggressive Growth Fund or the Growth Fund would have more than
10% of the value of their respective total assets committed to such contracts,
or (2) the Income Fund would have more than 40% of the value of its total
assets committed to such contracts. None of the Funds will enter into a
forward contract with a term of more than one year.
In addition to the forward exchange contracts, the Funds may also
purchase or sell listed or OTC foreign currency options, foreign currency
futures and related options as a short or long hedge against possible
variations in foreign exchange rates. The cost to a Fund of engaging in
foreign currency transactions varies with such factors as the currencies
involved, the length of the contract period and the market conditions then
prevailing. Since transactions in foreign currency exchange usually are
conducted on a principal basis, no fees or commissions are involved.
Transactions involving forward exchange contracts and futures contracts and
options thereon are subject to certain risks. A detailed discussion of such
risks appears under the caption "Risk Factors in Options, Futures, Forward and
Currency Transactions."
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.
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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 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
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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 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
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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 position may be closed out by taking an opposite
position which will operate to terminate the position in the futures contract.
A final determination of variation margin is then made, additional cash is
required to be paid to or released by the broker and the purchaser realizes a
loss or gain. In addition, a nominal commission is paid on each completed sale
transaction.
Regulations of the CFTC applicable to the Funds require that all of
the Funds' futures and options on futures transactions constitute bona fide
hedging transactions and that the Funds not enter into such transactions if,
immediately thereafter, the sum of the amount of initial margin deposits on a
Fund's existing futures positions and premiums paid for related options would
exceed 5% of the market value of such Fund's total assets. However, if an
option is "in-the-money" (the price of the option exceeds the strike price),
the in-the-money portion may be excluded in computing the 5% limit.
RESTRICTIONS ON OTC OPTIONS
The Funds will engage in transactions involving OTC options, including
over-the-counter stock index options, over-the-counter foreign security and
currency options and options on foreign security and currency futures, only
with member banks of the Federal Reserve System and primary dealers in U.S.
Government securities or with affiliates of such banks or dealers which have
capital of at least $50 million or whose obligations are guaranteed by an
entity having capital of at least $50 million. The Funds will acquire only
those OTC options for which AIM believes a Fund can receive on each business
day at least two independent bids or offers (one of which will be from an
entity other than a party to the option).
The Staff of the SEC has taken the position that purchased OTC options
and the assets used as cover for written OTC options are illiquid securities.
Therefore, the Funds have each adopted an operating policy pursuant to which
each Fund will not purchase or sell OTC options (including OTC options on
futures contracts) if, as a result of such transaction, the sum of (i) the
market value of OTC options currently outstanding which are held by a Fund,
(ii) the market value of the underlying securities covered by OTC call options
currently outstanding which were sold by such Fund, (iii) margin deposits on
the Fund's existing OTC options on futures contracts, and (iv) the market value
of all other assets of the Fund which are illiquid or are not otherwise readily
marketable, would exceed 10% of the net assets of such Fund, taken at market
value.
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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
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.
13
<PAGE> 158
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 security during the period in which the Fund seeks to
enforce its rights thereto; (b) a possible subnormal level of income and lack
of access to income during this period; and (c) expenses of enforcing its
rights. A repurchase agreement is collateralized by the security acquired by
the Fund and its value is marked to market daily in order to minimize the
Fund's risk. Repurchase agreements usually are for short periods, such as one
or two days, but may be entered into for longer periods of time.
A reverse repurchase agreement involves the sale of securities held by
a Fund, with an agreement that the Fund will repurchase such securities at an
agreed-upon price, date, and interest payment. It is the current operating
policy of the Aggressive Growth Fund and the Growth Fund to enter into reverse
repurchase agreements (which are considered to be borrowings under the 1940
Act) only for temporary or emergency purposes and not as a means to increase
income. The Income Fund may enter into such transactions as a means to enhance
portfolio returns. The Funds will enter into reverse repurchase agreements
only when the interest income to be earned from the investment of the proceeds
of the transaction is greater than the interest expense of the transaction.
During the time a reverse repurchase agreement is outstanding, the applicable
Fund will segregate U.S. Treasury obligations having a value equal to the
repurchase price under such reverse repurchase agreement. Any investment gains
made by a Fund with monies borrowed through reverse repurchase agreements will
cause the net asset value of the Fund's shares to rise faster than would be the
case if the Fund had no such borrowings. On the other hand, if the investment
performance resulting from the investment of borrowings obtained through
reverse repurchase agreements fails to cover the cost of such borrowings to the
Fund, the net asset value of the Fund will decrease faster than would otherwise
be the case.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may make
secured loans of portfolio securities amounting to not more than 33-1/3% of
each Fund's respective total assets. Securities loans are made to banks,
brokers and other financial institutions pursuant to agreements requiring that
the loans be continuously secured by collateral at least equal at all times to
the value of the securities lent marked to market on a daily basis. The
collateral received will consist of cash, U.S. Government securities, letters
of credit or such other collateral as may be permitted under the applicable
Fund's investment program. While the securities are being lent, the Fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. The Funds have a right to call each of
their respective loans and obtain the securities on five business days' notice
or, in connection with securities trading on foreign markets, within such
longer period of time which
14
<PAGE> 159
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.
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.
15
<PAGE> 160
INVESTMENT RESTRICTIONS
MATERIAL CHANGES TO INVESTMENT RESTRICTIONS
On December 11, 1996, the Board of Directors of the Company approved,
subject to shareholder approval, a change to certain fundamental investment
policies of the Funds. Shareholders of the Funds approved these changes at an
annual meeting of shareholders on February 7, 1997 and they will become
effective as of March 1, 1997.
Reference is made to Investment Restrictions 9, 10 and 11 set forth
below. The Board of Directors and shareholders approved a change to Investment
Restrictions 9, 10 and 11. Effective as of March 1, 1997, Investment
Restrictions 9, 10 and 11 will read in full as follows:
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 the 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 the Fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive
order.
The following fundamental policies and investment restrictions have
been adopted by the Funds and, except as noted, such policies cannot be changed
without approval by the vote of a majority of the outstanding voting securities
of the applicable Fund, as defined in the 1940 Act.
The Funds may not:
1. Purchase or sell real estate or interests in real
estate (except that this restriction does not preclude
investments in marketable securities of companies
engaged in real estate activities).
2. Purchase or sell commodities or commodity contracts,
except that the Funds may purchase and sell stock
index and currency options, stock index futures,
interest rate futures, financial futures and currency
futures contracts and related options on such futures.
3. Purchase any security on margin, except that the Funds
may obtain such short-term credits as may be necessary
for the clearance of purchases and sales 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.
16
<PAGE> 161
4. Make loans, although the Funds may (a) purchase money
market securities and enter into repurchase
agreements, (b) acquire bonds, debentures, notes and
other debt securities, governmental obligations and
certificates of deposit, and (c) lend portfolio
securities.
5. Issue senior securities, except to the extent
permitted by the 1940 Act, including permitted
borrowings.
6. Underwrite securities of other persons, except to the
extent that a Fund may be deemed to be an underwriter
within the meaning of the 1933 Act in connection with
the purchase and sale of its portfolio securities in
the ordinary course of pursuing its investment
program.
7. Purchase or sell interests in oil, gas or other
mineral exploration or development programs.
8. Purchase the securities of any issuer if, as a result,
more than 25% of the value of a Fund's total assets,
taken at market value, would be invested in the
securities of issuers having their principal business
activities in the same industry. This restriction
does not apply to obligations issued or guaranteed by
the U.S. Government or by any of its agencies or
instrumentalities but will (unless and until SEC
changes its position) apply to foreign government
obligations unless the SEC permits their exclusion.
9. Purchase a security if, as a result, with respect to
75% of the value of a Fund's total assets, taken at
market value, more than 5% of a Fund's total assets,
taken at market value, would be invested in the
securities of any one issuer (including repurchase
agreements with any one entity), except securities
issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities. This restriction
does not apply to the Income Fund. See "Material
Changes to Investment Restrictions" above.
10. Purchase a security if, as a result, with respect to
50% of the value of the Fund's total assets taken at
market value, more than 5% of the value of the Fund's
total assets, taken at market value, would be invested
in securities of any one issuer, except securities
issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities. This restriction
applies only to the Income Fund. See "Material
Changes to Investment Restrictions" above.
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. See "Material Changes to
Investment Restrictions" above.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Funds will
not:
12. Invest in securities of an issuer (including
predecessors and unconditional guarantors) which has a
record of less than three years of continuous
operations.
13. Make investments for the purpose of exercising control
or management.
14. Lend portfolio securities in excess of 33-1/3% of
total assets, taken at market value; provided that
loans of portfolio securities shall be made in
accordance with the guidelines set forth under the
heading "Lending of Portfolio Securities."
17
<PAGE> 162
15. Invest in securities which are illiquid if more than
15% of a Fund's total assets, taken at market value,
would be invested in such securities.
16. Effect short sales of securities, except that a Fund
may make short sales "against the box" to the extent
that the value of the securities sold short, in the
aggregate, does not represent more than 10% of the
Fund's total assets, taken at market value, at any
given time.
Percentage restrictions apply as of the time of investment without
regard to later increases or decreases in the values of securities or total
assets.
Subject to investment restriction number 14 above, the Funds may from
time to time lend securities from their respective portfolios to brokers,
dealers and financial institutions such as banks and trust companies and
receive collateral in cash or securities issued or guaranteed by the U.S.
Government which will be maintained in an amount equal to at least 100% of the
current market value of the loaned securities. Such cash will be invested in
short-term securities, which will increase the current income of the applicable
Fund. Such loans will not be for more than 30 days and will be terminable at
any time. The Funds will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights, subscription
rights and rights to dividends, interest or other distributions. The Funds may
pay reasonable fees to persons unaffiliated with the Funds for services in
arranging such loans. With respect to the lending of portfolio securities,
there is the risk of failure by the borrower to return the securities involved
in such transactions. See the information under the caption "Hedging
Strategies and Other Investment Techniques -- Lending Portfolio Securities"
above.
The Funds may each invest in warrants, valued at the lower of cost or
market, to the extent that the value of such warrants, in the aggregate, does
not exceed 5% of the value of a Fund's net assets. Included in that amount, but
not to exceed 2% of the value of a Fund's net assets, may be warrants which are
not listed on national exchanges.
In order to permit the sale of the Funds' shares in certain states, the
Funds may from time to time make commitments that are more restrictive than the
restrictions described above. For example, as of the date of this Statement of
Additional Information, the Funds have undertaken (1) not to invest more than
10% of their respective total assets in restricted securities (Arkansas), (2)
to provide investors with written notification at least 30 days prior to any
change in the investment objective of any Fund (Missouri), (3) not to invest in
real estate limited partnerships (Texas), (4) not to purchase or retain
securities of any issuer if the directors and officers of the Company and AIM
who own more than 0.5% of the securities of such issuer together beneficially
own more than 5% of the securities of such issuer (Ohio), (5) not to invest any
assets of the Funds in the securities of other investment companies, except by
purchase in the open market where no commission or profit to a sponsor or
dealer results from the purchase other than the customary broker's commission,
or except when the purchase is part of a plan of merger, consolidation,
reorganization, or acquisition (Ohio) and (6) not to engage in writing put and
call options on securities unless the options are issued by the Options
Clearing Corporation, and the aggregate value of the securities underlying the
calls or obligations underlying the puts determined as of the date the options
are sold shall not exceed 25% of the Funds' respective total net assets
(California). Should a Fund determine that any such commitment is no longer in
the best interests of the Fund and its shareholders, the Fund will revoke the
commitment by terminating sales of its shares in the states involved.
Each Fund's ability and decisions to purchase or sell portfolio
securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets. Because the shares of a Fund are
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.
18
<PAGE> 163
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 WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
*Charles T. Bauer (77) Director And Director, Chairman and Chief Executive
11 Greenway Plaza, Suite 1919 Chairman Officer, A I M Management Group Inc.;
Houston, TX 77046 Chairman of the Board Of Directors,
A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company.
Bruce L. Crockett (52) Director Formerly, Director, President And Chief
906 Frome Lane Executive Officer, Comsat Corporation
McLean, VA 22102 (Includes Comsat World Systems, Comsat Mobile
Communications, Comsat Video Enterprises,
Comsat RSI and Comsat International
Ventures). Previously, President and Chief
Operating Officer, Comsat Corporation;
President, World Systems Division, Comsat
Corporation; and Chairman, Board of Governors
of Intelsat; (Each of the Comsat Companies
listed above is an International
Communication, Information and Entertainment-
Distribution Services Company).
Owen Daly II (72) Director Director, Cortland Trust Inc. (Investment
Six Blythewood Road Company). Formerly, Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of The Board of Equitable
Bancorporation.
</TABLE>
- ----------------------------------
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
19
<PAGE> 164
<TABLE>
<CAPTION>
POSITIONS HELD WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
**Carl Frischling (60) Director Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (Law Firm). Formerly, Partner, Reid & Priest
New York, NY 10022 (Law Firm); and, Prior Thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling
(Law Firm).
*Robert H. Graham (50) Director And Director, President And Chief Operating
11 Greenway Plaza, Suite 1919 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.
John F. Kroeger (72) Director Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund,
Morristown, NJ 07960 Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Equity Partners Fund,
Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund,
Inc., Managed Municipal Fund, Inc., Flag
Investors Value Builder Fund, Inc., Flag
Investors Maryland Intermediate Tax-Free
Income Fund, Inc., Flag Investors Real Estate
Securities Fund, Inc., Alex. Brown Cash
Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (Investment
Companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (Consulting Firm).
Lewis F. Pennock (54) Director Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
</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.
20
<PAGE> 165
<TABLE>
<CAPTION>
POSITIONS HELD WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
Ian W. Robinson (73) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (Provider of Centralized
Management Services to Telephone Companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone'
Company.
Louis S. Sklar (57) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (Real Estate Development).
HOUSTON, TX 77056
***John J. Arthur (52) Senior Vice Senior Vice President and Treasurer,
11 Greenway Plaza, Suite 1919 President and A I M Advisors, Inc.; and Vice President and
Houston, Tx 77046 Treasurer Treasurer, A I M Management Group Inc.,
A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company.
Gary T. Crum (49) Senior Vice Director and President, A I M Capital
11 Greenway Plaza, Suite 1919 President Management, Inc.; Director and Senior Vice
Houston, Tx 77046 President, A I M Management Group Inc.,
A I M Advisors, Inc.; and Director,
A I M Distributors, Inc.
Scott G. Lucas (37) Senior Vice Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 1919 President Management, Inc.; and Vice President,
Houston, Tx 77046 A I M Management Group Inc. and
A I M Advisors, Inc.
</TABLE>
- ----------------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
21
<PAGE> 166
<TABLE>
<CAPTION>
POSITIONS HELD WITH
-------------------
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
***Carol F. Relihan (42) Senior Vice Senior Vice President, General Counsel and
11 Greenway Plaza, Suite 1919 President And Secretary, A I M Advisors, Inc.; Vice
Houston, TX 77046 Secretary President, General Counsel and Secretary,
A I M Management Group Inc.; Vice President
and General Counsel, Fund Management Company;
and Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and A I M Institutional Fund
Services, Inc.
Dana R. Sutton (38) Vice President And Vice President and Fund Controller,
11 Greenway Plaza, Suite 1919 Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
Houston, TX 77046 President and Assistant Treasurer, Fund
Management Company.
Robert G. Alley (48) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 1919 Management, Inc.; and Vice President, A I M
Houston, TX 77046 Advisors, Inc. Formerly, Senior Fixed Income
Money Manager, Waddell and Reed, Inc.
Melville B. Cox (53) Vice President Vice President and Chief Compliance Officer,
11 Greenway Plaza, Suite 1919 A I M Advisors, Inc., A I M Capital
Houston, TX 77046 Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.;
Assistant Secretary, Charles Schwab Family of
Funds and Schwab Investments; Chief
Compliance Officer, Charles Schwab Investment
Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and
Capitol Life Insurance Co.
Jonathan C. Schoolar (35) Vice President Director and Senior Vice President,
11 Greenway Plaza, Suite 1919 A I M Capital Management, Inc.; and Vice
Houston, TX 77046 President, A I M Advisors, Inc.
</TABLE>
- ----------------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
22
<PAGE> 167
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger (Chairman),
Pennock and Robinson. The Audit Committee is responsible for meeting with the
Company's auditors to review audit procedures and results and to consider any
matters arising from an audit to be brought to the attention of the directors
as a whole with respect to the Company's fund accounting or its internal
accounting controls, and for considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as directors who are not interested persons
as long as the Company maintains a distribution plan pursuant to Rule 12b-1
under the 1940 Act, reviewing from time to time the compensation payable to the
disinterested directors, and considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors and such committee.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who
is not also an officer of the Company is compensated for his or her services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. 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.
23
<PAGE> 168
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(4)
Carl Frischling 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 of Messrs. Bauer, Crockett, Daly, Frischling, Graham, Kroeger,
Pennock, Robinson and Sklar serves as director or trustee of a total of 10 AIM
Funds. Data reflect total compensation earned during the calendar year ended
December 31, 1996.
(4) See also pages 25 and 26 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 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
24
<PAGE> 169
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 various compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar
are 9,10, 19, 19, 15, 9 and 7 years, RESPECTIVELY.
ESTIMATED ANNUAL BENEFITS UPON
RETIREMENT
<TABLE>
<CAPTION>
Number of Years Annual Compensation
of Service with Paid By All AIM Funds
the AIM Funds
<S> <C> <C> <C>
$60,000 $65,000 $70,000
10 $45,000 $48,750 $52,500
9 $40,500 $43,875 $47,250
8 $36,000 $39,000 $42,000
7 $31,500 $34,125 $36,750
6 $27,000 $29,250 $31,500
5 $22,500 $24,375 $26,250
</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 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. See "Summary - Material Events" in the
Prospectus for information regarding AIM Management's proposed merger with a
subsidiary of INVESCO plc.
The Company paid the law firm of Kramer, Levin, Naftalis & Frankel ,
counsel to the Board of Directors, $4,726, $3,146 and $3,047 in legal fees for
services provided to the Aggressive Growth Fund, Growth Fund
25
<PAGE> 170
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 AND ADMINISTRATIVE SERVICES AGREEMENTS
AIM is a wholly-owned subsidiary of A I M Management Group Inc., a
holding company that has been engaged in the financial services business since
1976. See "Summary - Material Events" in the Prospectus for a description of
the proposed merger of AIM Management with a subsidiary of INVESCO plc.
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 an Investment
Advisory Agreement and an Administrative Services Agreement with AIM. See
"Management" in the Prospectus.
The Investment Advisory Agreement provides that each Fund will pay or
cause to be paid all expenses of the Fund not assumed by AIM, including,
without limitation: brokerage commissions; taxes, legal, accounting, auditing
or governmental fees; the cost of preparing share certificates; custodian,
transfer and shareholder service agent costs; expenses of issue, sale,
redemption and repurchase of shares; expenses of registering and qualifying
shares for sale; expenses relating to directors and shareholders meetings; the
cost of preparing and distributing reports and notices to shareholders; the
fees and other expenses incurred by the Company on behalf of a Fund in
connection with membership in investment company organizations; the cost of
printing copies of prospectuses and statements of additional information
distributed to each Fund's shareholders; and all other charges and costs of a
Fund's operations unless otherwise expressly provided.
The Investment Advisory Agreement provides that if, for any fiscal year,
the total of all ordinary business expenses of each Fund, including all
investment advisory fees, but excluding brokerage commissions and fees, taxes,
interest and extraordinary expenses, such as litigation costs, exceed the
applicable expense limitations imposed by state securities regulations in any
state in which the Fund's shares are qualified for sale, as such limitations
may be raised or lowered from time to time, the aggregate of all such
investment advisory fees shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by AIM shall be deducted from the
monthly investment advisory fee otherwise payable to AIM during such fiscal
year. If required pursuant to such state securities regulations, AIM will
reimburse each Fund no later than the last day of the first month of the next
succeeding fiscal year for any such annual operating expenses (after reduction
of all investment advisory fees in excess of such limitation).
The Investment Advisory Agreement for the Funds provides that such
agreement will continue in effect until June 30, 1997, and from year to year
thereafter only if such continuance is specifically approved at least annually
by the Company's Board of Directors and by the affirmative vote of a majority
of the directors who are not parties to the agreement or "interested persons"
of any such party (the "Non-Interested Directors") by votes cast in person at a
meeting called for such purpose. The Investment Advisory Agreement was
initially approved by the Company's Board of Directors (including the
affirmative vote of all of the Non-Interested Directors) on June 15, 1994. The
agreement became effective as of July 1, 1994. The agreement provides that the
Funds or AIM may terminate such agreement on sixty (60) days' written notice
without penalty. The
26
<PAGE> 171
Investment Advisory Agreement terminates automatically in the event of its
assignment. Under the agreement, AIM is entitled to receive from each Fund a
fee calculated at the annual rates of:
<TABLE>
<CAPTION>
AIM GLOBAL AGGRESSIVE GROWTH FUND
<S> <C>
Net Assets Annual Rate
---------- -----------
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.90%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.85%
AIM GLOBAL GROWTH FUND
Net Assets Annual Rate
---------- -----------
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.85%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.80%
AIM GLOBAL INCOME FUND
Net Assets Annual Rate
---------- -----------
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.70%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.65%
</TABLE>
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. 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.
For the fiscal years ended October 31, 1996 and 1995, and the period
September 15, 1994 (inception date) through October 31, 1994 AIM received
advisory fees from the Aggressive Growth Fund, Growth Fund and Income Fund as
follows:
<TABLE>
<CAPTION>
September 15, 1994
1996 1995 through October 31, 1994
---- ---- ------------------------
<S> <C> <C> <C>
Aggressive Growth Fund $ 8,571,918 $ 1,106,108 $ -0-
Growth Fund $ 1,163,814 $ 125,323 $ -0-
Income Fund $ -0- $ -0- $ -0-
</TABLE>
For the fiscal years ended October 31, 1996 and 1995, and the period
September 15, 1994 (inception date) through October 31, 1994 AIM waived
advisory fees for Aggressive Growth Fund, Growth Fund and Income Fund as
follows:
<TABLE>
<CAPTION>
September 15, 1994
1996 1995 through October 31, 1994
---- ---- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund $ -0- $ -0- $ 13,551
Growth Fund $ -0- $ 19,558 $ 2,816
Income Fund $ 182,596 $ 55,087 $ 2,099
</TABLE>
27
<PAGE> 172
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, 1996, and shall continue in effect from year to year
thereafter only if such continuance is specifically approved at least annually
by the Company's Board of Directors, including the Non-Interested Directors, by
votes cast in person at a meeting called for such purpose. The Administrative
Services Agreement was approved by the Company's Board of Directors (including
the Non-Interested Directors) on June 15, 1994. The agreement became effective
as of July 1, 1994.
For the fiscal years ended October 31, 1996 and 1995, and the period
September 15, 1994 (inception date) through October 31, 1994 AIM received
reimbursement of administrative services costs from Aggressive Growth Fund,
Growth Fund and Income Fund as follows:
<TABLE>
<CAPTION>
September 15, 1994
1996 1995 through October 31, 1994
---- ---- ------------------------
<S> <C> <C> <C>
Aggressive Growth Fund $ 86,330 $ 25,218 $ 3,939
Growth Fund $ 78,151 $ 21,984 $ 2,686
Income Fund $ 74,433 $ 29,858 $ 2,508
</TABLE>
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 years ended October 31, 1996 and 1995, AFS received transfer
agency and shareholder services fees with respect to the Aggressive Growth
Fund, Growth Fund and Income Fund as follows:
<TABLE>
<S> <C> <C>
1996 1995
---- ----
Aggressive Growth Fund $ 1,474,675 $258,683
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 the 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.
THE DISTRIBUTION PLANS
THE CLASS A PLAN. The Company has adopted a Master Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares of the
Funds (the "Class A Plan"). The Class A Plan provides that the Class A shares
pay 0.50% per annum of their average daily net assets as compensation to AIM
Distributors for the purpose of financing any activity which is primarily
intended to result in the sale of Class A shares. Of such amount, each Fund
pays a service fee of 0.25% of the average daily net assets attributable to
Class A shares to selected dealers and other institutions which furnish
continuing personal shareholder
28
<PAGE> 173
services to their customers who purchase and own Class A shares. Activities
appropriate for financing under the Class A Plan include, but are not limited
to, the following: printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class A Plan.
THE CLASS B PLAN. The Company has also adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of
the Funds (the "Class B Plan", and collectively with the Class A Plan, the
"Plans"). Under the Class B Plan, each Fund pays compensation to AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class B shares. Of such amount, each Fund pays a service fee of
0.25% of the average daily net assets attributable to Class B shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to their customers who purchase and own Class B shares.
Amounts paid in accordance with the Class B Plan may be used to finance any
activity primarily intended to result in the sale of Class B shares, including
but not limited to printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may
enter into agreements ("Shareholder Service Agreements") with investment
dealers selected from time to time by AIM Distributors for the provision of
distribution assistance in connection with the sale of the Funds' shares to
such dealers' customers, and for the provision of continuing personal
shareholder services to customers who may from time to time directly or
beneficially own shares of the Funds. The distribution assistance and
continuing personal shareholder services to be rendered by dealers under the
Shareholder Service Agreements may include, but shall not be limited to, the
following: distributing sales literature; answering routine customer inquiries
concerning the Funds; assisting customers in changing dividend options, account
designations and addresses, and in enrolling in any of several special
investment plans offered in connection with the purchase of the Funds' shares;
assisting in the establishment and maintenance of customer accounts and records
and in the processing of purchase and redemption transactions; investing
dividends and any capital gains distributions automatically in the Funds'
shares; and providing such other information and services as the Funds or the
customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a Fund and
the Company; performing sub-accounting; establishing and maintaining
shareholder accounts and records; processing customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other transactions
and balances in the shareholder's other accounts serviced by the bank;
forwarding applicable prospectuses, proxy statements, reports and notices to
bank clients who hold Fund shares; and such other administrative services as a
Fund reasonably may request, to the extent permitted by applicable statute,
rule or regulation. Similar agreements may be permitted under the Plans for
institutions which provide recordkeeping for and administrative services to
401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
Under a Shareholder Service Agreement, a Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a
29
<PAGE> 174
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 Plan and the Class B Plan:
<TABLE>
<CAPTION>
% of Class'
average daily
net assets
Class A Plan Class B Plan Class A Class B
------------ ------------ ------- -------
<S> <C> <C> <C> <C>
Aggressive Growth Fund $2,653,374 $4,217,606 0.50% 1.00%
Growth Fund 352,082 663,802 0.50% 1.00%
Income Fund 78,792 103,129 0.50% 1.00%
</TABLE>
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>
Global
Aggressive Global GLOBAL
Growth Growth Income
------------ ------------ ------------
CLASS A
<S> <C> <C> <C>
Advertising . . . . . . . . . . . . . . . $ 73,660 $ 13,817 $ 4,712
Printing and mailing prospectuses
semi-annual reports and annual reports
(other than to current shareholders) . . . $ 10,949 $ 1,974 $ 943
Seminars . . . . . . . . . . . . . . . . . $ 25,880 $ 4,935 $ 943
Compensation to Underwriters to partially
offset other marketing expenses . . . . . . $ -0- $ -0- $ -0-
Compensation to Dealers including
finder's fees . . . . . . . . . . . . . . $ 2,542,885 $ 331,356 $ 72,194
Compensation to Sales Personnel . . . . . $ -0- $ -0- $ -0-
</TABLE>
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<PAGE> 175
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>
Global
Aggressive Global Global
Growth Growth Income
------------ ------------ ------------
CLASS B
<S> <C> <C> <C>
Advertising . . . . . . . . . . . . . . . $ 597,500 $ 93,804 $ 13,528
Printing and mailing prospectuses
semi-annual reports and annual reports
(other than to current shareholders) . . . $ 89,775 $ 13,971 $ 1,933
Seminars . . . . . . . . . . . . . . . . . $ 209,474 $ 33,929 $ 4,832
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs . . . . . . . . . . $ 3,167,402 $ 498,480 $ 77,423
Compensation to Dealers . . . . . . . . . $ 153,455 $ 23,618 $ 5,413
Compensation to Sales Personnel . . . . . $ -0- $ -0- $ -0-
</TABLE>
The Plans require AIM Distributors to provide the Board of Directors
at least quarterly with a written report of the amounts expended pursuant to
the Plans and the purposes for which such expenditures were made. The Board of
Directors reviews these reports in connection with their decisions with respect
to the Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans
("Qualified Directors"). In approving the Plans in accordance with the
requirements of Rule 12b-1, the directors considered various factors and
determined that there is a reasonable likelihood that the Plans would benefit
each class of the Funds and their respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plans. Thus, even if AIM Distributors' actual expenses exceed the
fee payable to AIM Distributors thereunder at any given time, the Funds will
not be 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, 1997 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
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<PAGE> 176
Qualified Directors, by votes cast in person at a meeting called for the
purpose of voting upon such amendment. As long as the Plans are in effect, the
selection or nomination of the Qualified Directors is committed to the
discretion of the Qualified Directors. In the event the Class A Plan is
amended in a manner which the Board of Directors determines would materially
increase the charges paid under the Class A Plan, the Class B shares of the
Funds will no longer convert into Class A shares of the same Funds unless the
Class B shares, voting separately, approve such amendment. If the Class B
shareholders do not approve such amendment, the Board of Directors will (i)
create a new class of shares of the Funds which is identical in all material
respects to the Class A shares as they existed prior to the implementation of
the amendment and (ii) ensure that the existing Class B shares of the Funds
will be exchanged or converted into such new class of shares no later than the
date the Class B shares were scheduled to convert into Class A shares.
The principal differences between the Class A Plan, on the one hand,
and the Class B Plan, on the other hand, are: (i) the Class A Plan allows
payment to AIM Distributors or to dealers or financial institutions of up to
0.50% of average daily net assets of each Fund's Class A shares as compared to
1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan
obligates 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.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement with AIM Distributors relating to the Class A
shares of the Funds was approved by the Board of Directors on September 10,
1994. A Master Distribution Agreement with AIM Distributors relating to the
Class B shares of the Funds was also approved by the Board of Directors on
September 10, 1994. Both such Master Distribution Agreements are hereinafter
collectively referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear
the expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or
sales literature used by AIM Distributors or furnished by AIM Distributors to
dealers in connection with the public offering of the Funds' shares, including
expenses of advertising in connection with such public offerings. AIM
Distributors has not undertaken to sell any specified number of shares of any
classes of the Funds.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B shares of the Funds at
the time of such sales. Payments with respect to Class B shares will equal
4.0% of the purchase price of the Class B shares sold by the dealer or
institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. The portion of the payments
to AIM Distributors under the Class B Plan which constitutes an asset-based
sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it will require a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve a
Fund, each such distributor (or 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.
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
32
<PAGE> 177
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 and 1995 and
for the period September 15, 1994 (inception date) through October 31, 1994:
<TABLE>
<CAPTION>
Sept. 15, 1994 -
1996 1995 October 31, 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
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>
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 and 1995 and for the period September 15, 1994 (inception date)
through October 31, 1994:
<TABLE>
<CAPTION>
Sept. 15, 1994 -
1996 1995 October 31, 1994
---- ---- ----------------
<S> <C> <C> <C>
Aggressive Growth Fund $ 84,130 $ 68,427 $ 79
Growth Fund 14,106 25,155 80
Income Fund 4,924 3,877 -0-
</TABLE>
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."
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<PAGE> 178
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 (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.
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<PAGE> 179
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of each Fund unless the
shareholder has requested in writing to receive such dividends and
distributions in cash or that they be invested in shares of another AIM Fund,
subject to the terms and conditions set forth in the Prospectus under the
caption "Special Plans -- Automatic Dividend Investment Plan." If a
shareholder's account does not have any shares in it on a dividend or capital
gains distribution payment date, the dividend or distribution will be paid in
cash whether or not the shareholder has elected to have such dividends or
distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting each Fund and its shareholders that are not
described in the Funds' Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Funds' Prospectus is not intended as a substitute
for careful tax planning. Investors are urged to consult their tax advisers
with specific reference to their own tax situation.
Qualification as a Regulated Investment Company. As stated in the
Funds' Prospectus, each Fund intends to qualify each year as a regulated
investment company under Part I of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). In order to qualify for tax treatment as a
regulated investment company under the Code, each Fund is required, among other
things, to derive at least 90% of its gross income in each taxable year from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
and other income (including but not limited to gains from options, futures or
forward contracts derived with respect to the Fund's business of investing in
such stock, securities or currencies) (the "Income Requirement"); and derive
less than 30% of its gross income (exclusive of certain gains from designated
hedging transactions that are offset by realized or unrealized losses on
offsetting positions) in each taxable year from the sale or other disposition
of any of the following investments, if such investments are held for less than
three months (the "Short-Short Gain Test"): (a) stock or securities (as
defined in Section 2(a)(36) of the 1940 Act); (b) options, futures or forward
contracts (other than options, futures or forward contracts on foreign
currencies); and (c) foreign currencies (or options, futures or forward
contracts on foreign currencies), but only if such currencies (or options,
futures or forward contracts) are not directly related to the Fund's principal
business of investing in stock or securities (or options and futures with
respect to stock or securities). Foreign currency gains (including gains from
options, futures or forward contracts on foreign currencies) that are not
"directly related" to a Fund's principal business may, under regulations not
yet issued, not be qualifying income for purposes of the Income Requirement.
At the close of each quarter of its taxable year, at least 50% of the
value of each Fund's assets must consist of cash and cash items, U.S.
Government securities, securities of other regulated investment companies, and
securities of other issuers (as to which the Fund has not invested more than 5%
of the value of its total assets in securities of such issuer and as to which
the Fund does not hold more than 10% of the outstanding voting securities of
such issuer), and no more than 25% of the value of its total assets may be
invested in the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two
or more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses (the "Asset Diversification Test"). For purposes
of the Asset Diversification Test, it is unclear under present law who should
be treated as the issuer of forward foreign currency exchange contracts, of
options on foreign currencies, or of foreign currency futures and related
options. It has been suggested that the issuer in each case may be the foreign
central bank or foreign government backing the particular currency.
Consequently, a Fund may find it necessary to seek 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.
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<PAGE> 180
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits. Such distributions will
be eligible for the dividends received deduction in the case of corporate
shareholders.
Fund Distributions. Under the Code, each Fund is exempt from U.S.
federal income tax on its net investment income and realized capital gains
which it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (net investment income and the excess
of net short-term capital gain over net long-term capital loss) and its net
exempt-interest income for the year. Distributions of investment company
taxable income will be taxable to shareholders as ordinary income, regardless
of whether such distributions are paid in cash or are reinvested in shares.
Each Fund also intends to distribute to shareholders substantially all
of the excess of its net long-term capital gain over net short-term capital
loss as a capital gain dividend. Capital gain dividends are taxable to
shareholders as a long-term capital gain, regardless of the length of time a
shareholder has held his shares.
Treasury regulations permit a regulated investment company in
determining its investment company taxable income and undistributed net capital
gain for any taxable year to elect to treat all or part of any net capital
loss, any net long-term capital loss, or any net foreign currency loss incurred
after October 31 as if it had been incurred in the succeeding year.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to distribute in each calendar year an amount equal to 98%
of their ordinary taxable income for the calendar year plus 98% of their
"capital gain net income" (excess of capital gains over capital losses) for the
one-year period ending on October 31 of such calendar year. The balance of
such income must be distributed during the next calendar year. For the
foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) offset a net ordinary loss (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
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<PAGE> 181
or loss that was previously recognized upon the termination of Section 1256
contracts during that taxable year. The net amount of such gain or loss for the
entire taxable year (including gain or loss arising as a consequence of the
year-end deemed sale of such contracts) is deemed to be 60% long-term and 40%
short-term gain or loss. However, in the case of Section 1256 contracts that
are forward foreign currency exchange contracts, the net gain or loss is
separately determined and (as discussed above) 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.
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<PAGE> 182
Because the application of the PFIC rules may affect, among other
things, the character of gains, the amount of gain or loss and the timing of
the recognition of income with respect to PFIC stock, as well as subject the
Funds themselves to tax on certain income from PFIC stock, the amount that
must be distributed to shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gains, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC stock.
Redemption or Exchange of Shares. Upon a redemption or exchange of
shares, a shareholder will recognize a taxable gain or loss depending upon his
or her basis in the shares. 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 or Class
B shares are replaced within the 61-day period beginning 30 days before and
ending 30 days after the disposition of such shares. In such a case, the basis
of the shares acquired will be increased to reflect the disallowed loss.
Shareholders should particularly note that this loss disallowance rule applies
even where shares are automatically replaced under the dividend reinvestment
plan.
Foreign Income Taxes. Investment income received by each Fund from
sources within foreign countries may be subject to foreign income taxes
withheld at the source. The United States has entered into tax treaties with
many foreign countries which entitle the Funds to a reduced rate of, or
exemption from, taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of a Fund's assets to
be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant
to the Foreign Tax Election, shareholders will be required (i) to include in
gross income, even though not actually received, their respective pro-rata
shares of the foreign income taxes paid by the Fund that are attributable to
any distributions they receive; and (ii) either to deduct their pro-rata share
of foreign taxes in computing their taxable income, or to use it (subject to
various Code limitations) as a foreign tax credit against Federal income tax
(but not both). No deduction for foreign taxes may be claimed by a
non-corporate shareholder who does not itemize deductions or who is subject to
alternative minimum tax.
Generally, a credit for foreign taxes is subject to the limitation
that it may not exceed the shareholder's U.S. tax (determined without regard to
the availability of the credit) attributable to the shareholder's foreign
source taxable income. In determining the source and character of
distributions received from a Fund for 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
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number, or who have been notified by the Internal Revenue Service that they are
subject to backup withholding. When establishing an account, an investor must
provide his or her taxpayer identification number and certify under penalty of
perjury that such number is correct and that he or she is not otherwise subject
to backup withholding. Corporate shareholders and other shareholders specified
in the Code are exempt from backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against a shareholder's
U.S. federal income tax liability.
Foreign Shareholders. Dividends from a Fund's investment company
taxable income 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 February 12, 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 and Class B shares of each of the Funds. Each Fund pays the
Custodian and the Transfer Agent such compensation as may be agreed upon from
time to time.
Texas Commerce Bank National Association, 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.
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PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each of the
Company's portfolios as of February 3, 1997, and the amount of outstanding
shares held by such holders are set forth below:
<TABLE>
<CAPTION>
Percent
Name and Address Owned of
Fund of Record Owner Record Only*
- ---- --------------- -----------
<S> <C> <C>
AIM International Equity Fund - Merrill Lynch, Pierce, 29.23%**
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, 36.55%**
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, 17.80%
Class A 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, 14.19%
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, 24.95%
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> 186
<TABLE>
<CAPTION>
Percent
Name and Address Owned of
Fund of Record Owner Record Only*
- ---- --------------- -----------
<S> <C> <C>
AIM Global Income Fund - Merrill, Lynch, Pierce, 12.23%
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 February 3, 1997, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of the Fund and the other
portfolios of the Company.
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.
__________________________________
* 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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<PAGE> 187
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.
43
<PAGE> 188
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.
44
<PAGE> 189
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.
45
<PAGE> 190
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.
46
<PAGE> 191
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.
47
<PAGE> 192
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.
48
<PAGE> 193
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
Bonds are in imminent default in payment of interest or principal.
49
<PAGE> 194
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.
50
<PAGE> 195
FINANCIAL STATEMENTS
FS
<PAGE> 196
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-1
<PAGE> 197
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-2
<PAGE> 198
<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-3
<PAGE> 199
<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-4
<PAGE> 200
<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>
FS-5
<PAGE> 201
<TABLE>
<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>
FS-6
<PAGE> 202
<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-7
<PAGE> 203
<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-8
<PAGE> 204
<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-9
<PAGE> 205
<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-10
<PAGE> 206
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-11
<PAGE> 207
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-12
<PAGE> 208
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-13
<PAGE> 209
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-14
<PAGE> 210
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-15
<PAGE> 211
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-16
<PAGE> 212
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-17
<PAGE> 213
<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-18
<PAGE> 214
<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-19
<PAGE> 215
<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-20
<PAGE> 216
<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-21
<PAGE> 217
<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-22
<PAGE> 218
<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-23
<PAGE> 219
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-24
<PAGE> 220
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-25
<PAGE> 221
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-26
<PAGE> 222
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-27
<PAGE> 223
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-28
<PAGE> 224
<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-29
<PAGE> 225
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-30
<PAGE> 226
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-31
<PAGE> 227
<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-32
<PAGE> 228
<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-33
<PAGE> 229
<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-34
<PAGE> 230
<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-35
<PAGE> 231
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-36
<PAGE> 232
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-37
<PAGE> 233
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-38
<PAGE> 234
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-39
<PAGE> 235
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-40
<PAGE> 236
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
(1) 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
(3) Statements of Assets and Liabilities
as of October 31, 1996
(4) Statements of Operations for the year
ended October 31, 1996
(5) Statements of Changes in Net Assets
for the years ended October 31, 1996
and 1995
(2) 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
(3) Statement of Assets and Liabilities
as of October 31, 1996
(4) Statement of Operations for the year
ended October 31, 1996
(5) Statement of Changes in Net Assets
for the years ended October 31, 1996
and 1995
______________________
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C> <C> <C>
(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.
</TABLE>
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<TABLE>
<S> <C> <C> <C>
(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.
(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 are filed herewith electronically.
(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.
(5) (a) - 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.
(b) - 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 and is hereby incorporated by reference.
(c) - 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 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 and is hereby incorporated by reference.
</TABLE>
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<TABLE>
<S> <C> <C> <C>
- (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, and is hereby incorporated by reference.
(b) - (1) Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers was
electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995.
- (2) 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 was electronically
filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995.
- (2) 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) - 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) - 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.
</TABLE>
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<PAGE> 239
<TABLE>
<S> <C> <C>
(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.
- (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 an Exhibit to Post-Effective Amendment No.
9 on February 28, 1996 and is hereby incorporated by reference.
(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 and is
hereby incorporated by reference.
- (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 and is
hereby incorporated by reference.
</TABLE>
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<PAGE> 240
<TABLE>
<S> <C> <C>
- (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.
(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 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 is
filed herewith electronically.
(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) - Agreement Concerning Initial Capitalization of the Registrant's AIM Global Aggressive Growth Fund,
AIM Global Growth Fund and AIM Global Income Fund was filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 7 on February 23, 1995, and was filed
</TABLE>
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<PAGE> 241
<TABLE>
<S> <C> <C> <C>
electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996 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 an Exhibit to Registrant's 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 Registrant's
Registration Statement on December 19, 1991, and are hereby incorporated by reference.
(d) - Form of Registrant's 403(b) Plan was filed as an Exhibit to Registrant's Registration Statement on
December 19, 1991, and is hereby incorporated by reference.
(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 and is hereby
incorporated by reference.
- (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 and is hereby
incorporated by reference.
(b) - (1) Form of Shareholder Service Agreement to be used in connection with Registrant's Master Distribution Plan was
electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995.
- (2) Form of Shareholder Service Agreement to be used in connection with Registrant's Master Distribution
Plan is filed herewith electronically.
</TABLE>
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<TABLE>
<S> <C> <C> <C>
(c) - (1) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master
Distribution Plan was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December
1, 1995.
- (2) Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master
Distribution Plan is filed herewith electronically.
(e) - (1) Form of Service Agreement for Certain Retirement Plans (for the Retail Classes) to be used in
connection with Registrant's Master Distribution Plan was electronically filed as an Exhibit to Post-
Effective Amendment No. 8 on December 1, 1995.
- (2) Form of Agency Pricing Agreement (for Class A Shares) to be used in connection with Registrant's
Master Distribution Plan is filed herewith electronically.
- (3) 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.
(f) - (1) Forms of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Departments to
be used in connection with Registrant's Distribution Plan were electronically filed as an Exhibit to
Post-Effective Amendment No. 8 on December 1, 1995.
- (2) Forms of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Department to
be used in connection with Registrant's Master Distribution Plan is 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 - None.
(27) - Financial Data Schedule - filed herewith electronically.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant
Furnish a list or diagram of all persons directly or indirectly controlled
by or under common control with the Registrant and as to each such person
indicate (1) if a company the state or other sovereign power under the laws of
which it is organized, and (2) the percentage of voting securities owned or
other basis of control by the person, if any, immediately controlling it.
Not Applicable
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<PAGE> 243
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 February 3, 1997
-------------------------
Title of Class Class A Class B
-------------- ------- -------
<S> <C> <C>
AIM International Equity Fund 70,723 32,548
AIM Global Aggressive Growth Fund 102,292 89,028
AIM Global Growth Fund 11,896 13,067
AIM Global Income Fund 1,842 1,695
</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.
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.
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<PAGE> 244
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 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
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
</TABLE>
__________________________________
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
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<PAGE> 245
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address** with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
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
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
Assistant Treasurer &
Controller
Tisha Christopher Assistant Vice President None
Glenda Dayton Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne 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
Christopher T. Simutis Assistant Vice President None
</TABLE>
__________________________________
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
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<PAGE> 246
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address*** with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Gary K. Wendler Assistant Vice President None
Nicholas D. White 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
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, 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
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.
__________________________________
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
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<PAGE> 247
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 20th day of
February, 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> <C>
/s/ Charles T. Bauer Chairman & Director February 20, 1997
------------------------------
(Charles T. Bauer)
/s/ Robert H. Graham Director & President February 20, 1997
---------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ Bruce L. Crockett Director February 20, 1997
------------------------------
(Bruce L. Crockett)
/s/ Owen Daly II Director February 20, 1997
---------------------------------
(Owen Daly II)
/s/ Carl Frischling Director February 20, 1997
---------------------------------
(Carl Frischling)
/s/ John F. Kroeger Director February 20, 1997
-------------------------------
(John F. Kroeger)
/s/ Lewis F. Pennock Director February 20, 1997
------------------------------
(Lewis F. Pennock)
/s/ Ian W. Robinson Director February 20, 1997
------------------------------
(Ian W. Robinson)
/s/ Louis S. Sklar Director February 20, 1997
---------------------------------
(Louis S. Sklar)
Senior Vice President &
/s/ John J. Arthur Treasurer (Principal Financial February 20, 1997
--------------------------------- and Accounting Officer)
(John J. Arthur)
</TABLE>
<PAGE> 248
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
2(c) Amended and Restated By-Laws dated December 11, 1996
6(b)(2) Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers
6(c)(2) Form of Bank Selling Group Agreement between A I M Distributors,
Inc. and banks
9(d)(2) Notice of Addition of Funds to 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.
11(a) Consent of Ballard Spahr Andrews & Ingersoll
11(b) Consent of KPMG Peat Marwick LLP
15(b)(2) Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan
15(c)(2) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan
15(e)(2) Form of Agency Pricing Agreement (for Class A Shares) to be used
in connection with Registrant's Master Distribution Plan
15(f)(2) Forms of Service Agreement for Brokers for Bank Trust Departments
and for Bank Trust Department to be used in connection with
Registrant's Master Distribution Plan
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 2(c)
AMENDED AND RESTATED BYLAWS
OF
AIM INTERNATIONAL FUNDS, INC.,
A MARYLAND CORPORATION
ADOPTED EFFECTIVE DECEMBER 11, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 1. Time and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 4. Notice of Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 5. Closing of Transfer Books, Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
Section 6. Quorum, Adjournment of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
Section 7. Voting and Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
Section 8. Conduct of Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
Section 9. Validity of Proxies and Ballots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
Section 10. Nominations and Stockholder Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
ARTICLE II
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 1. Number and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 2. Increase or Decrease in Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 3. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 4. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 5. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 7. Telephonic Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 8. Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 9. Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 10. Informal Action by Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 11. Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
ARTICLE III
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 1. Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 2. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 3. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 4. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 5. Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 6. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 7. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
ARTICLE IV
STOCK . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 1. Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 3. Stock Ledgers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 4. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
ARTICLE V
CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . - 8 -
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . - 8 -
ARTICLE VII
INDEMNIFICATION AND ADVANCES FOR EXPENSES . . . . . . . . . . . . . . . - 8 -
Section 1. Indemnification of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
Section 2. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
Section 3. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
Section 4. Indemnification of Employees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
Section 5. Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
Section 6. Subsequent Changes to Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
ARTICLE VIII
AMENDMENT OF BYLAWS . . . . . . . . . . . . . . . . . . . . . - 9 -
</TABLE>
- ii -
<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
AIM INTERNATIONAL FUNDS, INC.,
A MARYLAND CORPORATION
ARTICLE I
STOCKHOLDERS
Section 1. Time and Place of Meetings. Meetings of the
stockholders of the Corporation need not be held except as required under the
general laws of the State of Maryland, as the same may be amended from time to
time. Meetings of the stockholders shall be held at places within the United
States designated by the Board of Directors and set forth in the notice of the
meeting.
Section 2. Annual Meetings. If a meeting of the stockholders
of the Corporation is required by the Investment Company Act of 1940, as
amended, to take action with respect to the election of directors, then such
matter shall be submitted to the stockholders at a special meeting called for
such purpose, which shall be deemed the annual meeting of stockholders for that
year. In years in which no such action by stockholders is so required, no
annual meeting of stockholders need be held.
Section 3. Special Meetings. Special meetings of the
stockholders for any purpose or purposes may be called by the Chairman of the
Board of Directors, if any, by the President or by a majority of the Board of
Directors. In addition, such special meetings shall be called by the Secretary
upon receipt of a request in writing, signed by stockholders entitled to cast
at least ten percent (10%) of all the votes entitled to be cast at the meeting,
which states the purpose of the meeting and the matters proposed to be acted on
at the meeting. Unless requested by stockholders entitled to cast a majority
of all the votes entitled to be cast at the meeting, a special meeting need not
be called to consider any matter which is substantially the same as a matter
voted on at a special meeting of the stockholders held during the preceding
twelve (12) months.
Section 4. Notice of Meeting of Stockholders. Written or
printed notice of every meeting of stockholders, stating the time and place
thereof (and the purpose of any special meeting), shall be given, not less than
ten (10) days nor more than ninety (90) days before the date of the meeting, to
each stockholder entitled to vote at the meeting and each other stockholder
entitled to notice, by delivering such notice personally, or leaving such
notice at each stockholder's residence or usual place of business, or by
mailing such notice, postage prepaid, addressed to each stockholder at such
stockholder's address as it appears upon the books of the Corporation. Each
person who is entitled to notice of any meeting shall be deemed to have waived
notice if present at the meeting in person or by proxy or if such person signs
a waiver of notice (either before or after the meeting) which is filed with the
records of stockholders meetings.
- 1 -
<PAGE> 5
Section 5. Closing of Transfer Books, Record Dates. The
Board of Directors may set a record date for the purpose of making any proper
determination with respect to stockholders, including determining which
stockholders are entitled to notice of and to vote at a meeting, receive a
dividend or be allotted other rights. The record date may not be prior to the
close of business on the day the record date is fixed and shall be not more
than ninety (90) days before the date on which the action requiring the
determination is taken. In the case of a meeting of stockholders, the record
date shall be at least ten (10) days before the date of the meeting. Only
stockholders of record on such date shall be entitled to notice of and to vote
at such meeting, or to receive such dividends or rights, as the case may be.
Section 6. Quorum, Adjournment of Meeting. The presence in
person or by proxy of stockholders entitled to cast thirty percent (30%) of all
votes entitled to be cast at the meeting shall constitute a quorum at all
meetings of the stockholders, except with respect to any matter which by law or
the charter of the Corporation requires the separate approval of one or more
classes or series of the capital stock of the Corporation, in which case the
holders of one-third of the shares of each such class or series (or of such
classes or series voting together as a single class) entitled to vote on the
matter shall constitute a quorum; and a majority, or with respect to the
election of Directors, a plurality, of all votes cast at a meeting (or cast by
the holders of shares of any such classes or series whose separate approval on
a matter is required) at which a quorum is present shall be sufficient to
approve any matter which properly comes before the meeting, unless otherwise
provided by applicable law, the Charter of the Corporation or these Bylaws. If
at any meeting of the stockholders there shall be less than a quorum present,
the stockholders present at such meeting may, by a majority of all votes cast
and without further notice, adjourn the same from time to time (but not more
than 120 days after the original record date for such meeting) until a quorum
shall attend, but no business shall be transacted at any such adjourned meeting
except business which might have been lawfully transacted had the meeting not
been adjourned.
Section 7. Voting and Inspectors.
(a) At all meetings of the stockholders, every
stockholder of record entitled to vote thereat shall be entitled to vote at
such meeting either in person or by written proxy signed by the stockholder or
by his duly authorized attorney in fact. A stockholder may duly authorize such
attorney in fact through written, electronic, telephonic, computerized,
facsimile, telecommunication, telex or oral communication or by any other form
of communication. Unless a proxy provides otherwise, such proxy shall not be
valid more than eleven (11) months after its date.
(b) At any meeting of stockholders considering the
election of directors, the Board of Directors prior to the convening of such
meeting may, or, if the Board has not so acted, the Chairman of the meeting
may, appoint two (2) inspectors of election, who shall first subscribe an oath
or affirmation to execute faithfully the duties of inspectors at such election
in strict impartiality and according to the best of their ability, and shall
after the election certify the result of the vote taken. No candidate for
election as a director shall be appointed to act as an inspector of election.
(c) The Chairman of the meeting may cause a vote by
ballot to be taken with respect to any election or matter.
- 2 -
<PAGE> 6
Section 8. Conduct of Stockholders Meetings.
(a) The meetings of the stockholders shall be
presided over by the Chairman of the Board, or if the Chairman shall not be
present or if there is no Chairman, by the President, or if the President shall
not be present, by a Vice President, or if no Vice President is present, by a
chairman elected for such purpose at the meeting. The Secretary of the
Corporation, if present, shall act as Secretary of such meetings, or if the
Secretary is not present, an Assistant Secretary of the Corporation shall so
act, and if no Assistant Secretary is present, then a person designated by the
Secretary of the Corporation shall so act, and if the Secretary has not
designated a person, then the meeting shall elect a secretary for the meeting.
(b) The Board of Directors of the Corporation shall
be entitled to make such rules and regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or convenient. Subject to
such rules and regulations of the Board of Directors, if any, the chairman of
the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are necessary, appropriate or convenient for the proper conduct of
the meeting, including, without limitation, establishing: an agenda or order of
business for the meeting; rules and procedures for maintaining order at the
meeting and the safety of those present; limitations on participation in such
meeting to stockholders of record of the corporation and their duly authorized
and constituted proxies, and such other persons as the chairman shall permit;
restrictions on entry to the meeting after the time fixed for the commencement
thereof; limitations on the time allotted to questions or comments by
participants; and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot, unless and to the
extent the Board of Directors or the chairman of the meeting determines that
meetings of stockholders shall not be required to be held in accordance with
the rules of parliamentary procedure.
Section 9. Validity of Proxies and Ballots. At every meeting
of the stockholders, all proxies shall be received and maintained by, and all
ballots shall be received and canvassed by, the secretary of the meeting, who
shall decide all questions concerning the qualification of voters, the validity
of proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed, in which case the inspectors of election
shall decide all such questions.
Section 10. Nominations and Stockholder Business.
(a) Annual Meetings of Stockholders.
(1) Nominations of individuals for election
to the board of directors shall be made by the Board of Directors or a
nominating committee of the Board of Directors, if one has been established
(the "Nominating Committee"). Any stockholder of the Corporation may submit
names of individuals to be considered by the Nominating Committee or the Board
of Directors, as applicable, provided, however, (i) that such person was a
stockholder of record at the time of submission of such names and is entitled
to vote at the meeting, and (ii) that the Nominating Committee or the Board of
Directors, as applicable, shall make the final determination of persons to be
nominated.
(2) The business to be considered by the
stockholders at an annual meeting shall be determined by the Board of Directors
of the Corporation.
- 3 -
<PAGE> 7
(b) Special Meetings of Stockholders. Only such
business shall be conducted at a special meeting of stockholders as shall have
been brought before the meeting pursuant to the corporation's notice of
meeting.
(c) General.
(1) Only such persons who are nominated in
accordance with the provisions of this Section 10 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the provisions of this Section 10. The presiding officer of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
provisions of this Section 10 and, if any proposed nomination or business is
not in compliance with this Section 10, to declare that such defective
nomination or proposal be disregarded.
(2) Notwithstanding the foregoing provisions
of this Section 10, a stockholder shall also comply with all applicable
requirements of state law and of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder with
respect to the matters set forth in this Section 10. Nothing in this Section
10 shall be deemed to affect any rights of stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The business and
affairs of the Corporation shall be managed under the direction of a Board of
Directors initially consisting of three (3) directors, which number may be
increased or decreased as herein provided. Directors shall hold office until
their respective successors have been duly elected and qualify. Directors need
not be stockholders.
Section 2. Increase or Decrease in Number of Directors. The
Board of Directors, by the vote of a majority of the entire Board, may increase
the number of directors to a number not exceeding fifteen (15), and may appoint
directors to fill the vacancies created by any increase in the number of
directors, and such appointed directors shall hold office until their
successors have been duly elected and qualify. The Board of Directors, by the
vote of a majority of the entire Board, may decrease the number of directors to
a number not less than three (3) or the number of stockholders, whichever is
less, but any such decrease shall not affect the term of office of any
director. Vacancies occurring other than by reason of any increase in the
number of directors shall be filled as provided by the Maryland General
Corporation Law.
Section 3. Place of Meetings. The directors may hold their
meetings and keep the books of the Corporation outside the State of Maryland,
at any office or offices of the Corporation or at any other place as they may
from time to time determine; and in the case of meetings, as shall be specified
in the respective notices of such meetings.
Section 4. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such time and on such notice, if any, as the
directors may from time to time determine.
- 4 -
<PAGE> 8
Section 5. Special Meetings. Special meetings of the Board
of Directors may be held from time to time upon call of the Chairman of the
Board of Directors, if any, the President, or any two (2) or more of the
directors, by oral, telegraphic, telephonic or written notice duly given to
each director not less than one (1) business day before such meeting or, sent
or mailed to each director, not less than three (3) business days before such
meeting. Each director who is entitled to notice shall be deemed to have
waived notice if such director is present at the meeting or, either before or
after the meeting, such director signs a waiver of notice which is filed with
the minutes of the meeting. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
Section 6. Quorum. One third (1/3) of the directors then in
office (but in no event less than two (2) directors) shall constitute a quorum
of the Board of Directors for the transaction of business. If at any meeting
of the Board there shall be less than a quorum present, a majority of those
directors present may adjourn the meeting from time to time until a quorum
shall have been attained. The action of a majority of the directors present at
any meeting at which there is a quorum shall be the action of the Board of
Directors, except as may be otherwise specifically provided by applicable law,
the Charter or these Bylaws.
Section 7. Telephonic Meetings. The members of the Board of
Directors, or any committee of the Board of Directors, may participate in a
meeting by means of a conference telephone call or similar communications
equipment if all persons participating in such meeting can simultaneously hear
each other, and participation in a meeting by these means constitutes presence
in person at such meeting.
Section 8. Executive Committee. The Board of Directors may
appoint an Executive Committee consisting of two (2) or more directors.
Between meetings of the Board of Directors, the Executive Committee, if any,
shall have and may exercise any or all of the powers of the Board of Directors
with respect to the management of the business and affairs of the Corporation,
except (a) as otherwise provided by law, and (b) the power to increase or
decrease the size of, or fill vacancies on, the Board of Directors. The
Executive Committee may determine its own rules of procedure, and may meet when
and as the Executive Committee determines, or when directed by resolution of
the Board of Directors. The presence of a majority of the Executive Committee
shall constitute a quorum. The Board of Directors shall have the power at any
time to change the members and powers of, to fill vacancies on, and to dissolve
the Executive Committee. In the absence of any member of the Executive
Committee, the members present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of such absent member.
Section 9. Other Committees. The Board of Directors may
appoint other nominees which shall in each case consist of such number of
directors (not less than two (2)), which shall have and may exercise such
powers as the Board may from time to time determine, subject to applicable law.
A majority of all members of any such committee may determine its action, and
the time and place of its meetings, unless the Board of Directors shall provide
otherwise. The Board of Directors shall have the power at any time to change
the members and powers of, to fill vacancies on, and to dissolve any such
committee. In the absence of any member of such committee, the members present
at any meeting, whether or not they constitute a quorum, may appoint a director
to act in the place of such absent member.
Section 10. Informal Action by Directors. Except to the
extent otherwise specifically prohibited by applicable law, any action required
or permitted to be taken at any
- 5 -
<PAGE> 9
meeting of the Board of Directors or any committee thereof may be taken without
a meeting, if a written consent to such action is signed by all members of the
Board or such committee, and such consent is filed with the minutes of
proceedings of the Board or such committee.
Section 11. Compensation of Directors. Directors shall be
entitled to receive such compensation from the Corporation for their services
as directors as the Board of Directors may from time to time determine.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive
officers of the Corporation shall be elected by the Board of Directors as soon
as practicable after the incorporation of the Corporation. The executive
officers may include a Chairman of the Board, and shall include a President,
one or more Vice Presidents (the number thereof to be determined by the Board
of Directors), a Secretary and a Treasurer. The Chairman of the Board, if any,
shall be selected from among the directors. The Board of Directors may also in
its discretion appoint Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers, and other officers, agents and employees, who shall have
such authority and perform such duties as the Board may determine. The Board
of Directors may fill any vacancy which may occur in any office. Any two (2)
offices, except those of President and Vice President, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument on
behalf of the Corporation in more than one (1) capacity, if such instrument is
required by law or by these Bylaws to be executed, acknowledged or verified by
two (2) or more officers.
Section 2. Term of Office. Unless otherwise specifically
determined by the Board of Directors, the officers shall serve at the pleasure
of the Board of Directors. If the Board of Directors in its judgment finds
that the best interests of the Corporation will be served, the Board of
Directors may remove any officer of the Corporation at any time with or without
cause.
Section 3. President. The President shall be the chief
executive officer of the Corporation and, subject to the Board of Directors,
shall generally manage the business and affairs of the Corporation. If there
is no Chairman of the Board, or if the Chairman of the Board has been appointed
but is absent, the President shall, if present, preside at all meetings of the
stockholders and the Board of Directors.
Section 4. Chairman of the Board. The Chairman of the Board,
if any, shall preside at all meetings of the stockholders and the Board of
Directors, if the Chairman of the Board is present. The Chairman of the Board
shall have such other powers and duties as shall be determined by the Board of
Directors, and shall undertake such other assignments as may be requested by
the President.
Section 5. Other Officers. The Chairman of the Board or one
or more Vice Presidents shall have and exercise such powers and duties of the
President in the absence or inability to act of the President, as may be
assigned to them, respectively, by the Board of Directors or, to the extent not
so assigned, by the President. In the absence or inability to act of the
President, the powers and duties of the President not otherwise assigned by the
Board of
- 6 -
<PAGE> 10
Directors or the President shall devolve upon the Chairman of the Board, or in
the Chairman's absence, the Vice Presidents in the order of their election.
Section 6. Secretary. The Secretary shall have custody of
the seal of the Corporation, and shall keep the minutes of the meetings of the
stockholders, Board of Directors and any committees thereof, and shall issue
all notices of the Corporation. The Secretary shall have charge of the stock
records and such other books and papers as the Board may direct, and shall
perform such other duties as may be incidental to the office or which are
assigned by the Board of Directors. The Secretary shall also keep or cause to
be kept a stock book, which may be maintained by means of computer systems,
containing the names, alphabetically arranged, of all persons who are
stockholders of the Corporation, showing their places of residence, the number
and class or series of any class of shares of stock held by them, respectively,
and the dates when they became the record owners thereof, and such book shall
be open for inspection as prescribed by the laws of the State of Maryland.
Section 7. Treasurer. The Treasurer shall have the care and
custody of the funds and securities of the Corporation and shall deposit the
same in the name of the Corporation in such bank or banks or other
depositories, subject to withdrawal in such manner as these Bylaws or the Board
of Directors may determine. The Treasurer shall, if required by the Board of
Directors, give such bond for the faithful discharge of duties in such form as
the Board of Directors may require.
ARTICLE IV
STOCK
Section 1. Stock Certificates. Each stockholder of the
Corporation shall be entitled to a certificate or certificates for the full
number of shares of each class or series of stock of the Corporation owned by
such stockholder, in such form as the Board of Directors may from time to time
determine, subject to applicable law.
Section 2. Transfer of Shares. Shares of the Corporation
shall be transferable on the books of the Corporation by the holder(s) thereof,
in person or by such holder's duly authorized attorney or legal representative,
upon surrender and cancellation of certificates, if any, for the same number of
shares, duly endorsed or accompanied by proper instruments of assignment and
transfer, with such proof of the authenticity of the signature(s) as the
Corporation or its agents may reasonably require. In the case of shares not
represented by certificates, the same or similar requirements may be imposed by
the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the
Corporation, containing the names and addresses of the stockholders and the
number of shares held by them, respectively, shall be kept at the principal
offices of the Corporation, or if the Corporation has appointed a transfer
agent, at the offices of such transfer agent.
Section 4. Lost, Stolen or Destroyed Certificates. The Board
of Directors may determine the conditions upon which a new stock certificate of
any class or series may be issued in place of a certificate which is alleged to
have been lost, stolen or destroyed. The Board of Directors may in its
discretion require the owner of such certificate to give bond, with sufficient
surety to the Corporation and the transfer agent, if any, to indemnify the
Corporation and such
- 7 -
<PAGE> 11
transfer agent against any and all losses or claims which may arise by reason
of the issuance of a replacement certificate.
ARTICLE V
CORPORATE SEAL
The Board of Directors may provide for a suitable corporate
seal, in such form and bearing such inscriptions as it may determine. In lieu
of fixing the Corporation's seal to a document, it is sufficient to meet the
requirements of any law, rule or regulation relating to a corporate seal to
place the word ("seal") adjacent to the signature of the person authorized to
sign the document on behalf of the Corporation.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the
Board of Directors.
ARTICLE VII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
Section 1. Indemnification of Directors and Officers. The
Corporation shall indemnify its directors to the fullest extent that
indemnification of directors is permitted by the Maryland General Corporation
Law. The Corporation shall indemnify its officers to the same extent as its
directors and to such further extent as is consistent with law. The
Corporation shall indemnify its directors and officers who while serving as
directors or officers also serve at the request of the Corporation as a
director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the fullest extent consistent with law. The indemnification
and other rights provided for by this Article shall continue as to a person who
has ceased to be a director or officer, and shall inure to the benefit of the
heirs, executors and administrators of such a person. This Article shall not
protect any such person against any liability to the Corporation or any
stockholder thereof to which such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such person's office ("disabling
conduct").
Section 2. Advances. The Corporation shall advance payment
to any current or former director or officer of the Corporation for reasonable
expenses incurred in connection with any proceeding in which the individual is
made a party by reason of service as a director or officer in the manner and to
the fullest extent permissible under the Maryland General Corporation Law.
Upon receipt by the Corporation of a written affirmation of his or her good
faith belief that the standard of conduct necessary for indemnification by the
Corporation has been met and a written undertaking to repay any such advance if
it should ultimately be determined that the requisite standard of conduct has
not been met. In addition, at least one of the following
- 8 -
<PAGE> 12
conditions must be satisfied: (a) the individual shall provide security in form
and amount acceptable to the Corporation for the foregoing undertaking, (b) the
Corporation shall be insured against losses arising by reason of the advance,
or (c) a majority of a quorum of directors of the Corporation who are neither
interested persons, as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended, nor parties to the proceeding ("disinterested
non-party directors"), or independent legal counsel in a written opinion, shall
have determined, based on a review of facts readily available to the
Corporation at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to meet the requisite standard of conduct.
Section 3. Procedure. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this Article have been met.
Indemnification shall be made only following: (a) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of disabling conduct, or (b)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the person to be indemnified was not liable by reason
of disabling conduct by, (i) the vote of a majority of a quorum of
disinterested non-party directors, or (ii) an independent legal counsel in a
written opinion.
Section 4. Indemnification of Employees and Agents.
Employees and agents who are not officers or directors of the Corporation may
be indemnified, and reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of Directors or by contract,
subject to any limitations imposed by the Investment Company Act of 1940, as
amended.
Section 5. Other Rights. The Board of Directors may make
further provision consistent with law for indemnification and advancement of
expenses to directors, officers, employees and agents by resolution, agreement
or otherwise. The indemnification provided for by this Article shall not be
deemed exclusive of any other right, with respect to indemnification or
otherwise, to which those seeking indemnification may be entitled under any
insurance, other agreement, resolution of stockholders or disinterested
directors, or otherwise.
Section 6. Subsequent Changes to Law. References in this
Article are to the Maryland General Corporation Law and to the Investment
Company Act of 1940 as from time to time amended. No amendment of these Bylaws
shall affect any right of any person under this Article based on any event,
omission or proceeding occurring prior to such amendment.
ARTICLE VIII
AMENDMENT OF BYLAWS
These Bylaws may be altered, amended or repealed at any
meeting of the Board of Directors without prior notice that such alteration,
amendment or repeal will be considered at such meeting.
- 9 -
<PAGE> 1
[AIM LOGO APPEARS HERE] EXHIBIT 6(b)(2)
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole descretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
consession as disclosed in the CDSC Fund's then current prospectus. Wtih
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
<PAGE> 2
6 Sales and exchages of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concesssion
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospecutus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representaion, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges With CDSC
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes No
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Government Securities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Class A Yes Yes
AIM Money Market Fund Class C No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Limited Maturity Treasury Shares, AIM Money Market Fund
Class C, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
09/96
<PAGE> 1
[AIM LOGO APPEARS HERE] EXHIBIT 6(c)(2)
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
05/95
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges With CDSC
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes No
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Government Securities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Class A Yes Yes
AIM Money Market Fund Class C No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Limited Maturity Treasury Shares, AIM Money Market Fund
Class C, AIM Tax-Exempt Cash Fund and AIM Tax-Free Intermediate Shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
09/96
<PAGE> 1
EXHIBIT 9(d)(2)
NOTICE OF ADDITION OF FUNDS TO
SHAREHOLDER SUB-ACCOUNTING SERVICES AGREEMENT
This Notice of Addition of Funds, dated February 1, 1993, is made
pursuant to Paragraph 10 of that certain Shareholder Sub-Accounting Services
Agreement (the "Agreement"), dated as of July 1, 1990, by and among Tax-Free
Investments Trust (on behalf of its AIM Tax-Free Intermediate Shares class);
Short-Term Investments Co. (on behalf of its AIM Limited Maturity Treasury
Shares class); AIM Equity Funds, Inc. (on behalf of its AIM Charter Fund, AIM
Constellation Fund and AIM Weingarten Fund portfolios); AIM High Yield
Securities, Inc.; and AIM Convertible Securities, Inc. (collectively, the "AIM
Funds"); The Shareholders Services Group, Inc. ("TSSG"); Financial Data
Services, Inc. ("FDS"); and Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S").
WHEREAS, the above-named parties entered into the Agreement for the
purpose of having FDS and MLPF&S perform certain administrative services and
functions for the benefit of certain shareholders of the AIM Funds who maintain
shares in brokerage accounts with MLPF&S; and
WHEREAS, Paragraph 10 of the Agreement permits other mutual funds
which are managed by A I M Advisors, Inc. and for which TSSG serves as transfer
agent to become parties to the Agreement by (i) giving written notice to TSSG
and MLPF&S or FDS that such funds have elected to become such a party and (ii)
having the Agreement executed on their behalf;
NOW, THEREFORE, pursuant to Paragraph 10 of the Agreement, the
undersigned funds state as follows:
1. Addition of Funds. Both AIM International Funds, Inc. (on behalf
of its AIM International Equity Fund portfolio)("AIF") and AIM Investment
Securities Funds, Inc. (on behalf of its AIM Adjustable Rate Government Fund
portfolio)("AIS") hereby notify TSSG, MLPF&S and FDS that they elect to become
parties to the Agreement. For all purposes under the Agreement, the terms "AIM
Fund" and "AIM Funds" shall be deemed to include AIF and AIS.
2. Dates of Effectiveness.
(a) The addition of AIF as an AIM Fund under the Agreement shall be
deemed to have been effective as of May 21, 1992 (the date public offering of
its shares commenced).
-1-
<PAGE> 2
(b) The addition of AIS as an AIM Fund under the Agreement shall be
deemed to have been effective as of October 8, 1991 (the date public offering
of its shares commenced).
3. Execution of Agreement. This Notice of Addition of Funds shall
serve as the operative document by which AIF and AIS shall be deemed to have
executed the Agreement as parties thereto.
IN WITNESS WHEREOF, the undersigned have caused this Notice of
Addition of Funds to be executed by their duly authorized representatives as of
the date first above written.
AIM INTERNATIONAL FUNDS, INC. AIM INVESTMENT SECURITIES FUNDS, INC.
(on behalf of its AIM Inter- (on behalf of its AIM Adjustable
national Equity Fund portfolio) Rate Government Fund portfolio)
By: /s/ ROBERT H. GRAHAM By: /s/ ROBERT H. GRAHAM
------------------------- ----------------------------
Robert H. Graham Robert H. Graham
Executive Vice President Executive Vice President
-2-
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the captions "General Information - Legal Counsel" in the Prospectus
and "Miscellaneous Information - Legal Matters" in the Statement of Additional
Information forming a part of Post-Effective Amendment No. 10 to the
Registration Statement under the Securities Act of 1933 (No. 33-44611) and
Amendment No. 12 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
---------------------------------------
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
February 11, 1997
<PAGE> 1
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
AIM International Funds, Inc.
We consent to the use of our report on AIM International Equity Fund, AIM
Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income
Fund (series portfolios of AIM International Funds, Inc.) dated December 6,
1996 included herein and to the references to our firm under the headings
"Financial Highlights" in the Prospectus, and "Audit Reports" in the Statement
of Additional Information.
/s/ KPMG PEAT MARWICK LLP
-------------------------------------
KPMG Peat Marwick LLP
Houston, Texas
February 12, 1997
<PAGE> 1
EXHIBIT 15(b)(2)
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between A I M
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders. The Plan has also been
approved by a vote of at least a majority of each of such Funds' (or applicable
class of such Funds) outstanding securities, as defined in the 1940 Act.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
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.
<PAGE> 2
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written notice. It will
be terminated by any act which terminates either the Selected Dealer
Agreement between your firm and us or the Fund's Distribution Plan, and in
any event, it shall terminate automatically in the event of its assignment
as that term is defined in the 1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so long
as you provide such services.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate*
- -------------------------------------------------------------
<S> <C>
AIM Aggressive Growth Fund A Shares 0.25
AIM Balanced Fund A Shares 0.25
AIM Balanced Fund B Shares 0.25
AIM Blue Chip Fund A Shares 0.25
AIM Blue Chip Fund B Shares 0.25
AIM Capital Development Fund A Shares 0.25
AIM Capital Development Fund B Shares 0.25
AIM Charter Fund A Shares 0.25
AIM Charter Fund B Shares 0.25
AIM Constellation Fund A Shares 0.25
AIM Global Aggressive Growth Fund A Shares 0.50
AIM Global Aggressive Growth Fund B Shares 0.25
AIM Global Growth Fund A Shares 0.50
AIM Global Growth Fund B Shares 0.25
AIM Global Income Fund A Shares 0.25
AIM Global Income Fund B Shares 0.25
AIM Intermediate Government Fund A Shares 0.25
AIM Intermediate Government Fund B Shares 0.25
AIM Growth Fund A Shares 0.25
AIM Growth Fund B Shares 0.25
AIM High Yield Fund A Shares 0.25
AIM High Yield Fund B Shares 0.25
AIM Income Fund A Shares 0.25
AIM Income Fund B Shares 0.25
AIM International Equity Fund A Shares 0.25
AIM International Equity Fund B Shares 0.25
AIM Limited Maturity Treasury Shares 0.15
AIM Money Market Fund A Shares 0.25
AIM Money Market Fund B Shares 0.25
AIM Money Market Fund C Shares 0.25
AIM Municipal Bond Fund A Shares 0.25
AIM Municipal Bond Fund B Shares 0.25
AIM Tax-Exempt Bond Fund of Connecticut 0.25
AIM Tax-Exempt Cash Fund 0.10
AIM Global Utilities Fund A Shares 0.25
AIM Global Utilities Fund B Shares 0.25
AIM Value Fund A Shares 0.25
AIM Value Fund B Shares 0.25
AIM Weingarten Fund A Shares 0.25
AIM Weingarten Fund B Shares 0.25
</TABLE>
*Frequency of Payments: Quarterly, B share payments begin after an initial
12 month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(c)(2)
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
<PAGE> 2
7 In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assigment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 3
SCHEDULE "A" TO BANK
[AIM LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund A Shares 0.25 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Tax-Exempt Bond Fund of Connecticut 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund 0.10 July 1, 1992
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
</TABLE>
*Frequency of Payments: Quarterly, B share payments begin after an initial
12 month holding period.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT 15(e)(2)
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
maintainance 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 Plans' balances for the
prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---------- ----------
<S> <C>
AIM Equity Funds, Inc. (Class A Shares Only)
- --------------------------------------------
AIM Aggressive Growth Fund* .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group (Class A Shares Only)
- -------------------------------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Growth Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc. (Class A Shares Only)
- ------------------------------------------------------------
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds
- -------------------------------
Limited Maturity Treasury Portfolio (AIM
Limited Maturity Treasury Shares) .15%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan Provider. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made to Plan Provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
* AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(f)(2)
A I M DISTRIBUTORS, INC.
[AIM LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
(BANK TRUST DEPARTMENTS)
A I M Distributors, Inc.
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 2
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not
<PAGE> 3
Shareholder Service Agreement Page 3
(Bank Trust Departments)
constitute a waiver of AIM Distributors's right to terminate at a later
date for any such cause. This Agreement may be terminated with respect
to any Fund at any time by the vote of a majority of the directors or
trustees of such Fund who are disinterested directors or by a vote of a
majority of the Fund's outstanding shares, on not less than 60 days'
written notice to us at our principal place of business. This Agreement
will be terminated by any act which terminates a Fund's Distribution
Agreement with AIM Distributors, the Agreement for Purchase of Shares of
The AIM Family of Funds--Registered Trademark-- between us and AIM
Distributors or a Fund's Distribution Plan, and in any event, it shall
terminate automatically in the event of its assignment by us, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM
Family of Funds--Registered Trademark-- through Bank Trust Departments
constitute the entire agreement between us and AIM Distributors and
supersede all prior oral or written agreements between the parties
hereto. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute the same
instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------
(Firm Name)
-------------------------------------
(Address)
-------------------------------------
City/State/Zip/County
By:
------------------------------
Name:
--------------------------------
Title:
------------------------------
Dated:
-------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Dated:
----------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund
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
[AIM LOGO APPEARS HERE]
(BROKERS FOR BANK TRUST DEPARTMENTS)
A I M Distributors, Inc.
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 7
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
<PAGE> 8
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation
by us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for any such cause. This Agreement may be terminated
with respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates a Fund's
Distribution Agreement with AIM Distributors, the Selected Dealer
Agreement between us and AIM Distributors or a Fund's Distribution Plan,
and in any event, shall terminate automatically in the event of its
assignment by us, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors
from any obligations either may have under any other agreements between
us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------------------
(Firm Name)
-------------------------------------------------
(Address)
-------------------------------------------------
City/State/Zip/County
By:
------------------------------------------
Name:
--------------------------------------------
Title:
------------------------------------------
Dated:
-------------------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund
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.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM INTERNATIONAL
EQUITY FUND CLASS A SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 001
<NAME> AIM INTERNATIONAL EQUITY FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 1,260,825,376
<INVESTMENTS-AT-VALUE> 1,455,757,524
<RECEIVABLES> 24,103,230
<ASSETS-OTHER> 98,784
<OTHER-ITEMS-ASSETS> 36,821,259
<TOTAL-ASSETS> 1,516,780,797
<PAYABLE-FOR-SECURITIES> 35,604,954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,426,375
<TOTAL-LIABILITIES> 40,031,329
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,238,126,321
<SHARES-COMMON-STOCK> 96,446,729
<SHARES-COMMON-PRIOR> 51,789,496
<ACCUMULATED-NII-CURRENT> 1,113,111
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42,949,270
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 194,560,766
<NET-ASSETS> 1,476,749,468
<DIVIDEND-INCOME> 16,488,363
<INTEREST-INCOME> 3,504,142
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<EXPENSES-NET> (18,862,411)
<NET-INVESTMENT-INCOME> 1,130,094
<REALIZED-GAINS-CURRENT> 43,829,404
<APPREC-INCREASE-CURRENT> 98,461,748
<NET-CHANGE-FROM-OPS> 143,421,246
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> (20,343,317)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 62,697,439
<NUMBER-OF-SHARES-REDEEMED> 19,476,610
<SHARES-REINVESTED> 1,436,404
<NET-CHANGE-IN-ASSETS> 770,021,999
<ACCUMULATED-NII-PRIOR> 237,171
<ACCUMULATED-GAINS-PRIOR> 19,504,994
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,178,745
<AVERAGE-NET-ASSETS> 894,828,456
<PER-SHARE-NAV-BEGIN> 13.65
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 2.07
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> (.38)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.37
<EXPENSE-RATIO> 1.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM INTERNATIONAL
EQUITY FUND CLASS B SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 002
<NAME> AIM INTERNATIONAL EQUITY FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 1,260,825,376
<INVESTMENTS-AT-VALUE> 1,455,757,524
<RECEIVABLES> 24,103,230
<ASSETS-OTHER> 98,784
<OTHER-ITEMS-ASSETS> 36,821,259
<TOTAL-ASSETS> 1,516,780,797
<PAYABLE-FOR-SECURITIES> 35,604,954
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,426,375
<TOTAL-LIABILITIES> 40,031,329
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,238,126,321
<SHARES-COMMON-STOCK> 96,446,729
<SHARES-COMMON-PRIOR> 51,789,496
<ACCUMULATED-NII-CURRENT> 1,113,111
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42,949,270
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 194,560,766
<NET-ASSETS> 1,476,749,468
<DIVIDEND-INCOME> 16,488,363
<INTEREST-INCOME> 3,504,142
<OTHER-INCOME> 0
<EXPENSES-NET> (18,862,411)
<NET-INVESTMENT-INCOME> 1,130,094
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<APPREC-INCREASE-CURRENT> 98,461,748
<NET-CHANGE-FROM-OPS> 143,421,246
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (295,965)
<DISTRIBUTIONS-OF-GAINS> (20,343,317)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 62,697,439
<NUMBER-OF-SHARES-REDEEMED> 19,476,610
<SHARES-REINVESTED> 1,436,404
<NET-CHANGE-IN-ASSETS> 770,021,999
<ACCUMULATED-NII-PRIOR> 237,171
<ACCUMULATED-GAINS-PRIOR> 19,504,994
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,384,642
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,178,745
<AVERAGE-NET-ASSETS> 203,465,249
<PER-SHARE-NAV-BEGIN> 13.54
<PER-SHARE-NII> (.07)
<PER-SHARE-GAIN-APPREC> 2.04
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 15.13
<EXPENSE-RATIO> 2.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL
AGGRESSIVE FUND CLASS A SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 003
<NAME> AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 1,528,249,277
<INVESTMENTS-AT-VALUE> 1,729,881,025
<RECEIVABLES> 21,721,640
<ASSETS-OTHER> 128,958
<OTHER-ITEMS-ASSETS> 9,270,386
<TOTAL-ASSETS> 1,761,002,009
<PAYABLE-FOR-SECURITIES> 27,020,437
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<OTHER-ITEMS-LIABILITIES> 7,447,596
<TOTAL-LIABILITIES> 34,468,003
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,557,038,579
<SHARES-COMMON-STOCK> 110,157,520
<SHARES-COMMON-PRIOR> 23,288,229
<ACCUMULATED-NII-CURRENT> (14,054)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (32,181,471)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 201,690,922
<NET-ASSETS> 1,726,533,976
<DIVIDEND-INCOME> 8,040,717
<INTEREST-INCOME> 3,459,264
<OTHER-INCOME> 0
<EXPENSES-NET> (197,210,212)
<NET-INVESTMENT-INCOME> (8,221,031)
<REALIZED-GAINS-CURRENT> (32,408,407)
<APPREC-INCREASE-CURRENT> 171,434,202
<NET-CHANGE-FROM-OPS> 130,804,764
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,286,867)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 95,486,405
<NUMBER-OF-SHARES-REDEEMED> 8,712,205
<SHARES-REINVESTED> 94,991
<NET-CHANGE-IN-ASSETS> 1,422,306,034
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,571,918
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,735,974
<AVERAGE-NET-ASSETS> 530,674,844
<PER-SHARE-NAV-BEGIN> 13.09
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> 2.81
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.76
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL
AGGRESSIVE GROWTH FUND CLASS B SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 004
<NAME> AIM GLOBAL AGGRESSIVE GROWTH FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 1,528,249,227
<INVESTMENTS-AT-VALUE> 1,729,881,025
<RECEIVABLES> 21,721,640
<ASSETS-OTHER> 128,958
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<PAID-IN-CAPITAL-COMMON> 1,557,038,579
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<ACCUMULATED-NET-GAINS> (32,181,471)
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<ACCUM-APPREC-OR-DEPREC> 201,690,922
<NET-ASSETS> 1,726,533,976
<DIVIDEND-INCOME> 8,040,717
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<EXPENSES-NET> (197,210,212)
<NET-INVESTMENT-INCOME> (8,221,031)
<REALIZED-GAINS-CURRENT> (32,408,407)
<APPREC-INCREASE-CURRENT> 171,434,202
<NET-CHANGE-FROM-OPS> 130,804,764
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,286,867)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 95,486,405
<NUMBER-OF-SHARES-REDEEMED> 8,712,205
<SHARES-REINVESTED> 94,991
<NET-CHANGE-IN-ASSETS> 1,422,306,034
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,232,761
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,571,918
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,735,974
<AVERAGE-NET-ASSETS> 421,760,605
<PER-SHARE-NAV-BEGIN> 13.02
<PER-SHARE-NII> (.17)
<PER-SHARE-GAIN-APPREC> 2.78
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<PER-SHARE-NAV-END> 15.58
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL GROWTH
FUND CLASS A SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 005
<NAME> AIM GLOBAL GROWTH FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 213,861,105
<INVESTMENTS-AT-VALUE> 236,947,605
<RECEIVABLES> 3,933,360
<ASSETS-OTHER> 99,425
<OTHER-ITEMS-ASSETS> 4,930,741
<TOTAL-ASSETS> 245,911,131
<PAYABLE-FOR-SECURITIES> 8,304,055
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 787,904
<TOTAL-LIABILITIES> 9,091,959
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 214,479,430
<SHARES-COMMON-STOCK> 16,771,148
<SHARES-COMMON-PRIOR> 3,327,579
<ACCUMULATED-NII-CURRENT> (19,431)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (662,207)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,021,380
<NET-ASSETS> 236,819,172
<DIVIDEND-INCOME> 1,943,751
<INTEREST-INCOME> 511,628
<OTHER-INCOME> 0
<EXPENSES-NET> (3,003,779)
<NET-INVESTMENT-INCOME> (548,400)
<REALIZED-GAINS-CURRENT> (604,088)
<APPREC-INCREASE-CURRENT> 20,032,132
<NET-CHANGE-FROM-OPS> 18,879,644
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (929,191)
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<NUMBER-OF-SHARES-SOLD> 14,800,867
<NUMBER-OF-SHARES-REDEEMED> 1,425,351
<SHARES-REINVESTED> 68,054
<NET-CHANGE-IN-ASSETS> 195,908,080
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 874,201
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,163,814
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,017,649
<AVERAGE-NET-ASSETS> 70,416,375
<PER-SHARE-NAV-BEGIN> 12.32
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 2.11
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.22)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL GROWTH
FUND CLASS B SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 006
<NAME> AIM GLOBAL GROWTH FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 213,861,105
<INVESTMENTS-AT-VALUE> 236,947,605
<RECEIVABLES> 3,933,360
<ASSETS-OTHER> 99,425
<OTHER-ITEMS-ASSETS> 4,930,741
<TOTAL-ASSETS> 245,911,131
<PAYABLE-FOR-SECURITIES> 8,304,055
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 787,904
<TOTAL-LIABILITIES> 9,091,959
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 214,479,430
<SHARES-COMMON-STOCK> 16,771,148
<SHARES-COMMON-PRIOR> 3,327,579
<ACCUMULATED-NII-CURRENT> (19,431)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (662,207)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,021,380
<NET-ASSETS> 236,819,172
<DIVIDEND-INCOME> 1,943,751
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<NET-INVESTMENT-INCOME> (548,400)
<REALIZED-GAINS-CURRENT> (604,088)
<APPREC-INCREASE-CURRENT> 20,032,132
<NET-CHANGE-FROM-OPS> 18,879,644
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (929,191)
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<NUMBER-OF-SHARES-SOLD> 14,800,867
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<SHARES-REINVESTED> 68,054
<NET-CHANGE-IN-ASSETS> 195,908,080
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 874,201
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,163,814
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,017,649
<AVERAGE-NET-ASSETS> 66,380,227
<PER-SHARE-NAV-BEGIN> 12.26
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 2.06
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.22)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.05
<EXPENSE-RATIO> 2.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL INCOME
FUND CLASS A SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 007
<NAME> AIM GLOBAL INCOME FUND CLASS A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 36,405,538
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<PAID-IN-CAPITAL-COMMON> 37,281,153
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<ACCUMULATED-NET-GAINS> 330,414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 978,548
<NET-ASSETS> 38,713,770
<DIVIDEND-INCOME> 25,703
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<NUMBER-OF-SHARES-SOLD> 2,922,923
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 579,149
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<PER-SHARE-NAV-BEGIN> 10.74
<PER-SHARE-NII> .79
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> (.81)
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<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE AIM GLOBAL INCOME
FUND CLASS B SHARES OCTOBER 31, 1996 ANNUAL REPORT.
</LEGEND>
<CIK> 0000880859
<NAME> AIM INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 008
<NAME> AIM GLOBAL INCOME FUND CLASS B SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
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<PAID-IN-CAPITAL-COMMON> 37,281,153
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<ACCUM-APPREC-OR-DEPREC> 978,548
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<NUMBER-OF-SHARES-SOLD> 2,922,923
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<PER-SHARE-NAV-BEGIN> 10.73
<PER-SHARE-NII> .74
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<EXPENSE-RATIO> 1.75
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</TABLE>
