<PAGE> 1
As filed with the Securities and Exchange Commission on December 23, 1998
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. 15 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 17 [X]
(Check appropriate box or boxes.)
AIM INTERNATIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, TX 77046
(Name and Address of Agent for Service)
Copy to:
<TABLE>
<S> <C>
P. Michelle Grace, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the effective
date of this Amendment
</TABLE>
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 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.
Title of Securities Being Registered: Common Stock
<PAGE> 3
[AIM LOGO APPEARS HERE]
AIM ASIAN GROWTH FUND
PROSPECTUS
MARCH 1, 1999
AIM Asian Growth Fund seeks to provide long-term growth of capital.
This prospectus contains important information. Please read it before investing
and keep it for future reference.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. There is a risk that you could lose a portion or all of your money.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
1
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND.................................................................3
PERFORMANCE INFORMATION..................................................................................4
ANNUAL TOTAL RETURNS................................................................................5
PERFORMANCE TABLE...................................................................................6
FEE TABLE AND EXPENSE EXAMPLE............................................................................6
FEE TABLE...........................................................................................6
EXPENSE EXAMPLE.....................................................................................7
FUND MANAGEMENT..........................................................................................7
ADVISORY ARRANGEMENTS...............................................................................7
ADVISOR COMPENSATION................................................................................8
PORTFOLIO MANAGERS..................................................................................8
OTHER INFORMATION........................................................................................8
INITIAL SALES CHARGES FOR CLASS A SHARES............................................................8
DIVIDENDS DISTRIBUTIONS............................................................................8
FINANCIAL HIGHLIGHTS.....................................................................................9
SHAREHOLDER INFORMATION................................................................................A-1
CHOOSING A SHARE CLASS............................................................................A-1
PURCHASING SHARES.................................................................................A-4
REDEEMING SHARES..................................................................................A-6
EXCHANGING SHARES.................................................................................A-9
PRICING OF SHARES................................................................................A-11
TAXES............................................................................................A-11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
2
<PAGE> 5
AIM ASIAN GROWTH FUND
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is long-term growth of capital.
The fund attempts to meet this objective by investing at least 80% of its assets
in marketable equity securities issued by Asian companies (except Japanese
companies), including companies with market capitalizations of less than $1
billion. The fund considers Asian companies to be those (i) organized under the
laws of a country in Asia and having a principal office in a country in Asia;
(ii) that derive 50% or more of their total revenues from business in Asia; or
(iii) whose equity securities are traded principally on a stock exchange, or in
an over-the-counter market, in Asia. The fund may invest up to 20% of its total
assets in securities exchangeable for or convertible into equity securities of
Asian companies. The fund may also invest up to 20% of its total assets in
securities of non-Asian companies.
The fund will normally invest in companies located in at least three countries,
including countries in Asia as well as Australia and New Zealand. The fund may
also invest up to 100% of its total assets in companies in developing countries,
i.e., those that are in the initial stages of their industrial cycle.
The fund's portfolio managers focus on companies that have experienced
above-average, long-term growth in earnings and have excellent prospects for
future growth. In selecting countries in which the fund will invest, the fund's
portfolio managers also consider such factors as the prospect for relative
economic growth among countries or regions, economic or political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security. The fund's portfolio managers usually sell a particular
security when any of those factors materially changes.
Under normal circumstances, the fund may invest up to 20% of its total assets in
high-grade short-term securities and debt securities, including U.S. government
obligations, investment grade corporate bonds or taxable municipal securities,
whether denominated in U.S. dollars or foreign currencies. However, in
anticipation of or in response to adverse market conditions or for cash
management purposes, the fund may hold all or a portion of its assets in cash or
these types of securities. As a result, the fund may not achieve its investment
objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The price of common stock
goes up and down in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. This is especially true with respect to common stocks of smaller
companies, whose prices may go up and down more than the prices of common stocks
of larger, more-established companies. Also, since common stocks of smaller
companies may not be traded as often as common stocks of larger,
more-established companies, it may be difficult or impossible for the fund to
sell securities at a desired price.
3
<PAGE> 6
In addition, the prices of common stocks issued by foreign companies may be
further affected by other factors, including
o Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and
the currencies in which those investments are traded.
o Political and economic conditions--The value of the fund's foreign
investments may be adversely affected by political and social instability
in their home countries and by changes in economic or taxation policies in
those countries.
o Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, among other things, there generally is less
publicly available information about foreign companies than about U.S.
companies.
o Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of common stocks issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devaluated their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures. In addition, developing
countries may have greater political and economic instability, less regulation
and smaller, less liquid and more volatile markets than countries with more
mature economies.
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of correcting
and testing those systems that may have such problem. This problem, if not
corrected, may adversely affect the services provided to the fund or may affect
companies in which the fund may invest, and, therefore, may lower the value of
your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
4
<PAGE> 7
ANNUAL TOTAL RETURNS
The following bar chart shows the performance of the fund's Class A shares over
a two-year period. The bar chart does not reflect sales loads. If it did, the
annual total return shown would be lower.
Asian Growth
<TABLE>
<CAPTION>
Annual
Total
Return
------
Year Ended
December 31
-----------
<S> <C>
1997 ............................................ -0.14%
1998 ............................................ %
</TABLE>
- --------------
The year-to-date as of 1/31/99 (the end of the most recent fiscal quarter)
was ___%.
During the two-year period shown in the bar chart, the highest quarterly return
was ____% (quarter ended __________) and the lowest quarterly return was _____%
(quarter ended __________).
5
<PAGE> 8
PERFORMANCE TABLE
The following performance table shows how the fund's average annual returns for
a one-year period compares to those of a broad-based securities market index.
Average Annual Total Returns
(for the period ending
December 31, 1998)
<TABLE>
<CAPTION>
1 Year
------
<S> <C>
Class A* -0.14%
Class B* --
Class C* --
MSCI All Country Asia Free ex Japan Index** --
</TABLE>
* Return is since inception (11/3/97).
** The Morgan Stanley Capital International All Country Asia Free ex Japan
Index measures performance of twelve of both developed and emerging markets
in this region. The index excludes shares that are not readily purchased by
non-local investors. The index is capitalization weighted. Companies
included in the index replicate the industry composition of each local
market and, in addition, represent a sampling of large, medium and small
capitalization companies from each local market, taking into account the
stocks' liquidity.
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.50% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None(1) 5.00 1.00
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees [0.63%] [0.63%] [0.63%]
Distribution and/or Service (12b-1) Fees [0.30] [1.00] [1.00]
Other Expenses:
Transfer agent fees and costs [0.17] [0.23] [0.23]
Other [0.03] [0.03] [0.03]
------ ------ ------
Total Other Expenses [0.20] [0.26] [0.26]
Total Annual Fund Operating Expenses [1.13] [1.89] [1.89]
- ------------------- ====== ====== ======
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
6
<PAGE> 9
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A $ -- $ --
Class B -- --
Class C -- --
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A $ -- $ --
Class B -- --
Class C -- --
</TABLE>
FUND MANAGEMENT
ADVISORY ARRANGEMENTS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management including the fund's investment
decisions and the execution of securities transactions. The advisor is located
at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. INVESCO Global Asset
Management Limited (the subadvisor), the fund's subadvisor, is located at Cedar
House, 41 Cedar Avenue, Hamilton, HM12 Bermuda. INVESCO Asia Limited (the
subsubadvisor), the fund's subsubadvisor, is located at Suite 2106, Two Pacific
Place, 88 Queensway, Hong Kong. All three entities are affiliated.
The subadvisor and subsubadvisor are responsible for providing the advisor with
economic and market research, securities analysis and investment recommendations
with respect to the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over [90]
investment company
7
<PAGE> 10
portfolios, including the fund, encompassing a broad range of investment
objectives. The subadvisor has acted as an investment advisor since its
organization in 1995. The subadvisor advises approximately 27 [investment
company] portfolios. The subsubadvisor has acted as an investment advisor since
its organization in 19__. The subsubadvisor advises approximately ___
[investment company] portfolios.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of [0.61%] of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
o A. Dale Griffin, III, Senior Portfolio Manager, who has been
responsible for the fund since its inception and has been associated
with the advisor and/or its affiliates since 1989.
o Barrett K. Sides, Senior Portfolio Manager, who has been responsible
for the fund since its inception and has been associated with the
advisor and/or its affiliates since 1990.
OTHER INFORMATION
INITIAL SALES CHARGES FOR CLASS A SHARES
Purchases of Class A shares of the fund are subject to the maximum 5.50% initial
sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in
the "Shareholder Information--Choosing a Share Class" section of this
prospectus.
DIVIDENDS DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares and pays dividends, if any, annually.
8
<PAGE> 11
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years ended October 31 (or periods) indicated.
This information has been audited by KPMG Peat Marwick LLP, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
<TABLE>
<CAPTION>
Class A Class B Class C
---------------------------------------------------------
For the Period For the Period For the Period
November 3, November 3, November 3,
1997 through 1997 through 1997 through
October 31, October 31, October 31,
1998 1998 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period $xx.xx $xx.xx $xx.xx
-------------- -------------- --------------
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx) (x.xx)
============== ============== ==============
Net gains on securities (both realized and unrealized) (x.xx) x.xx x.xx
============== ============== ==============
Total from investment operations (x.xx) x.xx x.xx
============== ============== ==============
Distributions from net realized gains (x.xx) (x.xx) (x.xx)
============== ============== ==============
Net asset value, end of period $xx.xx $xx.xx $xx.xx
============== ============== ==============
Total return (a) (x.xx)% xx.xx% xx.xx%
============== ============== ==============
Ratios/supplemental data:
Net assets, end of period (000s omitted) $xx,xxx $xx,xxx,xxx $xx,xxx,xxx
============== ============== ==============
Ratio of expenses to average net assets (b)(c) x.xx% x.xx x.xx
============== ============== ==============
Ratio of net investment income (loss) to average net assets (c)(d) (x.xx)% (x.xx)% (x.xx)%
============== ============== ==============
Portfolio turnover rate xx% xx% xx%
============== ============== ==============
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
xxx% (annualized), x.xx% (annualized) and x.xx% (annualized) for Class A,
Class B and Class C, respectively.
(c) Ratios are annualized and based on average net assets of $x,xxx,xxx,
$x,xxx,xxx and $xxx,xxx for Class A, Class B and Class C, respectively.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (x.xx)% (annualized), (x.xx)% (annualized) and (x.xx)%
(annualized), for Class A, Class B and Class C, respectively.
9
<PAGE> 12
SHAREHOLDER INFORMATION
Choosing a Share Class
Many of the funds advised by the advisor (the AIM Funds) have multiple classes
of shares, each class representing an interest in the same portfolio of
investments. When choosing a share class, you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C>
o Initial sales charge o No initial sales charge o No initial sales charge
o Reduced or o Contingent deferred o Contingent deferred
waived initial sales charge on sales charge on
sales charge for redemptions within redemptions within
certain purchases six years one year
o Lower distribution o 12b-1 fee of 1.00% o 12b-1 fee of 1.00%
and service (12b-1)
fee than Class B or
Class C shares
(See "Fee Table o Converts to Class A o Does not convert to
and Expense shares after eight years Class A shares
Example") along with a pro rata
portion of its reinvested
dividends and distributions*
o Generally more o Purchase orders limited o Generally more
appropriate for long- to amounts less than appropriate for short-
term investors $250,000 term investors
</TABLE>
* If you held Class B shares of AIM Global Trends Fund on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of that fund
seven years after your date of purchase. If you exchange those shares for Class
B shares of another AIM Fund, the shares into which you exchanged will not
convert to Class A shares until eight years after your date of purchase of the
original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
A-1
<PAGE> 13
SALES CHARGES
Generally you will not pay a sales charge on purchases or redemptions of
Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund. You may be charged a contingent deferred sales charge if
you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through
certain exchanges. Sales charges on all other AIM Funds and classes of those
Funds are detailed below. As used below, the term "offering price" with respect
to all categories of Class A shares includes the initial sales charge.
Initial Sales Charges
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
CATEGORY I Initial Sales Charges
- --------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY II Initial Sales Charges
- ---------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$ 100,000 but less than $ 250,000 3.75 3.90
$ 250,000 but less than $ 500,000 2.50 2.56
$ 500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY III Initial Sales Charges
- ----------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
</TABLE>
Contingent Deferred Sales Charges for Class A Shares
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
A-2
<PAGE> 14
Contingent Deferred Sales Charges for Class B and Class C Shares
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
CLASS B CLASS C
CDSC AS A PERCENTAGE CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT OF DOLLAR AMOUNT
YEAR SINCE PURCHASE MADE SUBJECT TO CHARGE SUBJECT TO CHARGE
------------------------ ----------------- -----------------
<S> <C> <C>
First 5% 1%
Second 4% None
Third 3% None
Fourth 3% None
Fifth 2% None
Sixth 1% None
Seventh and following None None
</TABLE>
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
Reduced Sales Charges
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
Initial Sales Charge Exceptions
You will not pay initial sales charges
o on shares purchased by reinvesting dividends and distributions;
o when exchanging shares among certain AIM Funds;
o when using the reinstatement privilege; and
o when a merger, consolidation, or acquisition of assets of an AIM Fund
occurs.
Contingent Deferred Sales Charge (CDSC) Exceptions
You will not pay a CDSC
o if you redeem Class B shares you held for more than six years;
o if you redeem Class C shares you held for more than one year;
o if you redeem shares acquired through reinvestment of dividends and
distributions; and
o on increases in the net asset value of your shares.
A-3
<PAGE> 15
There may be other situations in which you or other shareholders may be able to
purchase or redeem shares at reduced or without sales charges. You should
consult the fund's Statement of Additional Information for details regarding
these situations.
Purchasing Shares
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM
Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Type of Account Initial Additional
Investments Investments
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing plans, 401(k) plans, Simplified $0 ($25 per $25
Employee Pension (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings AIM Fund
Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 investment
plans) for salary
deferrals
from Savings
Plans)
- -------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plans $50 $50
- -------------------------------------------------------------------------------------------------------------------------
IRA, Education IRA or Roth IRA $250 $50
- -------------------------------------------------------------------------------------------------------------------------
All other accounts $500 $50
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE> 16
HOW TO PURCHASE SHARES
There are several ways you can purchase your shares. You can make direct
purchases or select from one of three automatic investment methods.
DIRECT PURCHASES
<TABLE>
<CAPTION>
Opening An Account Adding to An Account
<S> <C> <C>
Through a
Financial
Consultant Contact your financial consultant. Same
By Mail Mail completed Account Mail your check and the
Application and purchase payment to the transfer agent, remittance slip from
A I M Fund Services, Inc., P.O. Box 4739, your confirmation statement
Houston, TX 77210-4739. to the transfer agent.
By Wire Mail completed Account Call the transfer agent to
Application to the transfer agent. receive a reference number.
Call the transfer agent at Then, use the wire
(800) 959-4246 to receive a reference number. instructions at left.
Then, use the following wire instructions:
Beneficiary Bank ABA/Routing #:113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank
Connection(sm) Open your account using one of the methods described Mail completed AIM Bank
above. Connection(sm) form to the
transfer agent. Once
the transfer agent has
received the form, call the
transfer agent to place your
purchase.
</TABLE>
SPECIAL PLANS
Automatic Investment Plan
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
Dollar Cost Averaging
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration and in the same class of shares. The
account from which exchanges are to be made must have a minimum balance of
$5,000 before you can use this option. Exchanges will occur on (or about) the
A-5
<PAGE> 17
10th or 25th day of the month in the amount you specify. The minimum amount you
can exchange to another AIM Fund is $50.
Automatic Dividend Investment
All of your dividends and distributions may be paid in cash or invested at net
asset value in certain AIM Funds without paying a sales charge. Unless you
specify otherwise, your dividends and distributions will automatically be
reinvested in the same AIM Fund. You may invest your dividends and distributions
(1) into another AIM Fund in the same class of shares; or (2) from Class A
shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at
least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
Portfolio Rebalancing Program
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. We may modify, suspend or terminate the
Program at any time on 60 days' prior written notice.
Retirement Plans
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-
sponsored retirement plan assesses an annual maintenance fee of $10. Contact
your financial consultant for details.
Redeeming Shares
TIMING OF REDEMPTIONS
You can redeem shares during the hours the New York Stock Exchange (NYSE) is
open for business. An AIM Fund may postpone the right of redemption only under
unusual circumstances, such as when the NYSE restricts or suspends trading.
A-6
<PAGE> 18
REDEMPTION FEES
We will not charge you any fees to redeem your shares; however, your broker or
financial consultant may charge service fees for handling these transactions.
Your shares may be subject to a contingent deferred sales charge (CDSC).
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY
EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within eighteen months of the purchase of the Class A shares,
you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
HOW TO REDEEM SHARES
<TABLE>
<CAPTION>
Through a
Financial Consultant Contact your financial consultant.
<S> <C>
By Mail Send a written request to the transfer agent.
Requests must include (1) original signatures of
all registered owners; (2) the name of the AIM
Fund and your account number; (3) if the transfer
agent does not hold your shares, endorsed share
certificates or share certificates accompanied by
an executed stock power; and (4) signature
guarantees, if necessary (see below). The
transfer agent may require that you provide
additional information, such as corporate
resolutions or powers of attorney, if applicable.
If you are redeeming from an IRA account, you
must include a statement of whether or not you
are at least 59-1/2 years old and whether you
wish to have federal income tax withheld from
your proceeds. The transfer agent may require
certain other information before you can redeem
from an employer-sponsored retirement plan.
Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to
redeem by telephone if (1) the proceeds are to be
mailed to the address on record with us or
transferred electronically to a pre-authorized
checking account; (2) the address on record with
us has not been changed within the last thirty
days; (3) you do not hold physical share
certificates; (4) you can provide proper
identification information; (5) the proceeds of
the redemption do not exceed $50,000; and (6) you
have not previously declined the telephone
redemption privilege. Certain accounts, including
retirement accounts and 403(b) plans, may not
redeem by telephone. The transfer agent must
receive your call during the hours the NYSE is
open for business in order to effect the
redemption at that day's closing price.
</TABLE>
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
A-7
<PAGE> 19
Redemption by mail
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
Redemption by telephone
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
Payment for Systematic Withdrawals
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
Expedited Redemptions (AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of trading
on the New York Stock Exchange (NYSE), we generally will transmit payment on the
next business day.
Redemptions by Check (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash
Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record
on the account; or
(4) you request that payment be sent to a new address or an address that
changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax- Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference
A-8
<PAGE> 20
between the initial sales charges on those Funds and the ones in which you will
be investing. In addition, if you paid a contingent deferred sales charge (CDSC)
on any reinstated amount, you will not be subject to a CDSC if you later redeem
that amount. You must notify the transfer agent in writing at the time you
reinstate that you are exercising your reinstatement privilege. You may exercise
this privilege only once per year and it may have tax consequences.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
AIM Fund may, in its discretion, redeem the account and distribute the proceeds
to you.
Exchanging Shares
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You also may exchange AIM Cash Reserve Shares of
AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
may be required to pay an initial sales charge when exchanging from a Fund with
a lower initial sales charge than the one into which you are exchanging. If you
exchange from Class A shares not subject to a CDSC into Class A shares subject
to those charges, you will be charged a CDSC when you redeem the exchanged
shares. The CDSC charged on redemption of those shares will be calculated
starting on the date you acquired those shares through exchange.
You will not pay a sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares
of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares
of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii)you acquired the original shares on or after May 1, 1994 by
way of an exchange from shares with higher sales charges;
A-9
<PAGE> 21
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge
(except for Class A shares of AIM Limited Maturity Treasury Fund
and AIM Tax-Free Intermediate Fund), but only if you acquired the
original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject
to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares
subject to an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund, but only if you acquired the original
shares by exchange from Class A shares subject to an initial sales
charge; or
(4) Class B shares for other Class B shares, and Class C shares for other
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
o You must meet the minimum purchase requirements for the AIM Fund into
which you are exchanging;
o Shares of the AIM Fund you wish to acquire must be qualified for sale in
your state of residence;
o Exchanges must be made between accounts with identical registration
information;
o The account you wish to exchange from must have a certified tax
identification number (or the Fund has received an appropriate Form W-8 or
W-9);
o Shares must have been held for at least one day prior to the exchange; and
o If you have physical share certificates, you must return them to the
transfer agent prior to the exchange.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the issuance of shares
being purchased in an exchange for up to five business days if it determines
that it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
By Mail
A-10
<PAGE> 22
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
By Telephone
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours the NYSE is open for business; however, you still will be
allowed to exchange by telephone even if you have changed your address of record
within the preceding 30 days.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
EACH AIM FUND AND THE DISTRIBUTOR RESERVE THE RIGHT AT ANY TIME TO REJECT OR
CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; MODIFY ANY TERMS OR
CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; OR WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS.
Pricing of Shares
Each of the AIM Funds prices its shares based on its net asset value. The AIM
Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM High
Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of
Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities. The AIM
Funds value all other securities and assets at their fair value. Securities and
other assets quoted in foreign currencies are valued in U.S. dollars based on
the prevailing exchange rates on that day. In addition, if, between the time
trading ends on a particular security and the close of the New York Stock
Exchange (NYSE), events occur that materially affect the value of the security,
the AIM Funds may value the security at its fair value as determined in good
faith by or under the supervision of the Board of Directors or Trustees of the
AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset
value will be subject to the judgment of the Board of Directors or Trustees or
its designee instead of being determined by the market. Because some of the AIM
Funds may invest in securities that are primarily listed on foreign exchanges,
the value of those Funds' shares may change on days when you will not be able to
purchase or redeem shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the NYSE on each day the NYSE is open for business. AIM Money Market Fund also
determines its net asset value as of 12:00 noon Eastern Time on each day the
NYSE is open for business. The AIM Funds price purchase, exchange and redemption
orders at the net asset value calculated after the transfer agent receives an
order in good form.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions. Every year, an
A-11
<PAGE> 23
account statement showing the amount of dividends and distributions you
received from each AIM Fund during the prior year will be sent to you.
Any long-term or short-term capital gains realized from redemptions of AIM Fund
shares will be subject to federal income tax. Exchanges of shares for shares of
another AIM Fund are treated as a sale of the AIM Fund's shares, and any gain
realized on the transaction will be subject to federal income tax.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
A-12
<PAGE> 24
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities Exchange Commission (SEC), contains more details about
the fund and is incorporated by reference into the prospectus (is legally a part
of this prospectus). Annual and semi-annual reports to shareholders contain
additional information about the fund's investments. The fund's annual report
also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semi-annual reports only)
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
AIM Asian Growth Fund
SEC 1940 Act file number: 811-6463
Back Cover Page
<PAGE> 25
[AIM LOGO APPEARS HERE]
AIM EUROPEAN DEVELOPMENT FUND
PROSPECTUS
MARCH 1, 1999
AIM European Development Fund seeks to provide long-term growth of capital.
This prospectus contains important information. Please read it before investing
and keep it for future reference.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. There is a risk that you could lose a portion or all of your money.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
WHETHER THE INFORMATION IN THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.
1
<PAGE> 26
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AIM EUROPEAN DEVELOPMENT FUND............................................................................3
INVESTMENT OBJECTIVE AND STRATEGIES.................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND............................................................3
PERFORMANCE INFORMATION..................................................................................5
ANNUAL TOTAL RETURNS................................................................................5
PERFORMANCE TABLE ..................................................................................6
FEE TABLE AND EXPENSE EXAMPLE............................................................................7
FEE TABLE...........................................................................................7
EXPENSE EXAMPLE.....................................................................................7
FUND MANAGEMENT..........................................................................................9
ADVISORY ARRANGEMENTS...............................................................................9
ADVISOR COMPENSATION................................................................................9
PORTFOLIO MANAGERS..................................................................................9
OTHER INFORMATION.......................................................................................10
INITIAL SALES CHARGES FOR CLASS A SHARES...........................................................10
DIVIDENDS AND DISTRIBUTIONS........................................................................10
FINANCIAL HIGHLIGHTS ...................................................................................11
SHAREHOLDER INFORMATION................................................................................A-1
CHOOSING A SHARE CLASS............................................................................A-1
DISTRIBUTION AND SERVICE (12B-1) FEES.............................................................A-1
PURCHASING SHARES.................................................................................A-4
REDEEMING SHARES..................................................................................A-6
EXCHANGING SHARES.................................................................................A-9
PRICING OF SHARES................................................................................A-11
TAXES............................................................................................A-11
OBTAINING ADDITIONAL INFORMATION......................................................BACK COVER PAGE
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
2
<PAGE> 27
AIM EUROPEAN DEVELOPMENT FUND
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing at least 80% of its total
assets in marketable equity securities of European companies, including
securities of companies having less than $1 billion market capitalization. The
fund considers European companies to be those (i) organized under the laws of a
country in Europe and having a principal office in a country in Europe; (ii)
that derive 50% or more of their total revenues from business in Europe; or
(iii) whose equity securities are traded principally in a stock exchange, or in
an over-the-counter market, in Europe. The fund will normally invest in the
securities of companies located in at least three European countries. The fund
may invest up to 65% of its total assets in issuers of securities located
outside of Western Europe. Many of these countries in Eastern Europe may be
considered developing countries, i.e., those that are in the initial stages of
their industrial cycle. The fund may invest up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of European
securities. The fund may invest up to 20% of its total assets in securities of
non-European companies.
The fund's portfolio managers focus on companies that have experienced
above-average long-term growth in earnings and have excellent prospects for
future growth. In selecting countries in which the fund will invest, the fund's
portfolio managers also consider such factors as the prospect for relative
economic growth among countries or regions, economic or political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security. The fund's portfolio managers usually sell a particular
security when any of these factors materially changes.
Under normal circumstances, the fund may invest up to 20% of its total assets
in high-grade short-term securities and in debt securities, including U.S.
government obligations, investment grade corporate bonds or taxable municipal
securities. However, in anticipation of or in response to adverse market
conditions or for cash management purposes, the fund may hold all or a portion
of its assets in cash or these types of securities. As a result, the fund may
not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The price of common stock
goes up and down in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. This is especially true with respect to common stock of smaller
companies, whose prices may go up and down more than the prices of common
stocks of larger more-established companies. Also, since common stocks of
smaller companies may not be traded as often as common stocks of larger,
more-established companies, it may be difficult or impossible for the fund to
sell securities at a desired price.
3
<PAGE> 28
In addition, the prices of common stocks issued by foreign companies may be
further affected by other factors, including
o Currency exchange rates--The dollar value of the fund's foreign
investments will be affected by changes in the exchange rates between
the dollar and the currencies in which those investments are traded.
o Political and economic conditions--The value of the fund's foreign
investments may be adversely affected by political and social
instability in their home countries and by changes in economic or
taxation policies in those countries.
o Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, among other things, there generally is less
publicly available information about foreign companies than about U.S.
companies.
o Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less
liquid and more volatile than U.S. securities.
These factors may affect the price of common stocks issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past,
experienced high rates of inflation or sharply devalued their currencies
against the U. S. dollar, thereby causing the value of investments in companies
located in those countries to decline. Transaction costs are often higher in
developing countries and there may be delays in settlement procedures. In
addition, developing countries may have greater political or economic
instability, less regulation and smaller, less liquid and more volatile markets
than countries with more mature economies.
[If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in
selling the securities underlying the repurchase agreement. As a result, the
fund may incur losses arising from decline in the value of those securities,
reduced levels of income and expenses of enforcing its rights. ]
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of
correcting and testing those systems that may have such problem. This problem,
if not corrected, may adversely affect the services provided to the fund or may
affect companies in which the fund may invest, and, therefore, may lower the
value of your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
4
<PAGE> 29
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows the performance of the fund's Class A shares over
a one-year period. The bar chart does not reflect sales loads. If it did, the
annual total return shown would be lower.
European Development
<TABLE>
<CAPTION>
Annual
Total
Return
YEAR ENDED DECEMBER 31 ------
<S> <C>
1997....................................... 1.50%
1998....................................... %
</TABLE>
- --------------
The year-to-date return as of 1/31/99 (the end of the most recent fiscal
quarter) was ___%.
During the one-year period shown in the bar chart, the highest quarterly return
was ____% (quarter ended ______________) and the lowest quarterly return was
___% (quarter ended _______________).
5
<PAGE> 30
PERFORMANCE TABLE
The following performance table shows how the fund's average annual returns for
a one-year period compares to those of a broad-based securities market index.
<TABLE>
<CAPTION>
=====================================================
Average Annual Total
Returns
(for the period ending
December 31, 1998) 1 Year
- -----------------------------------------------------
<S> <C>
Class A* 1.50%
- -----------------------------------------------------
Class B* --
- -----------------------------------------------------
Class C* --
- -----------------------------------------------------
MSCI Europe Index** --
=====================================================
</TABLE>
* Return is since inception (11/3/97).
** The Morgan Stanley Capital International Europe Index measures performances
for fourteen European developed country stock markets. The index is
capitalization weighted. Companies included in the index replicate the
industry composition of each local market and, in addition, represent a
sampling of large, medium and small capitalization companies from each
local market, taking into account the stocks' liquidity.
6
<PAGE> 31
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
Shareholder Fees (fees paid directly from
your investment)
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.50% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None(1) 5.00 1.00
</TABLE>
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
<S> <C> <C> <C>
Management Fees [0.63%] [0.63%] [0.63%]
Distribution and/or Service (12b-1) Fees [0.30] [1.00] [1.00]
Other Expenses:
Transfer agent fees and costs [0.17] [0.23] [0.23]
Other [0.03] [0.03] [0.03]
------ ------ ------
Total Other Expenses [0.20] [0.26] [0.26]
Total Annual Fund Operating Expenses [1.13] [1.89] [1.89]
====== ====== ======
</TABLE>
- -------------------
1 If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in
different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A $ -- $ --
Class B -- --
Class C -- --
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class A $ -- $ --
Class B -- --
Class C -- --
</TABLE>
7
<PAGE> 32
FUND MANAGEMENT
ADVISORY ARRANGEMENTS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management including the fund's investment
decisions and the execution of securities transactions. The advisor is located
at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. INVESCO Global
Asset Management Limited (the subadvisor), is located at Cedar House, 41 Cedar
Avenue, Hamilton, HM12 Bermuda. INVESCO Asset Management Limited (the
subsubadvisor), the fund's subsubadvisor, is located at 11 Devonshire
Square, London, England EC2M4YR. The subadvisor and subsubadvisor are
responsible for providing the advisor with economic and market research,
securities analysis and investment recommendations with respect to the fund.
All three entities are affiliated.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over
[90] investment company portfolios, including the fund, encompassing a broad
range of investment objectives. The subadvisor has acted as an investment
advisor since its organization in 1995. The subadvisor advises approximately 27
[investment company] portfolios. The subsubadvisor has acted as an investment
advisor since its organization in 19__. The subsubadvisor advises approximately
__ [investment company] portfolios.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of [0.61%] of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
o Paul A. Rogge, Senior Portfolio Manager, who has been responsible for
the fund since its inception and has been associated with the advisor
and/or its affiliates since 1991.
o Clas G. Olsson, Senior Portfolio Manager, who has been responsible for
the fund since its inception and has been associated with the advisor
and/or its affiliates since 1994. Prior to 1994, he was a broker
assistant with Merrill Lynch, Pierce, Fenner & Smith Incorporated.
8
<PAGE> 33
OTHER INFORMATION
INITIAL SALES CHARGES FOR CLASS A SHARES
Purchases of Class A shares of the fund are subject to the maximum 5.50%
initial sales charge as listed under the heading "CATEGORY I Initial Sales
Charges" in the "Shareholder Information--Choosing a Share Class" section of
this prospectus.
DIVIDENDS AND DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes any long-term and short-term capital gains
(including any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares and pays dividends, if any, annually.
9
<PAGE> 34
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years ended October 31 (or periods) indicated.
This information has been audited by KPMG Peat Marwick LLP, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
<TABLE>
<CAPTION>
Class A Class B Class C
-------------- -------------- --------------
For the Period For the Period For the Period
November 3, November 3, November 3,
1997 through 1997 through 1997 through
October 31, October 31, October 31,
1998 1998 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period $xx.xx $xx.xx $xx.xx
------- ------- -------
Income from investment operations:
Net investment income (loss) (x.xx) (a) (x.xx) (a) (x.xx) (a)
------- ------- -------
Net gains on securities (both realized
and unrealized) (x.xx) x.xx x.xx
------- ------- -------
Total from investment operations (x.xx) x.xx x.xx
------- ------- -------
Distributions from net realized gains (x.xx) (x.xx) (x.xx)
------- ------- -------
Net asset value, end of period $xx.xx $xx.xx $xx.xx
======= ======= =======
Total return (b) (x.xx)% xx.xx% xx.xx%
======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $xx,xxx $xx,xxx,xxx $xx,xxx,xxx
======= =========== ===========
Ratio of expenses to average net assets (c) (d) x.xx% xx% xx%
======= =========== ===========
Ratio of net investment income (loss) to average
net assets (d) (e (x.xx)% xx% xx%
======= =========== ===========
Portfolio turnover rate xx% xx% xx%
======= =========== ===========
</TABLE>
(a) Calculated using average shares outstanding.A10
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
x.xx% (annualized) and x.xx% (annualized) and xx% (annualized) for Class A,
Class B and Class C, respectively.
(d) Ratios are annualized and based on average net assets of $xx,xxx,xxx,
$xx,xxx,xxx and $x,xxx,xxx, for Class A, Class B and Class C shares,
respectively.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (x.xx)% (annualized), (x.xx)% (annualized) and (x.xx)%
(annualized), for Class A, Class B and Class C, respectively.
10
<PAGE> 35
SHAREHOLDER INFORMATION
Choosing a Share Class
Many of the funds advised by the advisor (the AIM Funds) have multiple classes
of shares, each class representing an interest in the same portfolio of
investments. When choosing a share class, you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C>
o Initial sales charge o No initial sales charge o No initial sales charge
o Reduced or o Contingent deferred o Contingent deferred
waived initial sales charge on sales charge on
sales charge for redemptions within redemptions within
certain purchases six years one year
o Lower distribution o 12b-1 fee of 1.00% o 12b-1 fee of 1.00%
and service (12b-1)
fee than Class B or
Class C shares
(See "Fee Table o Converts to Class A o Does not convert to
and Expense shares after eight years Class A shares
Example") along with a pro rata
portion of its reinvested
dividends and distributions*
o Generally more o Purchase orders limited o Generally more
appropriate for long- to amounts less than appropriate for short-
term investors $250,000 term investors
</TABLE>
* If you held Class B shares of AIM Global Trends Fund on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of that fund
seven years after your date of purchase. If you exchange those shares for Class
B shares of another AIM Fund, the shares into which you exchanged will not
convert to Class A shares until eight years after your date of purchase of the
original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
A-1
<PAGE> 36
SALES CHARGES
Generally you will not pay a sales charge on purchases or redemptions of
Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund. You may be charged a contingent deferred sales charge if
you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through
certain exchanges. Sales charges on all other AIM Funds and classes of those
Funds are detailed below. As used below, the term "offering price" with respect
to all categories of Class A shares includes the initial sales charge.
Initial Sales Charges
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
CATEGORY I Initial Sales Charges
- --------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY II Initial Sales Charges
- ---------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$ 100,000 but less than $ 250,000 3.75 3.90
$ 250,000 but less than $ 500,000 2.50 2.56
$ 500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY III Initial Sales Charges
- ----------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
</TABLE>
Contingent Deferred Sales Charges for Class A Shares
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
A-2
<PAGE> 37
Contingent Deferred Sales Charges for Class B and Class C Shares
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
CLASS B CLASS C
CDSC AS A PERCENTAGE CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT OF DOLLAR AMOUNT
YEAR SINCE PURCHASE MADE SUBJECT TO CHARGE SUBJECT TO CHARGE
------------------------ ----------------- -----------------
<S> <C> <C>
First 5% 1%
Second 4% None
Third 3% None
Fourth 3% None
Fifth 2% None
Sixth 1% None
Seventh and following None None
</TABLE>
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
Reduced Sales Charges
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
Initial Sales Charge Exceptions
You will not pay initial sales charges
o on shares purchased by reinvesting dividends and distributions;
o when exchanging shares among certain AIM Funds;
o when using the reinstatement privilege; and
o when a merger, consolidation, or acquisition of assets of an AIM Fund
occurs.
Contingent Deferred Sales Charge (CDSC) Exceptions
You will not pay a CDSC
o if you redeem Class B shares you held for more than six years;
o if you redeem Class C shares you held for more than one year;
o if you redeem shares acquired through reinvestment of dividends and
distributions; and
o on increases in the net asset value of your shares.
A-3
<PAGE> 38
There may be other situations in which you or other shareholders may be able to
purchase or redeem shares at reduced or without sales charges. You should
consult the fund's Statement of Additional Information for details regarding
these situations.
Purchasing Shares
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM
Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Type of Account Initial Additional
Investments Investments
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing plans, 401(k) plans, Simplified $0 ($25 per $25
Employee Pension (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings AIM Fund
Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 investment
plans) for salary
deferrals
from Savings
Plans)
- -------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plans $50 $50
- -------------------------------------------------------------------------------------------------------------------------
IRA, Education IRA or Roth IRA $250 $50
- -------------------------------------------------------------------------------------------------------------------------
All other accounts $500 $50
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE> 39
HOW TO PURCHASE SHARES
There are several ways you can purchase your shares. You can make direct
purchases or select from one of three automatic investment methods.
DIRECT PURCHASES
<TABLE>
<CAPTION>
Opening An Account Adding to An Account
<S> <C> <C>
Through a
Financial
Consultant Contact your financial consultant. Same
By Mail Mail completed Account Mail your check and the
Application and purchase payment to the transfer agent, remittance slip from
A I M Fund Services, Inc., P.O. Box 4739, your confirmation statement
Houston, TX 77210-4739. to the transfer agent.
By Wire Mail completed Account Call the transfer agent to
Application to the transfer agent. receive a reference number.
Call the transfer agent at Then, use the wire
(800) 959-4246 to receive a reference number. instructions at left.
Then, use the following wire instructions:
Beneficiary Bank ABA/Routing #:113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank
Connection(sm) Open your account using one of the methods described Mail completed AIM Bank
above. Connection(sm) form to the
transfer agent. Once
the transfer agent has
received the form, call the
transfer agent to place your
purchase.
</TABLE>
SPECIAL PLANS
Automatic Investment Plan
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
Dollar Cost Averaging
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration and in the same class of shares. The
account from which exchanges are to be made must have a minimum balance of
$5,000 before you can use this option. Exchanges will occur on (or about) the
A-5
<PAGE> 40
10th or 25th day of the month in the amount you specify. The minimum amount you
can exchange to another AIM Fund is $50.
Automatic Dividend Investment
All of your dividends and distributions may be paid in cash or invested at net
asset value in certain AIM Funds without paying a sales charge. Unless you
specify otherwise, your dividends and distributions will automatically be
reinvested in the same AIM Fund. You may invest your dividends and distributions
(1) into another AIM Fund in the same class of shares; or (2) from Class A
shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at
least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
Portfolio Rebalancing Program
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. We may modify, suspend or terminate the
Program at any time on 60 days' prior written notice.
Retirement Plans
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-
sponsored retirement plan assesses an annual maintenance fee of $10. Contact
your financial consultant for details.
Redeeming Shares
TIMING OF REDEMPTIONS
You can redeem shares during the hours the New York Stock Exchange (NYSE) is
open for business. An AIM Fund may postpone the right of redemption only under
unusual circumstances, such as when the NYSE restricts or suspends trading.
A-6
<PAGE> 41
REDEMPTION FEES
We will not charge you any fees to redeem your shares; however, your broker or
financial consultant may charge service fees for handling these transactions.
Your shares may be subject to a contingent deferred sales charge (CDSC).
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY
EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within eighteen months of the purchase of the Class A shares,
you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
HOW TO REDEEM SHARES
<TABLE>
<CAPTION>
Through a
Financial Consultant Contact your financial consultant.
<S> <C>
By Mail Send a written request to the transfer agent.
Requests must include (1) original signatures of
all registered owners; (2) the name of the AIM
Fund and your account number; (3) if the transfer
agent does not hold your shares, endorsed share
certificates or share certificates accompanied by
an executed stock power; and (4) signature
guarantees, if necessary (see below). The
transfer agent may require that you provide
additional information, such as corporate
resolutions or powers of attorney, if applicable.
If you are redeeming from an IRA account, you
must include a statement of whether or not you
are at least 59-1/2 years old and whether you
wish to have federal income tax withheld from
your proceeds. The transfer agent may require
certain other information before you can redeem
from an employer-sponsored retirement plan.
Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to
redeem by telephone if (1) the proceeds are to be
mailed to the address on record with us or
transferred electronically to a pre-authorized
checking account; (2) the address on record with
us has not been changed within the last thirty
days; (3) you do not hold physical share
certificates; (4) you can provide proper
identification information; (5) the proceeds of
the redemption do not exceed $50,000; and (6) you
have not previously declined the telephone
redemption privilege. Certain accounts, including
retirement accounts and 403(b) plans, may not
redeem by telephone. The transfer agent must
receive your call during the hours the NYSE is
open for business in order to effect the
redemption at that day's closing price.
</TABLE>
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
A-7
<PAGE> 42
Redemption by mail
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
Redemption by telephone
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
Payment for Systematic Withdrawals
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
Expedited Redemptions (AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of trading
on the New York Stock Exchange (NYSE), we generally will transmit payment on the
next business day.
Redemptions by Check (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash
Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record
on the account; or
(4) you request that payment be sent to a new address or an address that
changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax- Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference
A-8
<PAGE> 43
between the initial sales charges on those Funds and the ones in which you will
be investing. In addition, if you paid a contingent deferred sales charge (CDSC)
on any reinstated amount, you will not be subject to a CDSC if you later redeem
that amount. You must notify the transfer agent in writing at the time you
reinstate that you are exercising your reinstatement privilege. You may exercise
this privilege only once per year and it may have tax consequences.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
AIM Fund may, in its discretion, redeem the account and distribute the proceeds
to you.
Exchanging Shares
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You also may exchange AIM Cash Reserve Shares of
AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
may be required to pay an initial sales charge when exchanging from a Fund with
a lower initial sales charge than the one into which you are exchanging. If you
exchange from Class A shares not subject to a CDSC into Class A shares subject
to those charges, you will be charged a CDSC when you redeem the exchanged
shares. The CDSC charged on redemption of those shares will be calculated
starting on the date you acquired those shares through exchange.
You will not pay a sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares
of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares
of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii)you acquired the original shares on or after May 1, 1994 by
way of an exchange from shares with higher sales charges;
A-9
<PAGE> 44
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge
(except for Class A shares of AIM Limited Maturity Treasury Fund
and AIM Tax-Free Intermediate Fund), but only if you acquired the
original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject
to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares
subject to an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund, but only if you acquired the original
shares by exchange from Class A shares subject to an initial sales
charge; or
(4) Class B shares for other Class B shares, and Class C shares for other
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
o You must meet the minimum purchase requirements for the AIM Fund into
which you are exchanging;
o Shares of the AIM Fund you wish to acquire must be qualified for sale in
your state of residence;
o Exchanges must be made between accounts with identical registration
information;
o The account you wish to exchange from must have a certified tax
identification number (or the Fund has received an appropriate Form W-8 or
W-9);
o Shares must have been held for at least one day prior to the exchange; and
o If you have physical share certificates, you must return them to the
transfer agent prior to the exchange.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the issuance of shares
being purchased in an exchange for up to five business days if it determines
that it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
By Mail
A-10
<PAGE> 45
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
By Telephone
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours the NYSE is open for business; however, you still will be
allowed to exchange by telephone even if you have changed your address of record
within the preceding 30 days.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
EACH AIM FUND AND THE DISTRIBUTOR RESERVE THE RIGHT AT ANY TIME TO REJECT OR
CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; MODIFY ANY TERMS OR
CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; OR WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS.
Pricing of Shares
Each of the AIM Funds prices its shares based on its net asset value. The AIM
Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM High
Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of
Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities. The AIM
Funds value all other securities and assets at their fair value. Securities and
other assets quoted in foreign currencies are valued in U.S. dollars based on
the prevailing exchange rates on that day. In addition, if, between the time
trading ends on a particular security and the close of the New York Stock
Exchange (NYSE), events occur that materially affect the value of the security,
the AIM Funds may value the security at its fair value as determined in good
faith by or under the supervision of the Board of Directors or Trustees of the
AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset
value will be subject to the judgment of the Board of Directors or Trustees or
its designee instead of being determined by the market. Because some of the AIM
Funds may invest in securities that are primarily listed on foreign exchanges,
the value of those Funds' shares may change on days when you will not be able to
purchase or redeem shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the NYSE on each day the NYSE is open for business. AIM Money Market Fund also
determines its net asset value as of 12:00 noon Eastern Time on each day the
NYSE is open for business. The AIM Funds price purchase, exchange and redemption
orders at the net asset value calculated after the transfer agent receives an
order in good form.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions. Every year, an
A-11
<PAGE> 46
account statement showing the amount of dividends and distributions you
received from each AIM Fund during the prior year will be sent to you.
Any long-term or short-term capital gains realized from redemptions of AIM Fund
shares will be subject to federal income tax. Exchanges of shares for shares of
another AIM Fund are treated as a sale of the AIM Fund's shares, and any gain
realized on the transaction will be subject to federal income tax.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
A-12
<PAGE> 47
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities and Exchange Commission (SEC), contains more details
about the fund and is incorporated by reference into the prospectus (is legally
a part of this prospectus). Annual and semi-annual reports to shareholders
contain additional information about the fund's investments. The fund's annual
report also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semi-annual reports only)
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to
the SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call
the SEC at 1-800-SEC-0330 for information about the Public Reference Room.
AIM European Development Fund
SEC 1940 Act file number: 811-6436
Back Cover Page
<PAGE> 48
[AIM LOGO APPEARS HERE]
AIM GLOBAL AGGRESSIVE GROWTH FUND
PROSPECTUS
MARCH 1, 1999
AIM Global Aggressive Growth Fund seeks to provide above-average long-term
growth of capital appreciation.
This prospectus contains important information. Please read it before investing
and keep it for future reference.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. There is a risk that you could lose a portion or all of your money.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
1
<PAGE> 49
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES...........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND......................................3
PERFORMANCE INFORMATION.......................................................4
ANNUAL TOTAL RETURNS ....................................................5
PERFORMANCE TABLE........................................................5
FEE TABLE AND EXPENSE EXAMPLE.................................................6
FEE TABLE................................................................6
EXPENSE EXAMPLE..........................................................6
FUND MANAGEMENT...............................................................8
THE ADVISOR..............................................................8
ADVISOR COMPENSATION.....................................................8
PORTFOLIO MANAGERS.......................................................8
OTHER INFORMATION.............................................................9
INITIAL SALES CHARGES FOR CLASS A SHARES.................................9
DIVIDENDS AND DISTRIBUTIONS..............................................9
FINANCIAL HIGHLIGHTS.........................................................10
SHAREHOLDER INFORMATION.....................................................A-1
CHOOSING A SHARE CLASS.................................................A-1
PURCHASING SHARES......................................................A-4
REDEEMING SHARES.......................................................A-6
EXCHANGING SHARES......................................................A-9
PRICING OF SHARES.....................................................A-11
TAXES.................................................................A-11
OBTAINING ADDITIONAL INFORMATION................................BACK COVER PAGE
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
2
<PAGE> 50
AIM GLOBAL AGGRESSIVE GROWTH FUND
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is above-average long-term growth of capital.
The fund seeks to meet this objective by investing at least 65% of its total
assets in marketable equity securities of domestic and foreign issuers. The fund
will normally invest in the securities of small- and medium-sized growth
companies located in at least four countries, including the United States, and
will normally maintain at least 20% of its total assets in U.S. dollar
denominated securities. The fund emphasizes investment in companies in developed
countries such as the United States, the countries of Western Europe and certain
countries in the Pacific Basin. The fund may also invest in companies located in
developing countries, i.e., those that are in the initial stages of their
industrial cycle. The fund may invest up to 20% of its total assets in
convertible equity securities of foreign and domestic issuers.
The fund's portfolio managers focus on companies that have experienced
above-average long-term growth in earnings and have excellent prospects for
future growth. In selecting countries in which the fund will invest, the fund's
portfolio managers also consider such factors as the prospect for relative
economic growth among countries or regions, economic or political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security. The fund's portfolio managers usually sell a particular
security when any of these factors materially changes.
Under normal circumstances, the fund may invest up to 35% of its total assets in
high-grade short-term securities and in debt securities, including U.S.
government obligations, investment grade corporate bonds or taxable municipal
securities. However, in anticipation of or in response to adverse market
conditions or for cash management purposes, the fund may hold all or a portion
of its assets in cash or these types of securities. As a result, the fund may
not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The price of common stock
goes up and down in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. This is especially true with respect to common stock of small- and
medium-sized companies, whose prices may go up and down more than the prices of
common stocks of larger more-established companies. Also, since common stocks
of small- and medium-sized companies may not be traded as often as common stocks
of larger, more-established companies, it may be difficult or impossible for the
fund to sell securities at a desired price.
In addition, the prices of common stocks issued by foreign companies may be
further affected by other factors, including
o Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and
the currencies in which those investments are traded.
3
<PAGE> 51
o Political and economic conditions--The value of the fund's foreign
investments may be adversely affected by political and social instability
in their home countries and by changes in economic or taxation policies in
those countries.
o Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, among other things, there generally is less
publicly available information about foreign companies than about U.S.
companies.
o Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the price of common stocks issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures. In addition, developing
countries may have greater political or economic instability, less regulation
and smaller, less liquid and more volatile markets than countries with more
mature economies.
[If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, it the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.]
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of correcting
and testing those systems that may have such problem. This problem, if not
corrected, may adversely affect the services provided to the fund or may affect
companies in which the fund may invest, and, therefore, may lower the value of
your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
4
<PAGE> 52
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year over a five-year period. The bar chart does not reflect
sales loads. If it did, the annual total returns shown would be lower.
Global Aggressive Growth
<TABLE>
<CAPTION>
Annual
Total
YEAR ENDED DECEMBER 31 Return
------
<S> <C>
1994 ............................................ 0.70%
1995 ............................................ 32.15%
1996 ............................................ 23.53%
1997 ............................................ 4.03%
1998 ............................................ -- %
</TABLE>
- -----------------
The year-to-date return as of 1/31/99 (the end of the most recent fiscal
quarter) was __%.
During the five-year period shown in the bar chart, the highest quarterly return
was _____% (quarter ended ___________) and the lowest quarterly return was
_____% (quarter ended ________________).
PERFORMANCE TABLE
The following performance table shows how the fund's average annual returns for
one and five years compare to those of a broad-based securities market index.
5
<PAGE> 53
<TABLE>
<CAPTION>
================================================================================
Average Annual Total
Returns
(for the periods ending
December 31, 1998) 1 Year 5 Years
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A 4.03% 0.70%*
- --------------------------------------------------------------------------------
Class B -- --*
- --------------------------------------------------------------------------------
Class C -- --**
- --------------------------------------------------------------------------------
MSCI World Index*** -- --
================================================================================
</TABLE>
* Class A and B returns are since inception (9/15/94).
** Class C returns are since inception (8/4/97).
*** The Morgan Stanley Capital International World Index measures performance
for twenty-two developed country global stock markets. The index is
capitalization weighted. Companies included in the index replicate the
industry composition of each local market and, in addition, represent a
sampling of large, medium and small capitalization companies from each
local market, taking into account the stocks' liquidity.
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None(1) 5.00 1.00
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees [0.63%] [0.63%] [0.63%] Distribution and/or Service (12b-1)
Fees [0.30] [1.00] [1.00] Other Expenses:
Transfer agent fees and costs [0.17] [0.23] [0.23]
Other [0.03] [0.03] [0.03]
Total Other Expenses [0.20] [0.26] [0.26]
Total Annual Fund Operating Expenses [1.13] [1.89] [1.89]
===== ===== =====
</TABLE>
- -------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
6
<PAGE> 54
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
7
<PAGE> 55
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment adviser since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over [90]
investment company portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of [0.61%] of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
o A. Dale Griffin, III, Senior Portfolio Manager, who has been
responsible for the fund since 1994 and has been associated with the
advisor and/or its affiliates since 1989.
o Robert M. Kippes, Senior Portfolio Manager, who has been responsible
for the fund since 1994 and has been associated with the advisor and/or
its affiliates since 1989.
o Kenneth A. Zschappel, Senior Portfolio Manager, who has been
responsible for the fund since 1998 and has been associated with the
advisor and/or its affiliates since 1990.
o Clas G. Olsson, Senior Portfolio Manager, who has been responsible for
the fund since 1997 and has been associated with the advisor and/or its
affiliates since 1994. Prior to 1994, he was a broker assistant with
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
o Paul A. Rogge, Senior Portfolio Manager, who has been responsible for
the fund since 1994 and has been associated with the advisor and/or its
affiliates since 1991.
o Barrett K. Sides, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor and/or
its affiliates since 1990.
8
<PAGE> 56
OTHER INFORMATION
INITIAL SALES CHARGES FOR CLASS A SHARES
Purchases of Class A shares of the fund are subject to the maximum 4.75% initial
sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in
the "Shareholder Information--Choosing a Share Class" section of this
prospectus.
DIVIDENDS AND DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares and pays dividends, if any, annually.
9
<PAGE> 57
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by KPMG Peat Marwick LLP, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
<TABLE>
<CAPTION>
Class A
- ------- ---------- ------------ --------- ---------
1998 1997 1996 1995
---------- ------------ --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx
---------- ------------ --------- ---------
Income from investment operations:
Net investment income (loss) (x.xx) (a) (x.xx) (a) (x.xx)(a) (x.xx)(a)
---------- ------------ --------- ---------
Net gains (losses) on securities (both realized and unrealized) (x.xx) x.xx x.xx x.xx
---------- ------------ --------- ---------
Total from investment operations (x.xx) x.xx x.xx x.xx
---------- ------------ --------- ---------
Less distributions: Distributions from net realized gains (x.xx) (x.xx) (x.xx) (x.xx)
---------- ------------ --------- ---------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx
---------- ------------ --------- ---------
Total return (b) (x.xx)% x.xx% x.xx% x.xx%
---------- ------------ --------- ---------
Ratios/supplement data:
Net assets, end of period (000s omitted) $ xx,xxx $ xx,xxx $ xx,xxx $ xx,xxx
---------- ------------ --------- ---------
Ratio of expenses to average net assets x.xx% (c) x.xx x.xx x.xx
---------- ------------ --------- ---------
Ratio of net investment income (loss) to average net assets(h) (x.xx)%(c) (x.xx)% (x.xx)% (x.xx)%
---------- ------------ --------- ---------
Portfolio turnover rate xx% xx% xx% xx%
========== ============ ========= =========
</TABLE>
<TABLE>
<CAPTION>
For the
Period
September
15 through
Class A October 31
- ------- ----------
1994
-----------
<S> <C>
Net asset value, beginning of period $ xx.xx
-----------
Income from investment operations:
Net investment income (loss) (x.xx)
-----------
Net gains (losses) on securities (both realized and unrealized) x.xx
-----------
Total from investment operations x.xx
-----------
Distributions from net realized gains xx.xx
-----------
Net asset value, end of period $ xx.xx
-----------
Total return (b) xx.xx%
-----------
Ratios/supplement data:
Net assets, end of period (000s omitted) % x,xxx,xxx
-----------
Ratio of expenses to average net assets x.xxx% (d)(e)
-----------
Ratio of net investment income (loss) to average net assets (x.xx)%(e)(f)
-----------
Portfolio turnover rate xx%
===========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $x,xxx,xxx,xxx.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
x.xx% (annualized)
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements was (x.xx)% (annualized).
10
<PAGE> 58
<TABLE>
<CAPTION>
Class B
- ------- ---------- ------------ --------- ---------
1998 1997 1996 1995
---------- ------------ --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx
---------- ------------ --------- ---------
Income from investment operations:
Net investment income (loss) (x.xx) (a) (x.xx) (a) (x.xx)(a) (x.xx)(a)
---------- ------------ --------- ---------
Net gains (losses) on securities (both realized and unrealized) (x.xx) (x.xx) (x.xx) (x.xx)
---------- ------------ --------- ---------
Total from investment operations (x.xx) (x.xx) (x.xx) (x.xx)
---------- ------------ --------- ---------
Distributions from net realized gains (x.xx) (x.xx) (x.xx) (x.xx)
---------- ------------ --------- ---------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx
---------- ------------ --------- ---------
Total return (b) (x.xx)% (x.xx)% (x.xx)% (x.xx)%
---------- ------------ --------- ---------
Ratios/supplement data:
Net assets, end of period (000s omitted) $ xx,xxx $ xx,xxx $ xx,xxx $ xx,xxx
---------- ------------ --------- ---------
Ratio of expenses to average net assets x.xx% (c) x.xx% x.xx% x.xx%
---------- ------------ --------- ---------
Ratio of net investment income (loss) to average net assets (x.xx)%(c) (x.xx)%(c) (x.xx)% (x.xx)%
---------- ------------ --------- ---------
Portfolio turnover rate xx% xx% xx% xx%
========== ============ ========= =========
</TABLE>
<TABLE>
<CAPTION>
For the
Period
September
15 through
Class B October 31
- ------- ----------
1994
-----------
<S> <C>
Net asset value, beginning of period $ xx.xx
-----------
Income from investment operations:
Net investment income (loss) (x.xx)
-----------
Net gains (losses) on securities (both realized and unrealized) (x.xx)
-----------
Total from investment operations (x.xx)
-----------
Less distributions: Distributions from net realized gains (x.xx)
-----------
Net asset value, end of period $ xx.xx
-----------
Total return (b) (x.xx)%
-----------
Ratios/supplement data:
Net assets, end of period (000s omitted) $ xx,xxx
-----------
Ratio of expenses to average net assets x.xx% (d)(e)
-----------
Ratio of net investment income (loss) to average net assets (x.xx)%(e)(f)
-----------
Portfolio turnover rate xx%
===========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $x,xxx,xxx,xxx.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
x.xx% (annualized)
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements was (x.xx)%(annualized).
<TABLE>
<CAPTION>
For the
Period
August 4
through
October 31
Class C 1998 1997
- ------- ------- ----------
<S> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx
- -------------------------------------------------------------- ------- -------
Income from investment operations:
Net investment income (loss) (x.xx)(a) (x.xx) (a)
- -------------------------------------------------------------- ------- -------
Net gains (losses) on securities (both realized and unrealized (x.xx) (x.xx)
- -------------------------------------------------------------- ------- -------
Total from investment operations (x.xx) (x.xx)
- -------------------------------------------------------------- ------- -------
Distributions from net realized gains (x.xx) (x.xx)
- -------------------------------------------------------------- ------- -------
Net asset value, end of period $ xx.xx $ xx.xx
- -------------------------------------------------------------- ------- -------
Total return(b) (x.xx)% (x.xx)%
- -------------------------------------------------------------- ------- -------
Ratios/supplement data:
- -------------------------------------------------------------- ------- -------
Net assets, end of period (000s omitted) $xx,xxx $xx,xxx
- -------------------------------------------------------------- ------- -------
Ratio of expenses to average net assets x.xx%(c) x.xx% (d)
- -------------------------------------------------------------- ------- -------
Ratio of net investment income (loss) to average net assets (x.xx)%(c) (x.xx)%(d)
- -------------------------------------------------------------- ------- -------
Portfolio turnover rate xx% xx%
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized
for periods less than one year.
(c) Ratio are based on average net assets of $X,XXX,XXX,XXX.
(d) Annualized.
11
<PAGE> 59
SHAREHOLDER INFORMATION
Choosing a Share Class
Many of the funds advised by the advisor (the AIM Funds) have multiple classes
of shares, each class representing an interest in the same portfolio of
investments. When choosing a share class, you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C>
o Initial sales charge o No initial sales charge o No initial sales charge
o Reduced or o Contingent deferred o Contingent deferred
waived initial sales charge on sales charge on
sales charge for redemptions within redemptions within
certain purchases six years one year
o Lower distribution o 12b-1 fee of 1.00% o 12b-1 fee of 1.00%
and service (12b-1)
fee than Class B or
Class C shares
(See "Fee Table o Converts to Class A o Does not convert to
and Expense shares after eight years Class A shares
Example") along with a pro rata
portion of its reinvested
dividends and distributions*
o Generally more o Purchase orders limited o Generally more
appropriate for long- to amounts less than appropriate for short-
term investors $250,000 term investors
</TABLE>
* If you held Class B shares of AIM Global Trends Fund on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of that fund
seven years after your date of purchase. If you exchange those shares for Class
B shares of another AIM Fund, the shares into which you exchanged will not
convert to Class A shares until eight years after your date of purchase of the
original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
A-1
<PAGE> 60
SALES CHARGES
Generally you will not pay a sales charge on purchases or redemptions of
Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund. You may be charged a contingent deferred sales charge if
you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through
certain exchanges. Sales charges on all other AIM Funds and classes of those
Funds are detailed below. As used below, the term "offering price" with respect
to all categories of Class A shares includes the initial sales charge.
Initial Sales Charges
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
CATEGORY I Initial Sales Charges
- --------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY II Initial Sales Charges
- ---------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$ 100,000 but less than $ 250,000 3.75 3.90
$ 250,000 but less than $ 500,000 2.50 2.56
$ 500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY III Initial Sales Charges
- ----------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
</TABLE>
Contingent Deferred Sales Charges for Class A Shares
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
A-2
<PAGE> 61
Contingent Deferred Sales Charges for Class B and Class C Shares
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
CLASS B CLASS C
CDSC AS A PERCENTAGE CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT OF DOLLAR AMOUNT
YEAR SINCE PURCHASE MADE SUBJECT TO CHARGE SUBJECT TO CHARGE
------------------------ ----------------- -----------------
<S> <C> <C>
First 5% 1%
Second 4% None
Third 3% None
Fourth 3% None
Fifth 2% None
Sixth 1% None
Seventh and following None None
</TABLE>
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
Reduced Sales Charges
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
Initial Sales Charge Exceptions
You will not pay initial sales charges
o on shares purchased by reinvesting dividends and distributions;
o when exchanging shares among certain AIM Funds;
o when using the reinstatement privilege; and
o when a merger, consolidation, or acquisition of assets of an AIM Fund
occurs.
Contingent Deferred Sales Charge (CDSC) Exceptions
You will not pay a CDSC
o if you redeem Class B shares you held for more than six years;
o if you redeem Class C shares you held for more than one year;
o if you redeem shares acquired through reinvestment of dividends and
distributions; and
o on increases in the net asset value of your shares.
A-3
<PAGE> 62
There may be other situations in which you or other shareholders may be able to
purchase or redeem shares at reduced or without sales charges. You should
consult the fund's Statement of Additional Information for details regarding
these situations.
Purchasing Shares
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM
Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Type of Account Initial Additional
Investments Investments
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing plans, 401(k) plans, Simplified $0 ($25 per $25
Employee Pension (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings AIM Fund
Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 investment
plans) for salary
deferrals
from Savings
Plans)
- -------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plans $50 $50
- -------------------------------------------------------------------------------------------------------------------------
IRA, Education IRA or Roth IRA $250 $50
- -------------------------------------------------------------------------------------------------------------------------
All other accounts $500 $50
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE> 63
HOW TO PURCHASE SHARES
There are several ways you can purchase your shares. You can make direct
purchases or select from one of three automatic investment methods.
DIRECT PURCHASES
<TABLE>
<CAPTION>
Opening An Account Adding to An Account
<S> <C> <C>
Through a
Financial
Consultant Contact your financial consultant. Same
By Mail Mail completed Account Mail your check and the
Application and purchase payment to the transfer agent, remittance slip from
A I M Fund Services, Inc., P.O. Box 4739, your confirmation statement
Houston, TX 77210-4739. to the transfer agent.
By Wire Mail completed Account Call the transfer agent to
Application to the transfer agent. receive a reference number.
Call the transfer agent at Then, use the wire
(800) 959-4246 to receive a reference number. instructions at left.
Then, use the following wire instructions:
Beneficiary Bank ABA/Routing #:113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank
Connection(sm) Open your account using one of the methods described Mail completed AIM Bank
above. Connection(sm) form to the
transfer agent. Once
the transfer agent has
received the form, call the
transfer agent to place your
purchase.
</TABLE>
SPECIAL PLANS
Automatic Investment Plan
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
Dollar Cost Averaging
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration and in the same class of shares. The
account from which exchanges are to be made must have a minimum balance of
$5,000 before you can use this option. Exchanges will occur on (or about) the
A-5
<PAGE> 64
10th or 25th day of the month in the amount you specify. The minimum amount you
can exchange to another AIM Fund is $50.
Automatic Dividend Investment
All of your dividends and distributions may be paid in cash or invested at net
asset value in certain AIM Funds without paying a sales charge. Unless you
specify otherwise, your dividends and distributions will automatically be
reinvested in the same AIM Fund. You may invest your dividends and distributions
(1) into another AIM Fund in the same class of shares; or (2) from Class A
shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at
least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
Portfolio Rebalancing Program
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. We may modify, suspend or terminate the
Program at any time on 60 days' prior written notice.
Retirement Plans
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-
sponsored retirement plan assesses an annual maintenance fee of $10. Contact
your financial consultant for details.
Redeeming Shares
TIMING OF REDEMPTIONS
You can redeem shares during the hours the New York Stock Exchange (NYSE) is
open for business. An AIM Fund may postpone the right of redemption only under
unusual circumstances, such as when the NYSE restricts or suspends trading.
A-6
<PAGE> 65
REDEMPTION FEES
We will not charge you any fees to redeem your shares; however, your broker or
financial consultant may charge service fees for handling these transactions.
Your shares may be subject to a contingent deferred sales charge (CDSC).
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY
EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within eighteen months of the purchase of the Class A shares,
you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
HOW TO REDEEM SHARES
<TABLE>
<CAPTION>
Through a
Financial Consultant Contact your financial consultant.
<S> <C>
By Mail Send a written request to the transfer agent.
Requests must include (1) original signatures of
all registered owners; (2) the name of the AIM
Fund and your account number; (3) if the transfer
agent does not hold your shares, endorsed share
certificates or share certificates accompanied by
an executed stock power; and (4) signature
guarantees, if necessary (see below). The
transfer agent may require that you provide
additional information, such as corporate
resolutions or powers of attorney, if applicable.
If you are redeeming from an IRA account, you
must include a statement of whether or not you
are at least 59-1/2 years old and whether you
wish to have federal income tax withheld from
your proceeds. The transfer agent may require
certain other information before you can redeem
from an employer-sponsored retirement plan.
Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to
redeem by telephone if (1) the proceeds are to be
mailed to the address on record with us or
transferred electronically to a pre-authorized
checking account; (2) the address on record with
us has not been changed within the last thirty
days; (3) you do not hold physical share
certificates; (4) you can provide proper
identification information; (5) the proceeds of
the redemption do not exceed $50,000; and (6) you
have not previously declined the telephone
redemption privilege. Certain accounts, including
retirement accounts and 403(b) plans, may not
redeem by telephone. The transfer agent must
receive your call during the hours the NYSE is
open for business in order to effect the
redemption at that day's closing price.
</TABLE>
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
A-7
<PAGE> 66
Redemption by mail
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
Redemption by telephone
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
Payment for Systematic Withdrawals
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
Expedited Redemptions (AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of trading
on the New York Stock Exchange (NYSE), we generally will transmit payment on the
next business day.
Redemptions by Check (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash
Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record
on the account; or
(4) you request that payment be sent to a new address or an address that
changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax- Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference
A-8
<PAGE> 67
between the initial sales charges on those Funds and the ones in which you will
be investing. In addition, if you paid a contingent deferred sales charge (CDSC)
on any reinstated amount, you will not be subject to a CDSC if you later redeem
that amount. You must notify the transfer agent in writing at the time you
reinstate that you are exercising your reinstatement privilege. You may exercise
this privilege only once per year and it may have tax consequences.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
AIM Fund may, in its discretion, redeem the account and distribute the proceeds
to you.
Exchanging Shares
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You also may exchange AIM Cash Reserve Shares of
AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
may be required to pay an initial sales charge when exchanging from a Fund with
a lower initial sales charge than the one into which you are exchanging. If you
exchange from Class A shares not subject to a CDSC into Class A shares subject
to those charges, you will be charged a CDSC when you redeem the exchanged
shares. The CDSC charged on redemption of those shares will be calculated
starting on the date you acquired those shares through exchange.
You will not pay a sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares
of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares
of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii)you acquired the original shares on or after May 1, 1994 by
way of an exchange from shares with higher sales charges;
A-9
<PAGE> 68
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge
(except for Class A shares of AIM Limited Maturity Treasury Fund
and AIM Tax-Free Intermediate Fund), but only if you acquired the
original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject
to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares
subject to an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund, but only if you acquired the original
shares by exchange from Class A shares subject to an initial sales
charge; or
(4) Class B shares for other Class B shares, and Class C shares for other
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
o You must meet the minimum purchase requirements for the AIM Fund into
which you are exchanging;
o Shares of the AIM Fund you wish to acquire must be qualified for sale in
your state of residence;
o Exchanges must be made between accounts with identical registration
information;
o The account you wish to exchange from must have a certified tax
identification number (or the Fund has received an appropriate Form W-8 or
W-9);
o Shares must have been held for at least one day prior to the exchange; and
o If you have physical share certificates, you must return them to the
transfer agent prior to the exchange.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the issuance of shares
being purchased in an exchange for up to five business days if it determines
that it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
By Mail
A-10
<PAGE> 69
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
By Telephone
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours the NYSE is open for business; however, you still will be
allowed to exchange by telephone even if you have changed your address of record
within the preceding 30 days.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
EACH AIM FUND AND THE DISTRIBUTOR RESERVE THE RIGHT AT ANY TIME TO REJECT OR
CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; MODIFY ANY TERMS OR
CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; OR WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS.
Pricing of Shares
Each of the AIM Funds prices its shares based on its net asset value. The AIM
Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM High
Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of
Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities. The AIM
Funds value all other securities and assets at their fair value. Securities and
other assets quoted in foreign currencies are valued in U.S. dollars based on
the prevailing exchange rates on that day. In addition, if, between the time
trading ends on a particular security and the close of the New York Stock
Exchange (NYSE), events occur that materially affect the value of the security,
the AIM Funds may value the security at its fair value as determined in good
faith by or under the supervision of the Board of Directors or Trustees of the
AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset
value will be subject to the judgment of the Board of Directors or Trustees or
its designee instead of being determined by the market. Because some of the AIM
Funds may invest in securities that are primarily listed on foreign exchanges,
the value of those Funds' shares may change on days when you will not be able to
purchase or redeem shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the NYSE on each day the NYSE is open for business. AIM Money Market Fund also
determines its net asset value as of 12:00 noon Eastern Time on each day the
NYSE is open for business. The AIM Funds price purchase, exchange and redemption
orders at the net asset value calculated after the transfer agent receives an
order in good form.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions. Every year, an
A-11
<PAGE> 70
account statement showing the amount of dividends and distributions you
received from each AIM Fund during the prior year will be sent to you.
Any long-term or short-term capital gains realized from redemptions of AIM Fund
shares will be subject to federal income tax. Exchanges of shares for shares of
another AIM Fund are treated as a sale of the AIM Fund's shares, and any gain
realized on the transaction will be subject to federal income tax.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
A-12
<PAGE> 71
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities and Exchange Commission (SEC), contains more details
about the fund and is incorporated by reference into the prospectus (is legally
a part of this prospectus). Annual and semi-annual reports to shareholders
contain additional information about the fund's investments. The fund's annual
report also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark--or your account, or wish to obtain free copies of
the fund's current SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semi-annual reports only)
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
AIM Global Aggressive Growth Fund
SEC 1940 Act file number: 811-1424
Back Cover Page
<PAGE> 72
[AIM LOGO APPEARS HERE]
AIM GLOBAL GROWTH FUND
PROSPECTUS
MARCH 1, 1999
AIM Global Growth Fund seeks to provide long-term growth of capital.
This prospectus contains important information. Please read it before investing
and keep it for future reference.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. There is a risk that you could lose a portion or all of your money.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
WHETHER THE INFORMATION IN THIS PROSPECTUS IS ADEQUATE AND ACCURATE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
1
<PAGE> 73
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES.................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND............................................................3
PERFORMANCE INFORMATION..................................................................................5
ANNUAL TOTAL RETURNS................................................................................5
PERFORMANCE TABLE...................................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................7
FEE TABLE...........................................................................................7
EXPENSE EXAMPLE.....................................................................................7
FUND MANAGEMENT..........................................................................................9
THE ADVISOR.........................................................................................9
ADVISOR COMPENSATION................................................................................9
PORTFOLIO MANAGERS..................................................................................9
OTHER INFORMATION.......................................................................................10
INITIAL SALES CHARGES FOR CLASS A SHARES...........................................................10
DIVIDENDS AND DISTRIBUTIONS........................................................................10
FINANCIAL HIGHLIGHTS....................................................................................11
SHAREHOLDER INFORMATION................................................................................A-1
CHOOSING A SHARE CLASS............................................................................A-1
PURCHASING SHARES.................................................................................A-4
REDEEMING SHARES..................................................................................A-6
EXCHANGING SHARES.................................................................................A-9
PRICING OF SHARES................................................................................A-11
TAXES............................................................................................A-11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
2
<PAGE> 74
AIM GLOBAL GROWTH FUND
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing at least 65% of its total
assets in marketable equity securities of domestic and foreign issuers. The fund
will normally invest in the securities of medium- and large-sized growth
companies located in at least four countries, including the United States, and
will normally maintain at least 20% of its total assets in U.S. dollar
denominated securities. The fund emphasizes investment in companies in developed
countries such as the United States, the countries of Western Europe and certain
countries in the Pacific Basin. The fund may also invest in companies located in
developing countries, i.e., those that are in the initial stages of their
industrial cycle. The fund may invest up to 20% of its total assets in
convertible equity securities of foreign and domestic issuers.
The fund's portfolio managers focus on companies that have experienced
above-average long-term growth in earnings and have excellent prospects for
future growth. In selecting countries in which the fund will invest, the fund's
portfolio managers also consider such factors as the prospect for relative
economic growth among countries or regions, economic or political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security. The fund's portfolio managers usually sell a particular
security when any of these factors materially changes.
Under normal circumstances, the fund may invest up to 35% of its total assets in
high-grade short-term securities and in debt securities, including U.S.
government obligations, investment grade corporate bonds or taxable municipal
securities. However, in anticipation of or in response to adverse market
conditions or for cash management purposes, the fund may hold all or a portion
of its assets in cash or these types of securities. As a result, the fund may
not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The price of common stock
goes up and down in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. In addition, the prices of common stocks issued by foreign companies
may be further affected by other factors, including
o Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and
the currencies in which those investments are traded.
o Political and economic conditions--The value of the fund's foreign
investments may be adversely affected by political and social instability
in their home countries and by changes in economic or taxation policies in
those countries.
3
<PAGE> 75
o Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, among other things, there generally is less
publicly available information about foreign companies than about U.S.
companies.
o Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the price of common stocks issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures. In addition, developing
countries may have greater political or economic instability, less regulation
and smaller, less liquid and more volatile markets than countries with more
mature economies.
[If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, it the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.]
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of correcting
and testing those systems that may have such problem. This problem, if not
corrected, may adversely affect the services provided to the fund or may affect
companies in which the fund may invest, and, therefore, may lower the value of
your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
4
<PAGE> 76
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year over a five-year period. The bar chart does not reflect
sales loads. If it did, the annual total returns shown would be lower.
Global Growth Fund
<TABLE>
<CAPTION>
Annual
Total
Return
Year Ended ------
December 31
-----------
<S> <C>
1994 ............................................ (0.02)%
1995 ............................................ 30.09%
1996 ............................................ 19.87%
1997 ............................................ 13.85%
1998 ............................................ %
</TABLE>
- -------------
The year-to-date as of 1/31/99 (the end of the most recent fiscal quarter) was
_____%
During the five-year period shown in the bar chart, the highest quarterly return
was _____%
(quarter ended ______________) and the lowest quarterly return was _____%
(quarter ended ______________).
PERFORMANCE TABLE
The following performance table shows how the fund's average annual returns for
one and five years compare to those of a broad-based securities market index.
5
<PAGE> 77
<TABLE>
<CAPTION>
============================================================================
Average Annual Total
Returns
(for the periods ending
December 31, 1998) 1 Year 5 Years
- ----------------------------------------------------------------------------
<S> <C> <C>
Class A 13.85%* -0.02%*
- ----------------------------------------------------------------------------
Class B -- --*
- ----------------------------------------------------------------------------
Class C -- --**
- ----------------------------------------------------------------------------
MSCI World Index*** -- --
============================================================================
</TABLE>
* Class A and B returns are since inception (9/15/94).
** Class C returns are since inception (8/4/97).
*** The Morgan Stanley Capital International World Index measures performance
for twenty-two developed country global stock markets. The index is
capitalization weighted. Companies included in the index replicate the
industry composition of each local market and, in addition, represent a
sampling of large, medium and small capitalization companies from each
local market, taking into account the stocks' liquidity.
6
<PAGE> 78
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None(1) 5.00 1.00
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees [0.63%] [0.63%] [0.63%]
Distribution and/or Service (12b-1) Fees [0.30] [1.00] [1.00]
Other Expenses:
Transfer agent fees and costs [0.17] [0.23] [0.23]
Other [0.03] [0.03] [0.03]
---- ---- ----
Total Other Expenses [0.20] [0.26] [0.26]
Total Annual Fund Operating Expenses [1.13] [1.89] [1.89]
==== ==== ====
</TABLE>
- -------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
7
<PAGE> 79
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
8
<PAGE> 80
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The advisor supervises all aspects of the fund's operations and provide
investment advisory services to the fund, including obtaining and evaluating
economic, statistical and financial information to formulate and implement
investment programs for the fund.
The advisor has acted as an investment adviser since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over [90]
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of [---%] of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
o A. Dale Griffin, III, Senior Portfolio Manager, who has been
responsible for the fund since 1994 and has been associated with the
advisor and/or its affiliates since 1989.
o Clas G. Olsson, Senior Portfolio Manager, who has been responsible for
the fund since 1997 and has been associated with the advisor and/or its
affiliates since 1994. Prior to 1994, he was a broker assistant with
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
o Paul A. Rogge, Senior Portfolio Manager, who has been responsible for
the fund since 1994 and has been associated with the advisor and/or its
affiliates since 1991.
o Jonathan C. Schoolar, Senior Portfolio Manager, who has been
responsible for the fund since 1994 and has been associated with the
advisor and/or its affiliates since 1986.
o Barrett K. Sides, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor and/or
its affiliates since 1990.
9
<PAGE> 81
OTHER INFORMATION
INITIAL SALES CHARGES FOR CLASS A SHARES
Purchases of Class A shares of the fund are subject to the maximum 4.75% initial
sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in
the "Shareholder Information--Choosing a Share Class" section of this
prospectus.
DIVIDENDS AND DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares and pays dividends, if any, annually.
10
<PAGE> 82
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years ended October 31 (or periods) indicated.
This information has been audited by KPMG Peat Marwick LLP, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
<TABLE>
<CAPTION>
For the
Period
September
15 through
Class A October 31,
- ------- ------- ----------- ----------- ---------- ----------
1998 1997 1996 1995 1994
------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Net gains on securities (both realized and unrealized) (x.xx) x.xx x.xx x.xx x.xx
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Total from investment operations (x.xx) x.xx x.xx x.xx x.xx
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Distributions from net realized gains (x.xx) (x.xx) (x.xx) (x.xx) --
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Total return(a) (x.xx)% xx.xx% xx.xx% xx.xx% x.xx%
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $xx,xxx $xx,xxx,xxx $xx,xxx,xxx $x,xxx,xxx $x,xxx,xxx
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Ratio of expenses to average net assets(b) x.xx%(c) x.xx x.xx x.xx x.xx(d)
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Ratio of net investment income (loss) to average
net assets(e) (x.xx)%(c) (x.xx)% (x.xx)% (x.xx)% (x.xx)%(d)
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
Portfolio turnover rate xx% xx% xx% xx% xx%
- ------------------------------------------------------- ------- ----------- ----------- ---------- ----------
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
X.XX%, X.XX%, and X.XX% for 1996-1994.
(c) Ratios are based on average net assets of $XXX,XXX,XXX.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (X.XX)%, (X.XX)% and (X.XX)% (annualized) for 1996-1994.
11
<PAGE> 83
<TABLE>
<CAPTION>
For the Period
September 15
Through
October 31
------- --------- ----------- ---------- ----------
Class B 1998 1997 1996 1995 1994
------- ------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Income from investment operations:
Net investment income (loss) (x.xx)(a) (x.xx) (x.xx) (x.xx) (x.xx)
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Net gains (losses) on securities (both realized and
unrealized (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Total from investment operations (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Distributions from net realized gains (x.xx) (x.xx) -- (x.xx) (x.xx)
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Total return(b) (x.xx)% (x.xx)% (x.xx)% (x.xx)% (x.xx)%
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Ratios/supplement data:
Net assets, end of period (000s omitted) $xx,xxx $ xx,xxx $ xx,xxx $ xx,xxx $ xx,xxx
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Ratio of expenses to average net assets x.xx%(c) x.xx% x.xx%(d) x.xx%(d) x.xx%(d)(e)
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Ratio of net investment income (loss) to average
net assets(e) (x.xx)%(c) (x.xx)% (x.xx)%(f) (x.xx)%(f) (x.xx)%(e)(f)
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
Portfolio turnover rate xx% xx% xx% xx% xx%
- ------------------------------------------------------- ------- --------- ----------- ---------- ----------
</TABLE>
(a) Annualized.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $XXX,XXX,XXX.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
X.XX%, X.XX% and X.XX% (annualized) for 1996-1994.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (X.XX)%, (X.XX)% and (X.XX)% (annualized) for 1996-1994.
<TABLE>
<CAPTION>
For the Period
August 4
through October
31,
-------- --------
Class C 1998 1997
------- -------- --------
<S> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx
- -------------------------------------------------------------- -------- --------
Income from investment operations:
Net investment income (loss) (x.xx)(a) (x.xx)
- -------------------------------------------------------------- -------- --------
Net gains (losses) on securities (both realized and unrealized) (x.xx) (x.xx)
- -------------------------------------------------------------- -------- --------
Total from investment operations (x.xx) (x.xx)
- -------------------------------------------------------------- -------- --------
Distributions from net realized gains (x.xx) (x.xx)
- -------------------------------------------------------------- -------- --------
Net asset value, end of period $ xx.xx $ xx.xx
- -------------------------------------------------------------- -------- --------
Total return(b) (x.xx)% (x.xx)%
- -------------------------------------------------------------- -------- --------
Ratios/supplement data:
Net assets, end of period (000s omitted) $ xx,xxx $ xx,xxx
- -------------------------------------------------------------- -------- --------
Ratio of expenses to average net assets x.xx%(c) x.xx%(d)
- -------------------------------------------------------------- -------- --------
Ratio of net investment income (loss) to average net assets (x.xx)%(c) (x.xx)%(d)
- -------------------------------------------------------------- -------- --------
Portfolio turnover rate xx% xx%
- -------------------------------------------------------------- -------- --------
</TABLE>
(a) Calculated using shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $XXX,XXX,XXX.
(d) Annualized.
12
<PAGE> 84
SHAREHOLDER INFORMATION
Choosing a Share Class
Many of the funds advised by the advisor (the AIM Funds) have multiple classes
of shares, each class representing an interest in the same portfolio of
investments. When choosing a share class, you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C>
o Initial sales charge o No initial sales charge o No initial sales charge
o Reduced or o Contingent deferred o Contingent deferred
waived initial sales charge on sales charge on
sales charge for redemptions within redemptions within
certain purchases six years one year
o Lower distribution o 12b-1 fee of 1.00% o 12b-1 fee of 1.00%
and service (12b-1)
fee than Class B or
Class C shares
(See "Fee Table o Converts to Class A o Does not convert to
and Expense shares after eight years Class A shares
Example") along with a pro rata
portion of its reinvested
dividends and distributions*
o Generally more o Purchase orders limited o Generally more
appropriate for long- to amounts less than appropriate for short-
term investors $250,000 term investors
</TABLE>
* If you held Class B shares of AIM Global Trends Fund on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of that fund
seven years after your date of purchase. If you exchange those shares for Class
B shares of another AIM Fund, the shares into which you exchanged will not
convert to Class A shares until eight years after your date of purchase of the
original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
A-1
<PAGE> 85
SALES CHARGES
Generally you will not pay a sales charge on purchases or redemptions of
Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund. You may be charged a contingent deferred sales charge if
you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through
certain exchanges. Sales charges on all other AIM Funds and classes of those
Funds are detailed below. As used below, the term "offering price" with respect
to all categories of Class A shares includes the initial sales charge.
Initial Sales Charges
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
CATEGORY I Initial Sales Charges
- --------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY II Initial Sales Charges
- ---------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$ 100,000 but less than $ 250,000 3.75 3.90
$ 250,000 but less than $ 500,000 2.50 2.56
$ 500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY III Initial Sales Charges
- ----------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
</TABLE>
Contingent Deferred Sales Charges for Class A Shares
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
A-2
<PAGE> 86
Contingent Deferred Sales Charges for Class B and Class C Shares
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
CLASS B CLASS C
CDSC AS A PERCENTAGE CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT OF DOLLAR AMOUNT
YEAR SINCE PURCHASE MADE SUBJECT TO CHARGE SUBJECT TO CHARGE
------------------------ ----------------- -----------------
<S> <C> <C>
First 5% 1%
Second 4% None
Third 3% None
Fourth 3% None
Fifth 2% None
Sixth 1% None
Seventh and following None None
</TABLE>
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
Reduced Sales Charges
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
Initial Sales Charge Exceptions
You will not pay initial sales charges
o on shares purchased by reinvesting dividends and distributions;
o when exchanging shares among certain AIM Funds;
o when using the reinstatement privilege; and
o when a merger, consolidation, or acquisition of assets of an AIM Fund
occurs.
Contingent Deferred Sales Charge (CDSC) Exceptions
You will not pay a CDSC
o if you redeem Class B shares you held for more than six years;
o if you redeem Class C shares you held for more than one year;
o if you redeem shares acquired through reinvestment of dividends and
distributions; and
o on increases in the net asset value of your shares.
A-3
<PAGE> 87
There may be other situations in which you or other shareholders may be able to
purchase or redeem shares at reduced or without sales charges. You should
consult the fund's Statement of Additional Information for details regarding
these situations.
Purchasing Shares
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM
Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Type of Account Initial Additional
Investments Investments
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing plans, 401(k) plans, Simplified $0 ($25 per $25
Employee Pension (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings AIM Fund
Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 investment
plans) for salary
deferrals
from Savings
Plans)
- -------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plans $50 $50
- -------------------------------------------------------------------------------------------------------------------------
IRA, Education IRA or Roth IRA $250 $50
- -------------------------------------------------------------------------------------------------------------------------
All other accounts $500 $50
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE> 88
HOW TO PURCHASE SHARES
There are several ways you can purchase your shares. You can make direct
purchases or select from one of three automatic investment methods.
DIRECT PURCHASES
<TABLE>
<CAPTION>
Opening An Account Adding to An Account
<S> <C> <C>
Through a
Financial
Consultant Contact your financial consultant. Same
By Mail Mail completed Account Mail your check and the
Application and purchase payment to the transfer agent, remittance slip from
A I M Fund Services, Inc., P.O. Box 4739, your confirmation statement
Houston, TX 77210-4739. to the transfer agent.
By Wire Mail completed Account Call the transfer agent to
Application to the transfer agent. receive a reference number.
Call the transfer agent at Then, use the wire
(800) 959-4246 to receive a reference number. instructions at left.
Then, use the following wire instructions:
Beneficiary Bank ABA/Routing #:113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank
Connection(sm) Open your account using one of the methods described Mail completed AIM Bank
above. Connection(sm) form to the
transfer agent. Once
the transfer agent has
received the form, call the
transfer agent to place your
purchase.
</TABLE>
SPECIAL PLANS
Automatic Investment Plan
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
Dollar Cost Averaging
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration and in the same class of shares. The
account from which exchanges are to be made must have a minimum balance of
$5,000 before you can use this option. Exchanges will occur on (or about) the
A-5
<PAGE> 89
10th or 25th day of the month in the amount you specify. The minimum amount you
can exchange to another AIM Fund is $50.
Automatic Dividend Investment
All of your dividends and distributions may be paid in cash or invested at net
asset value in certain AIM Funds without paying a sales charge. Unless you
specify otherwise, your dividends and distributions will automatically be
reinvested in the same AIM Fund. You may invest your dividends and distributions
(1) into another AIM Fund in the same class of shares; or (2) from Class A
shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at
least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
Portfolio Rebalancing Program
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. We may modify, suspend or terminate the
Program at any time on 60 days' prior written notice.
Retirement Plans
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-
sponsored retirement plan assesses an annual maintenance fee of $10. Contact
your financial consultant for details.
Redeeming Shares
TIMING OF REDEMPTIONS
You can redeem shares during the hours the New York Stock Exchange (NYSE) is
open for business. An AIM Fund may postpone the right of redemption only under
unusual circumstances, such as when the NYSE restricts or suspends trading.
A-6
<PAGE> 90
REDEMPTION FEES
We will not charge you any fees to redeem your shares; however, your broker or
financial consultant may charge service fees for handling these transactions.
Your shares may be subject to a contingent deferred sales charge (CDSC).
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY
EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within eighteen months of the purchase of the Class A shares,
you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
HOW TO REDEEM SHARES
<TABLE>
<CAPTION>
Through a
Financial Consultant Contact your financial consultant.
<S> <C>
By Mail Send a written request to the transfer agent.
Requests must include (1) original signatures of
all registered owners; (2) the name of the AIM
Fund and your account number; (3) if the transfer
agent does not hold your shares, endorsed share
certificates or share certificates accompanied by
an executed stock power; and (4) signature
guarantees, if necessary (see below). The
transfer agent may require that you provide
additional information, such as corporate
resolutions or powers of attorney, if applicable.
If you are redeeming from an IRA account, you
must include a statement of whether or not you
are at least 59-1/2 years old and whether you
wish to have federal income tax withheld from
your proceeds. The transfer agent may require
certain other information before you can redeem
from an employer-sponsored retirement plan.
Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to
redeem by telephone if (1) the proceeds are to be
mailed to the address on record with us or
transferred electronically to a pre-authorized
checking account; (2) the address on record with
us has not been changed within the last thirty
days; (3) you do not hold physical share
certificates; (4) you can provide proper
identification information; (5) the proceeds of
the redemption do not exceed $50,000; and (6) you
have not previously declined the telephone
redemption privilege. Certain accounts, including
retirement accounts and 403(b) plans, may not
redeem by telephone. The transfer agent must
receive your call during the hours the NYSE is
open for business in order to effect the
redemption at that day's closing price.
</TABLE>
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
A-7
<PAGE> 91
Redemption by mail
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
Redemption by telephone
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
Payment for Systematic Withdrawals
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
Expedited Redemptions (AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of trading
on the New York Stock Exchange (NYSE), we generally will transmit payment on the
next business day.
Redemptions by Check (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash
Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record
on the account; or
(4) you request that payment be sent to a new address or an address that
changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax- Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference
A-8
<PAGE> 92
between the initial sales charges on those Funds and the ones in which you will
be investing. In addition, if you paid a contingent deferred sales charge (CDSC)
on any reinstated amount, you will not be subject to a CDSC if you later redeem
that amount. You must notify the transfer agent in writing at the time you
reinstate that you are exercising your reinstatement privilege. You may exercise
this privilege only once per year and it may have tax consequences.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
AIM Fund may, in its discretion, redeem the account and distribute the proceeds
to you.
Exchanging Shares
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You also may exchange AIM Cash Reserve Shares of
AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
may be required to pay an initial sales charge when exchanging from a Fund with
a lower initial sales charge than the one into which you are exchanging. If you
exchange from Class A shares not subject to a CDSC into Class A shares subject
to those charges, you will be charged a CDSC when you redeem the exchanged
shares. The CDSC charged on redemption of those shares will be calculated
starting on the date you acquired those shares through exchange.
You will not pay a sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares
of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares
of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii)you acquired the original shares on or after May 1, 1994 by
way of an exchange from shares with higher sales charges;
A-9
<PAGE> 93
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge
(except for Class A shares of AIM Limited Maturity Treasury Fund
and AIM Tax-Free Intermediate Fund), but only if you acquired the
original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject
to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares
subject to an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund, but only if you acquired the original
shares by exchange from Class A shares subject to an initial sales
charge; or
(4) Class B shares for other Class B shares, and Class C shares for other
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
o You must meet the minimum purchase requirements for the AIM Fund into
which you are exchanging;
o Shares of the AIM Fund you wish to acquire must be qualified for sale in
your state of residence;
o Exchanges must be made between accounts with identical registration
information;
o The account you wish to exchange from must have a certified tax
identification number (or the Fund has received an appropriate Form W-8 or
W-9);
o Shares must have been held for at least one day prior to the exchange; and
o If you have physical share certificates, you must return them to the
transfer agent prior to the exchange.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the issuance of shares
being purchased in an exchange for up to five business days if it determines
that it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
By Mail
A-10
<PAGE> 94
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
By Telephone
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours the NYSE is open for business; however, you still will be
allowed to exchange by telephone even if you have changed your address of record
within the preceding 30 days.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
EACH AIM FUND AND THE DISTRIBUTOR RESERVE THE RIGHT AT ANY TIME TO REJECT OR
CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; MODIFY ANY TERMS OR
CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; OR WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS.
Pricing of Shares
Each of the AIM Funds prices its shares based on its net asset value. The AIM
Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM High
Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of
Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities. The AIM
Funds value all other securities and assets at their fair value. Securities and
other assets quoted in foreign currencies are valued in U.S. dollars based on
the prevailing exchange rates on that day. In addition, if, between the time
trading ends on a particular security and the close of the New York Stock
Exchange (NYSE), events occur that materially affect the value of the security,
the AIM Funds may value the security at its fair value as determined in good
faith by or under the supervision of the Board of Directors or Trustees of the
AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset
value will be subject to the judgment of the Board of Directors or Trustees or
its designee instead of being determined by the market. Because some of the AIM
Funds may invest in securities that are primarily listed on foreign exchanges,
the value of those Funds' shares may change on days when you will not be able to
purchase or redeem shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the NYSE on each day the NYSE is open for business. AIM Money Market Fund also
determines its net asset value as of 12:00 noon Eastern Time on each day the
NYSE is open for business. The AIM Funds price purchase, exchange and redemption
orders at the net asset value calculated after the transfer agent receives an
order in good form.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions. Every year, an
A-11
<PAGE> 95
account statement showing the amount of dividends and distributions you
received from each AIM Fund during the prior year will be sent to you.
Any long-term or short-term capital gains realized from redemptions of AIM Fund
shares will be subject to federal income tax. Exchanges of shares for shares of
another AIM Fund are treated as a sale of the AIM Fund's shares, and any gain
realized on the transaction will be subject to federal income tax.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
A-12
<PAGE> 96
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities and Exchange Commission (SEC), contains more details
about the fund and is incorporated by reference into the prospectus (is legally
a part of this prospectus). Annual and semi-annual reports to shareholders
contain additional information about the fund's investments. The fund's annual
report also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semi-annual reports only)
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
AIM Global Growth Fund
SEC 1940 Act file number: 811-6463
<PAGE> 97
[AIM LOGO APPEARS HERE]
AIM GLOBAL INCOME FUND
PROSPECTUS
MARCH 1, 1999
AIM Global Income Fund seeks to provide high current income, with a secondary
objective of preservation of principal and growth of capital.
This prospectus contains important information. Please read it before investing
and keep it for future reference.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. There is a risk that you could lose a portion or all of your money.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
WHETHER THE INFORMATION IN THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.
1
<PAGE> 98
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVES AND STRATEGIES.....................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND.................................................................3
PERFORMANCE INFORMATION..................................................................................5
ANNUAL TOTAL RETURNS................................................................................5
PERFORMANCE TABLE...................................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................7
FEE TABLE...........................................................................................7
EXPENSE EXAMPLE.....................................................................................7
FUND MANAGEMENT..........................................................................................9
THE ADVISOR.........................................................................................9
ADVISOR COMPENSATION................................................................................9
PORTFOLIO MANAGERS..................................................................................9
OTHER INFORMATION.......................................................................................10
INITIAL SALES CHARGES FOR CLASS A SHARES...........................................................10
DIVIDENDS AND DISTRIBUTIONS........................................................................10
FINANCIAL HIGHLIGHTS....................................................................................11
SHAREHOLDER INFORMATION................................................................................A-1
CHOOSING A SHARE CLASS............................................................................A-1
PURCHASING SHARES.................................................................................A-4
REDEEMING SHARES..................................................................................A-6
EXCHANGING SHARES.................................................................................A-9
PRICING OF SHARES................................................................................A-11
TAXES............................................................................................A-11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
2
<PAGE> 99
AIM GLOBAL INCOME FUND
INVESTMENT OBJECTIVES AND STRATEGIES
The fund's primary investment objective is high current income. Its secondary
objective is preservation of principal and growth of capital.
The fund attempts to meet this objective by investing at least 65% of its total
assets in government and non-convertible corporate debt securities, both foreign
and domestic, including securities issued by supranational organizations, such
as the World Bank. The fund emphasizes investment in securities issued by
governments and companies in developed countries such as the United States, the
countries of Western Europe, Canada, Japan, Australia and New Zealand. The fund
may also invest up to 20% of its total assets in securities of issuers located
in developing countries, i.e., those that are in the initial stages of their
industrial cycles. The fund will normally invest in the securities of companies
located in at least four different countries, including the United States, and
will normally maintain at least 20% of its total assets in securities of U.S.
issuers. The fund may invest up to 10% of its total assets in common stocks,
preferred stocks and similar equity securities of foreign and domestic issuers
and up to 10% of its total assets in convertible debt securities of foreign and
domestic issuers. The fund may also invest up to 35% of its total assets in high
yield debt securities rated below investment grade, i.e., "junk bonds."
The 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. However, the fund will 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 organization.
The fund's portfolio managers focus on debt securities throughout the world that
they believe have excellent prospects for current income or growth of capital.
The fund's portfolio managers usually sell a particular security when any of
those factors materially changes.
In anticipation of or in response to adverse market conditions or for cash
management purposes, the fund may hold all or a portion of its assets in cash,
money market securities, bonds or other debt securities. As a result, the fund
may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Interest rate increases can cause the
price of a debt security to decrease; the longer the debt security's duration,
the more sensitive it is to this risk. The issuer of a security may default or
otherwise be unable to honor a financial obligation.
Compared to higher quality debt securities, junk bonds involve greater risk of
default or price changes due to changes in the credit quality of the issuer
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of lower-quality
3
<PAGE> 100
debt securities often fluctuates in response to company, political or economic
developments and can decline significantly over short periods of time or during
periods of general or regional economic difficulty.
Because it is non-diversified, the fund may invest in fewer issuers than if it
was a diversified fund. The value of the fund's shares may vary more widely, and
the fund may be subject to greater investment and credit risk, than if the fund
invested more broadly.
In addition, the prices of securities issued by foreign companies may be further
affected by other factors, including
o Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and
the currencies in which those investments are traded.
o Political and economic conditions--The value of the fund's foreign
investments may be adversely affected by political and social instability
in their home countries and by changes in economic or taxation policies in
those countries.
o Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, among other things, there generally is less
publicly available information about foreign companies than about U.S.
companies.
o Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the price of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures. In addition, developing
countries may have greater political or economic instability, less regulation
and smaller, less liquid and more volatile markets than countries with more
mature economies.
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of correcting
and testing those systems that may have such problem. This problem, if not
corrected, may adversely affect the services provided to the fund or may affect
companies in which the fund may invest, and, therefore, may lower the value of
your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
4
<PAGE> 101
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year over a five-year period. The bar chart does not reflect
sales loads. If it did, the annual total returns shown would be lower.
Global Income
<TABLE>
<CAPTION>
Total
Year ended Annual
December 31 Return
----------- ------
<S> <C>
1994 ............................................ 0.39%
1995 ............................................ 19.39%
1996 ............................................ 10.30%
1997 ............................................ 7.68%
1998 ............................................ %
</TABLE>
- --------------
The year-to-date as of 1/31/99 (the end of the most recent fiscal quarter) was
___%.
During the five-year period shown in the bar chart, the highest quarterly return
was _____% (quarter ended ________) and the lowest quarterly return was ____%
(quarter ended ___________).
PERFORMANCE TABLE
The following performance table shows how the fund's average annual returns for
one and five years compare to those of a broad-based securities market index.
5
<PAGE> 102
<TABLE>
<CAPTION>
===============================================================================
Average Annual Total
Returns
(for the periods ending
December 31, 1998) 1 Year 5 Years
- ------------------------------------------ ------------- ------------
<S> <C> <C>
Class A 7.68% 0.39%*
- ------------------------------------------ ------------- ------------
Class B -- --*
- ------------------------------------------ ------------- ------------
Class C -- --**
- ------------------------------------------ ------------- ------------
Salomon Bros World Govt -- --
Bond Index ***
===============================================================================
</TABLE>
* Class A and B returns are since inception (9/15/94).
** Class C returns are since inception (8/4/97).
*** The Salomon Brothers World Govt Bond Index includes all fixed-rate bonds
with a remaining maturity of one year or longer and with amounts
outstanding of at least the equivalent of US $25 million. The index is
designed to provide a comprehensive measure of the total return performance
of the domestic government bond markets in fourteen countries combined.
6
<PAGE> 103
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None(1) 5.00 1.00
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees [0.63%] [0.63%] [0.63%]
Distribution and/or Service (12b-1)Fees [0.30] [1.00] [1.00]
Other Expenses:
Transfer agent fees and costs [0.17] [0.23] [0.23]
Other [0.03] [0.03] [0.03]
----- ----- -----
Total Other Expenses [0.20] [0.26] [0.26]
Total Annual Fund Operating Expenses [1.13] [1.89] [1.89]
===== ===== =====
</TABLE>
- -------------------
1 If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
7
<PAGE> 104
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
8
<PAGE> 105
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provide investment advisory services to the
fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment adviser since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over [90]
investment company portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of [0.61%] of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
o Robert G. Alley, Senior Portfolio Manager, who has been responsible for
the fund since 1994 and has been associated with the advisor and/or its
affiliates since 1992.
o John L. Pessarra, Senior Portfolio Manager, who has been responsible
for the fund since 1994 and has been associated with the advisor and/or
its affiliates since 1990.
o Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor and/or
its affiliates since 1992.
9
<PAGE> 106
OTHER INFORMATION
INITIAL SALES CHARGES FOR CLASS A SHARES
Purchases of Class A shares of the fund are subject to the maximum 4.75% initial
sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in
the "Shareholder Information--Choosing a Share Class" section of this
prospectus.
DIVIDENDS AND DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares dividends daily and pays dividends, if any, monthly.
10
<PAGE> 107
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by KPMG Peat Marwick LLP, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
<TABLE>
<CAPTION>
For the Period
September 15
through
October 31,
Class A 1998 1997 1996 1995 1994
- ------- -------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
-------- ----------- ----------- ---------- -------------
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
-------- ----------- ----------- ---------- -------------
Net gains on securities (both realized and unrealized) (x.xx) x.xx x.xx x.xx x.xx
-------- ----------- ----------- ---------- -------------
Total from investment operations (x.xx) x.xx x.xx x.xx x.xx
-------- ----------- ----------- ---------- -------------
Distributions from net realized gains (x.xx) (x.xx) (x.xx) (x.xx) ----
-------- ----------- ----------- ---------- -------------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
======== =========== =========== ========== =============
Total return (x.xx)% xx.xx% xx.xx% xx.xx% x.xx%
======== =========== =========== ========== =============
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ xx,xxx $xx,xxx,xxx $xx,xxx,xxx $x,xxx,xxx $ x,xxx,xxx
======== =========== =========== ========== =============
Ratio of expenses to average net assets x.xx% x.xx x.xx x.xx x.xx
======== =========== =========== ========== =============
Ratio of net investment income (loss) to average net assets (x.xx)% (x.xx)% (x.x)% (x.xx)% (x.xx)%
======== =========== =========== ========== =============
Portfolio turnover rate xx% xx% xx% xx% xx%
======== =========== =========== ========== =============
</TABLE>
(a) Calculated using average shares outstanding
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
x.xx%, x.xx%, x.xx%, x.xx% and x.xx% (annualized) for the periods
1998-1994, respectively.
(d) Ratios are based on average net assets of $xx,xxx,xxx.
(e) Ratios include expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been
x.xx%.
(f) Annualized.
(g) After fee waivers and/or expenses reimbursements. The ratios of net
investment income (loss) to average net assets prior to fee waivers
and/or expense reimbursements were x.xx%, x.xx%, x.xx%, x.xx% and x.xx%
(annualized) for the periods 1998-1994, respectively.
11
<PAGE> 108
<TABLE>
<CAPTION>
For the Period
September 15
through
October 31,
Class B -------- ----------- ----------- --------- ------------
- ------- 1998 1997 1996 1995 1994
-------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
-------- ----------- ----------- ---------- ----------
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx) (x.xx)(a) (x.xx) (x.xx)
-------- ----------- ----------- ---------- ----------
Net gains on securities
(both realized and unrealized) (x.xx) x.xx x.xx x.xx x.xx
-------- ----------- ----------- ---------- ----------
Total from investment operations (x.xx) x.xx x.xx x.xx x.xx
-------- ----------- ----------- ---------- ----------
Distributions from net realized gains (x.xx) (x.xx) (x.xx) (x.xx) ----
-------- ----------- ----------- ---------- ----------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
======== =========== =========== ========== ==========
Total return (b) (x.xx)% xx.xx% xx.xx% xx.xx% x.xx%
======== =========== =========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ xx,xxx $xx,xxx,xxx $xx,xxx,xxx $x,xxx,xxx $x,xxx,xxx
======== =========== =========== ========== ==========
Ratio of expenses to average net assets (c) x.xx%(d) x.xx(c)(d) x.xx x.xx x.xx(e)
======== =========== =========== ========== ==========
Ratio of net investment income (loss) to
average net assets (x.xx)%(d) (x.xx)%(c) (x.x)% (x.xx)% (x.xx)%(e)
======== =========== =========== ========== ==========
Portfolio turnover rate xx% xx% xx% xx% xx%
======== =========== =========== ========== ==========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
x.xx%, x.xx%, x.xx%, x.xx% and x.xx% (annualized) for 1998-1994.
(d) Ratios are based on average net assets of $xx,xxx,xxx.
(e) Annualized.
(f) After fee waivers and/or expenses reimbursements. The ratios of net
investment income (loss) to average net assets prior to fee waivers
and/or expense reimbursements were x.xx%, x.xx%, x.xx%, x.xx% and x.xx%
(annualized) for the periods 1998-1994.
<TABLE>
<CAPTION>
For the Period
August 4
through
Class C October 31,
- ------- -------- --------------
1998 1997
-------- --------------
<S> <C> <C>
Net asset value, beginning of period $ xx.xx xx.xx(a)
-------- -----------
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx)
-------- -----------
Net gains on securities (both realized and unrealized) (x.xx) x.xx
-------- -----------
Total from investment operations (x.xx) x.xx
-------- -----------
Distributions from net realized gains (x.xx) (x.xx)
-------- -----------
Net asset value, end of period $ xx.xx $ xx.xx
======== ===========
Total return (b) (x.xx)% xx.xx%
======== ===========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ xx,xxx $xx,xxx,xxx
Ratio of expenses to average net assets (c) x.xx%(d) x.xx(e)
======== ===========
Ratio of net investment income (loss) to average net assets (x.xx)%(d) (x.xx)%(e)
======== ===========
Portfolio turnover rate xx% xx%
======== ===========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
x.xx% and x.xx% (annualized) for 1998-1997.
(d) Ratios are based on average net assets of $xxx,xxx.
(e) Annualized.
(f) After fee waivers and/or expenses reimbursements. The ratios of net
investment income (loss) to average net assets prior to fee waivers
and/or expense reimbursements were x.xx% and x.xx% (annualized) for the
periods 1998-1997.
12
<PAGE> 109
SHAREHOLDER INFORMATION
Choosing a Share Class
Many of the funds advised by the advisor (the AIM Funds) have multiple classes
of shares, each class representing an interest in the same portfolio of
investments. When choosing a share class, you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C>
o Initial sales charge o No initial sales charge o No initial sales charge
o Reduced or o Contingent deferred o Contingent deferred
waived initial sales charge on sales charge on
sales charge for redemptions within redemptions within
certain purchases six years one year
o Lower distribution o 12b-1 fee of 1.00% o 12b-1 fee of 1.00%
and service (12b-1)
fee than Class B or
Class C shares
(See "Fee Table o Converts to Class A o Does not convert to
and Expense shares after eight years Class A shares
Example") along with a pro rata
portion of its reinvested
dividends and distributions*
o Generally more o Purchase orders limited o Generally more
appropriate for long- to amounts less than appropriate for short-
term investors $250,000 term investors
</TABLE>
* If you held Class B shares of AIM Global Trends Fund on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of that fund
seven years after your date of purchase. If you exchange those shares for Class
B shares of another AIM Fund, the shares into which you exchanged will not
convert to Class A shares until eight years after your date of purchase of the
original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
A-1
<PAGE> 110
SALES CHARGES
Generally you will not pay a sales charge on purchases or redemptions of
Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund. You may be charged a contingent deferred sales charge if
you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through
certain exchanges. Sales charges on all other AIM Funds and classes of those
Funds are detailed below. As used below, the term "offering price" with respect
to all categories of Class A shares includes the initial sales charge.
Initial Sales Charges
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
CATEGORY I Initial Sales Charges
- --------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY II Initial Sales Charges
- ---------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$ 100,000 but less than $ 250,000 3.75 3.90
$ 250,000 but less than $ 500,000 2.50 2.56
$ 500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY III Initial Sales Charges
- ----------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
</TABLE>
Contingent Deferred Sales Charges for Class A Shares
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
A-2
<PAGE> 111
Contingent Deferred Sales Charges for Class B and Class C Shares
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
CLASS B CLASS C
CDSC AS A PERCENTAGE CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT OF DOLLAR AMOUNT
YEAR SINCE PURCHASE MADE SUBJECT TO CHARGE SUBJECT TO CHARGE
------------------------ ----------------- -----------------
<S> <C> <C>
First 5% 1%
Second 4% None
Third 3% None
Fourth 3% None
Fifth 2% None
Sixth 1% None
Seventh and following None None
</TABLE>
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
Reduced Sales Charges
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
Initial Sales Charge Exceptions
You will not pay initial sales charges
o on shares purchased by reinvesting dividends and distributions;
o when exchanging shares among certain AIM Funds;
o when using the reinstatement privilege; and
o when a merger, consolidation, or acquisition of assets of an AIM Fund
occurs.
Contingent Deferred Sales Charge (CDSC) Exceptions
You will not pay a CDSC
o if you redeem Class B shares you held for more than six years;
o if you redeem Class C shares you held for more than one year;
o if you redeem shares acquired through reinvestment of dividends and
distributions; and
o on increases in the net asset value of your shares.
A-3
<PAGE> 112
There may be other situations in which you or other shareholders may be able to
purchase or redeem shares at reduced or without sales charges. You should
consult the fund's Statement of Additional Information for details regarding
these situations.
Purchasing Shares
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM
Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Type of Account Initial Additional
Investments Investments
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing plans, 401(k) plans, Simplified $0 ($25 per $25
Employee Pension (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings AIM Fund
Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 investment
plans) for salary
deferrals
from Savings
Plans)
- -------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plans $50 $50
- -------------------------------------------------------------------------------------------------------------------------
IRA, Education IRA or Roth IRA $250 $50
- -------------------------------------------------------------------------------------------------------------------------
All other accounts $500 $50
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE> 113
HOW TO PURCHASE SHARES
There are several ways you can purchase your shares. You can make direct
purchases or select from one of three automatic investment methods.
DIRECT PURCHASES
<TABLE>
<CAPTION>
Opening An Account Adding to An Account
<S> <C> <C>
Through a
Financial
Consultant Contact your financial consultant. Same
By Mail Mail completed Account Mail your check and the
Application and purchase payment to the transfer agent, remittance slip from
A I M Fund Services, Inc., P.O. Box 4739, your confirmation statement
Houston, TX 77210-4739. to the transfer agent.
By Wire Mail completed Account Call the transfer agent to
Application to the transfer agent. receive a reference number.
Call the transfer agent at Then, use the wire
(800) 959-4246 to receive a reference number. instructions at left.
Then, use the following wire instructions:
Beneficiary Bank ABA/Routing #:113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank
Connection(sm) Open your account using one of the methods described Mail completed AIM Bank
above. Connection(sm) form to the
transfer agent. Once
the transfer agent has
received the form, call the
transfer agent to place your
purchase.
</TABLE>
SPECIAL PLANS
Automatic Investment Plan
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
Dollar Cost Averaging
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration and in the same class of shares. The
account from which exchanges are to be made must have a minimum balance of
$5,000 before you can use this option. Exchanges will occur on (or about) the
A-5
<PAGE> 114
10th or 25th day of the month in the amount you specify. The minimum amount you
can exchange to another AIM Fund is $50.
Automatic Dividend Investment
All of your dividends and distributions may be paid in cash or invested at net
asset value in certain AIM Funds without paying a sales charge. Unless you
specify otherwise, your dividends and distributions will automatically be
reinvested in the same AIM Fund. You may invest your dividends and distributions
(1) into another AIM Fund in the same class of shares; or (2) from Class A
shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at
least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
Portfolio Rebalancing Program
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. We may modify, suspend or terminate the
Program at any time on 60 days' prior written notice.
Retirement Plans
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-
sponsored retirement plan assesses an annual maintenance fee of $10. Contact
your financial consultant for details.
Redeeming Shares
TIMING OF REDEMPTIONS
You can redeem shares during the hours the New York Stock Exchange (NYSE) is
open for business. An AIM Fund may postpone the right of redemption only under
unusual circumstances, such as when the NYSE restricts or suspends trading.
A-6
<PAGE> 115
REDEMPTION FEES
We will not charge you any fees to redeem your shares; however, your broker or
financial consultant may charge service fees for handling these transactions.
Your shares may be subject to a contingent deferred sales charge (CDSC).
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY
EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within eighteen months of the purchase of the Class A shares,
you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
HOW TO REDEEM SHARES
<TABLE>
<CAPTION>
Through a
Financial Consultant Contact your financial consultant.
<S> <C>
By Mail Send a written request to the transfer agent.
Requests must include (1) original signatures of
all registered owners; (2) the name of the AIM
Fund and your account number; (3) if the transfer
agent does not hold your shares, endorsed share
certificates or share certificates accompanied by
an executed stock power; and (4) signature
guarantees, if necessary (see below). The
transfer agent may require that you provide
additional information, such as corporate
resolutions or powers of attorney, if applicable.
If you are redeeming from an IRA account, you
must include a statement of whether or not you
are at least 59-1/2 years old and whether you
wish to have federal income tax withheld from
your proceeds. The transfer agent may require
certain other information before you can redeem
from an employer-sponsored retirement plan.
Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to
redeem by telephone if (1) the proceeds are to be
mailed to the address on record with us or
transferred electronically to a pre-authorized
checking account; (2) the address on record with
us has not been changed within the last thirty
days; (3) you do not hold physical share
certificates; (4) you can provide proper
identification information; (5) the proceeds of
the redemption do not exceed $50,000; and (6) you
have not previously declined the telephone
redemption privilege. Certain accounts, including
retirement accounts and 403(b) plans, may not
redeem by telephone. The transfer agent must
receive your call during the hours the NYSE is
open for business in order to effect the
redemption at that day's closing price.
</TABLE>
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
A-7
<PAGE> 116
Redemption by mail
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
Redemption by telephone
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
Payment for Systematic Withdrawals
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
Expedited Redemptions (AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of trading
on the New York Stock Exchange (NYSE), we generally will transmit payment on the
next business day.
Redemptions by Check (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash
Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record
on the account; or
(4) you request that payment be sent to a new address or an address that
changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax- Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference
A-8
<PAGE> 117
between the initial sales charges on those Funds and the ones in which you will
be investing. In addition, if you paid a contingent deferred sales charge (CDSC)
on any reinstated amount, you will not be subject to a CDSC if you later redeem
that amount. You must notify the transfer agent in writing at the time you
reinstate that you are exercising your reinstatement privilege. You may exercise
this privilege only once per year and it may have tax consequences.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
AIM Fund may, in its discretion, redeem the account and distribute the proceeds
to you.
Exchanging Shares
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You also may exchange AIM Cash Reserve Shares of
AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
may be required to pay an initial sales charge when exchanging from a Fund with
a lower initial sales charge than the one into which you are exchanging. If you
exchange from Class A shares not subject to a CDSC into Class A shares subject
to those charges, you will be charged a CDSC when you redeem the exchanged
shares. The CDSC charged on redemption of those shares will be calculated
starting on the date you acquired those shares through exchange.
You will not pay a sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares
of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares
of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii)you acquired the original shares on or after May 1, 1994 by
way of an exchange from shares with higher sales charges;
A-9
<PAGE> 118
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge
(except for Class A shares of AIM Limited Maturity Treasury Fund
and AIM Tax-Free Intermediate Fund), but only if you acquired the
original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject
to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares
subject to an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund, but only if you acquired the original
shares by exchange from Class A shares subject to an initial sales
charge; or
(4) Class B shares for other Class B shares, and Class C shares for other
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
o You must meet the minimum purchase requirements for the AIM Fund into
which you are exchanging;
o Shares of the AIM Fund you wish to acquire must be qualified for sale in
your state of residence;
o Exchanges must be made between accounts with identical registration
information;
o The account you wish to exchange from must have a certified tax
identification number (or the Fund has received an appropriate Form W-8 or
W-9);
o Shares must have been held for at least one day prior to the exchange; and
o If you have physical share certificates, you must return them to the
transfer agent prior to the exchange.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the issuance of shares
being purchased in an exchange for up to five business days if it determines
that it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
By Mail
A-10
<PAGE> 119
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
By Telephone
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours the NYSE is open for business; however, you still will be
allowed to exchange by telephone even if you have changed your address of record
within the preceding 30 days.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
EACH AIM FUND AND THE DISTRIBUTOR RESERVE THE RIGHT AT ANY TIME TO REJECT OR
CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; MODIFY ANY TERMS OR
CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; OR WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS.
Pricing of Shares
Each of the AIM Funds prices its shares based on its net asset value. The AIM
Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM High
Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of
Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities. The AIM
Funds value all other securities and assets at their fair value. Securities and
other assets quoted in foreign currencies are valued in U.S. dollars based on
the prevailing exchange rates on that day. In addition, if, between the time
trading ends on a particular security and the close of the New York Stock
Exchange (NYSE), events occur that materially affect the value of the security,
the AIM Funds may value the security at its fair value as determined in good
faith by or under the supervision of the Board of Directors or Trustees of the
AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset
value will be subject to the judgment of the Board of Directors or Trustees or
its designee instead of being determined by the market. Because some of the AIM
Funds may invest in securities that are primarily listed on foreign exchanges,
the value of those Funds' shares may change on days when you will not be able to
purchase or redeem shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the NYSE on each day the NYSE is open for business. AIM Money Market Fund also
determines its net asset value as of 12:00 noon Eastern Time on each day the
NYSE is open for business. The AIM Funds price purchase, exchange and redemption
orders at the net asset value calculated after the transfer agent receives an
order in good form.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions. Every year, an
A-11
<PAGE> 120
account statement showing the amount of dividends and distributions you
received from each AIM Fund during the prior year will be sent to you.
Any long-term or short-term capital gains realized from redemptions of AIM Fund
shares will be subject to federal income tax. Exchanges of shares for shares of
another AIM Fund are treated as a sale of the AIM Fund's shares, and any gain
realized on the transaction will be subject to federal income tax.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
A-12
<PAGE> 121
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities and Exchange Commission (SEC), contains more details
about the fund and is incorporated by reference into the prospectus (is legally
a part of this prospectus). Annual and semi-annual reports to shareholders
contain additional information about the fund's investments. The fund's annual
report also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semi-annual reports only)
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
AIM Global Income Fund
SEC 1940 Act file number: 811-6463
<PAGE> 122
[AIM LOGO APPEARS HERE]
AIM INTERNATIONAL EQUITY FUND
PROSPECTUS
MARCH 1, 1999
AIM International Equity Fund seeks to provide long-term growth of capital by
investing in a diversified portfolio of international equity securities whose
issuers are considered by the fund's portfolio managers to have strong earnings
momentum.
This prospectus contains important information. Please read it before investing
and keep it for future reference.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. There is a risk that you could lose a portion or all of your money.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
1
<PAGE> 123
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND.................................................................3
PERFORMANCE INFORMATION..................................................................................5
ANNUAL TOTAL RETURNS............................................................................5
PERFORMANCE TABLE...............................................................................6
FEE TABLE AND EXPENSE EXAMPLE............................................................................7
FEE TABLE.......................................................................................7
EXPENSE EXAMPLE.................................................................................7
FUND MANAGEMENT..........................................................................................8
THE ADVISOR.....................................................................................8
ADVISOR COMPENSATION............................................................................8
PORTFOLIO MANAGERS..............................................................................8
OTHER INFORMATION........................................................................................9
INITIAL SALES CHARGES FOR CLASS A SHARES........................................................9
DIVIDENDS AND DISTRIBUTIONS.....................................................................9
FINANCIAL HIGHLIGHTS....................................................................................10
SHAREHOLDER INFORMATION................................................................................A-1
CHOOSING A SHARE CLASS........................................................................A-1
PURCHASING SHARES.............................................................................A-4
REDEEMING SHARES..............................................................................A-6
EXCHANGING SHARES.............................................................................A-9
PRICING OF SHARES............................................................................A-11
TAXES........................................................................................A-11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
2
<PAGE> 124
AIM INTERNATIONAL EQUITY FUND
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to provide long-term growth of capital by
investing in a diversified portfolio of international equity securities whose
issuers are considered by the fund's portfolio managers to have strong earnings
momentum.
The fund attempts to meet this objective by investing, under normal market
conditions, at least 70% of its total assets in marketable equity securities of
foreign companies that are listed on a recognized foreign securities exchange or
traded in a foreign over-the-counter market. The fund will normally invest in
companies located in at least four countries outside of the United States,
emphasizing investment in companies in the developed countries of Western Europe
and the Pacific Basin. At the present time, the fund's portfolio managers do not
intend to invest more than 20% of the fund's total assets in foreign companies
locating in developing countries, i.e., those that are in the initial stages of
their industrial cycle. The fund may invest up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of foreign
companies that are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter market.
The fund's portfolio managers focus on companies that have experienced
above-average, long-term growth in earnings and have excellent prospects for
future growth. In selecting countries in which the fund will invest, the fund's
portfolio managers also consider such factors as the prospect for relative
economic growth among countries or regions, economic or political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security. The fund's portfolio managers usually sell a particular
security when any of those factors materially changes.
Under normal circumstances, the fund may invest up to 20% of its total assets in
high-grade short-term securities and debt securities, including U.S. government
obligations, investment grade corporate bonds or taxable municipal securities,
whether denominated in U.S. dollars or foreign currencies. However, in
anticipation of or in response to adverse market conditions or for cash
management purposes, the fund may hold all or a portion of its assets in cash or
these types of securities. As a result, the fund may not achieve its investment
objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The price of common stock
goes up and down in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity.
In addition, the prices of common stocks issued by foreign companies may be
further affected by other factors, including
o Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and
the currencies in which those investments are traded.
o Political and economic conditions--The value of the fund's foreign
investments may be adversely affected by political and social instability
in their home countries and by changes in economic or taxation policies in
those countries.
3
<PAGE> 125
o Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, among other things, there generally is less
publicly available information about foreign companies than about U.S.
companies.
o Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of common stocks issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devaluated their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures. In addition, developing
countries may have greater political and economic instability, less regulation
and smaller, less liquid and more volatile markets than countries with more
mature economies.
[If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.]
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of correcting
and testing those systems that may have such problem. This problem, if not
corrected, may adversely affect the services provided to the fund or may affect
companies in which the fund may invest, and, therefore, may lower the value of
your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
4
<PAGE> 126
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year over a seven-year period. The bar chart does not
reflect sales loads. If it did, the annual total returns shown would be lower.
* The year-to-date return as of 1/31/99 (the end of the most recent fiscal
quarter) was ___%
International Equity
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
------------- ------
<S> <C>
1992 ............................................ 2.66%
1993 ............................................ 45.78%
1994 ............................................ (3.34)%
1995 ............................................ 16.41%
1996 ............................................ 18.98%
1997 ............................................ 5.70%
1998 ............................................ %
</TABLE>
- --------------
The year-to-date as of 1/31/99 (the end of the most recent fiscal quarter) was
___%.
During the seven-year period shown in the bar chart, the highest quarterly
return was xx.xx% (quarter ended ________) and the lowest quarterly return was
xx.xx% (quarter ended ___________).
5
<PAGE> 127
PERFORMANCE TABLE
The following performance table shows how the fund's average annual returns for
one and five years compare to those of a broad-based securities market index.
Average Annual Total Returns
(for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
================================================================================
1 Year 5 Years
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A 5.70% 45.78%
- --------------------------------------------------------------------------------
Class B -- --*
- --------------------------------------------------------------------------------
Class C -- --**
- --------------------------------------------------------------------------------
MSCI EAFE World Index*** -- --
================================================================================
</TABLE>
* Class B returns are since inception (9/15/94).
** Class C returns are since inception (8/4/97).
*** The Morgan Stanley Capital International EAFE World Index measures
performance for twenty developed country global stock markets. The index is
capitalization weighted. Companies included in the index replicate the
industry composition of each local market and, in addition, represent a
sampling of large, medium and small capitalization companies from each
local market, taking into account the stocks' liquidity.
6
<PAGE> 128
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.50% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None(1) 5.00 1.00
Annual Fund Operating Expenses (expenses that are
deducted from fund assets)
Management Fees [0.63%] [0.63%] [0.63%]
Distribution and/or Service (12b-1) Fees [0.30] [1.00] [1.00]
Other Expenses:
Transfer agent fees and costs [0.17] [0.23] [0.23]
Other [0.03] [0.03] [0.03]
------ ------ ------
Fee Waiver(2) [0.04] [0.04] [0.04]
Total Other Expenses [0.20] [0.26] [0.26]
Total Annual Fund Operating Expenses [1.13] [1.89] [1.89]
====== ====== ======
</TABLE>
- -------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has agreed to waive a portion of its Fees. The
waiver may not be terminated without the approval of the Fund's Board of
Directors.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
7
<PAGE> 129
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A $ -- $ -- $ -- $ --
Class B -- -- -- --
Class C -- -- -- --
</TABLE>
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over [90]
investment company portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of ____% of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
o A. Dale Griffin, III, Senior Portfolio Manager, who has been
responsible for the fund since 1992 and has been associated with the
advisor and/or its affiliates since 1989.
o Clas G. Olsson, Senior Portfolio Manager, who has been responsible for
the fund since 1997 and has been associated with the advisor and/or its
affiliates since 1994. Prior to 1994, Mr. Olsson was a broker assistant
trainee with Merrill Lynch, Pierce, Fenner & Smith Incorporated.
o Paul A. Rogge, Senior Portfolio Manager, who has been responsible for
the fund since its inception in 1992 and has been associated with the
advisor and/or its affiliates since 1991.
o Barrett K. Sides, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor and/or
its affiliates since 1990.
8
<PAGE> 130
OTHER INFORMATION
INITIAL SALES CHARGES FOR CLASS A SHARES
Purchases of Class A shares of the fund are subject to the maximum 5.50% initial
sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in
the "Shareholder Information--Choosing a Share Class" section of this
prospectus.
DIVIDENDS AND DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares and pays dividends, if any, annually.
9
<PAGE> 131
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years ended October 31 (or periods) indicated.
This information has been audited by KPMG Peat Marwick LLP, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
<TABLE>
<CAPTION>
Class A 1998 1997 1996 1995 1994
- ------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) (x.xx)(a) (x.xx) (x.xx)(a) (x.xx) (x.xx)
---------- ---------- ---------- ---------- ----------
Net gains on securities (both realized and unrealized) (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
---------- ---------- ---------- ---------- ----------
Total from investment operations (x.xx) x.xx x.xx x.xx x.xx
---------- ---------- ---------- ---------- ----------
Distributions from net realized gains (x.xx) (x.xx) (x.xx) (x.xx) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
========== ========== ========== ========== ==========
Total return (b) (x.xx)% (x.xx)% (x.xx)% (x.xx)% (x.xx)%
========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (c) $ xx,xxx $x,xxx,xxx $x,xxx,xxx $x,xxx,xxx $x,xxx,xxx
========== ========== ========== ========== ==========
Ratio of expenses to average net assets (c) x.xx%(d) x.xx x.xx x.xx x.xx
========== ========== ========== ========== ==========
Ratio of net investment income (loss) to average net assets(c) (x.xx)%(d) (x.xx)% (x.xx)% (x.xx)% (x.xx)%
========== ========== ========== ========== ==========
Portfolio turnover rate xx% xx% xx% xx% xx%
========== ========== ========== ========== ==========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
x.xx%, x.xx%, x.xx% and x.xx% for 1998-1995.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were x.xx%, x.xx%, x.xx% and x.xx% for 1998 - 1995.
10
<PAGE> 132
<TABLE>
<CAPTION>
For the Period
Class B September 15,
- ------- through October
1998 1997 1996 1995 31, 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
------- ------- ------- ------- -------
Net gains (losses) on securities
(both realized and unrealized (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
------- ------- ------- ------- -------
Total from investment operations (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
------- ------- ------- ------- -------
Distributions from net realized gains (x.xx) (x.xx) -- (x.xx) (x.xx)
------- ------- ------- ------- -------
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
======= ======= ======= ======= =======
Total return (a) (x.xx)% (x.xx)% (x.xx)% (x.xx)% (x.xx)%
======= ======= ======= ======= =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $xx,xxx $xx,xxx $xx,xxx $xx,xxx $xx,xxx
======= ======= ======= ======= =======
Ratio of expenses to average net assets (b) x.xx%(c)(d) x.xx%(c)(d) x.xx% x.xx% x.xx%
======= ======= ======= ======= =======
Ratio of net investment income (loss) to
average net assets(f) (x.xx)%(c) (x.xx)%(c) (x.xx)% (x.xx)% (x.xx)%
======= ======= ======= ======= =======
Portfolio turnover rate xx% xx% xx% xx% xx%
======= ======= ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expenses reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
x.xx%, x.xx% and x.xx%, respectively for 1997-1995.
(d) Ratios are based on average net assets of $xxx,xxx,xxx.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been
x.xx%.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements are (x.xx)%, (x.xx)% and (x.xx)%, respectively for
1997-1995.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
For the
Period
September
15, through
October 31,
Class C 1998 1997
- ------- ------- -----------
<S> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx
------- -------
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx)
------- -------
Net gains (losses) on securities (both realized
and unrealized (x.xx) (x.xx)
------- -------
Total from investment operations (x.xx) (x.xx)
------- -------
Distributions from net realized gains (x.xx) (x.xx)
------- -------
Net asset value, end of period $ xx.xx $ xx.xx
======= =======
Total return (x.xx)% (x.xx)%
======= =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $xx,xxx $xx,xxx
======= =======
Ratio of expenses to average net assets x.xx% x.xx%
======= =======
Ratio of net investment income (loss) to average net assets (x.xx)% (x.xx)%
======= =======
Portfolio turnover rate xx% xx%
======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(c) After fee waivers and/or expenses reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements is
x.xx% (annualized).
(d) Ratio is annualized and based on average net assets of $xxx,xxx,xxx.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been
x.xx%.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements is (x.xx)% (annualized).
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
11
<PAGE> 133
SHAREHOLDER INFORMATION
Choosing a Share Class
Many of the funds advised by the advisor (the AIM Funds) have multiple classes
of shares, each class representing an interest in the same portfolio of
investments. When choosing a share class, you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C>
o Initial sales charge o No initial sales charge o No initial sales charge
o Reduced or o Contingent deferred o Contingent deferred
waived initial sales charge on sales charge on
sales charge for redemptions within redemptions within
certain purchases six years one year
o Lower distribution o 12b-1 fee of 1.00% o 12b-1 fee of 1.00%
and service (12b-1)
fee than Class B or
Class C shares
(See "Fee Table o Converts to Class A o Does not convert to
and Expense shares after eight years Class A shares
Example") along with a pro rata
portion of its reinvested
dividends and distributions*
o Generally more o Purchase orders limited o Generally more
appropriate for long- to amounts less than appropriate for short-
term investors $250,000 term investors
</TABLE>
* If you held Class B shares of AIM Global Trends Fund on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of that fund
seven years after your date of purchase. If you exchange those shares for Class
B shares of another AIM Fund, the shares into which you exchanged will not
convert to Class A shares until eight years after your date of purchase of the
original shares.
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
A-1
<PAGE> 134
SALES CHARGES
Generally you will not pay a sales charge on purchases or redemptions of
Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund. You may be charged a contingent deferred sales charge if
you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through
certain exchanges. Sales charges on all other AIM Funds and classes of those
Funds are detailed below. As used below, the term "offering price" with respect
to all categories of Class A shares includes the initial sales charge.
Initial Sales Charges
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
CATEGORY I Initial Sales Charges
- --------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY II Initial Sales Charges
- ---------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$ 100,000 but less than $ 250,000 3.75 3.90
$ 250,000 but less than $ 500,000 2.50 2.56
$ 500,000 but less than $1,000,000 2.00 2.04
</TABLE>
CATEGORY III Initial Sales Charges
- ----------------------------------
<TABLE>
<CAPTION>
INVESTOR'S SALES CHARGE
-----------------------
AS A PERCENTAGE
AS A PERCENTAGE OF THE
AMOUNT OF INVESTMENT OF THE PUBLIC NET AMOUNT
IN SINGLE TRANSACTION OFFERING PRICE INVESTED
--------------------- -------------- --------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
</TABLE>
Contingent Deferred Sales Charges for Class A Shares
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
A-2
<PAGE> 135
Contingent Deferred Sales Charges for Class B and Class C Shares
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
CLASS B CLASS C
CDSC AS A PERCENTAGE CDSC AS A PERCENTAGE
OF DOLLAR AMOUNT OF DOLLAR AMOUNT
YEAR SINCE PURCHASE MADE SUBJECT TO CHARGE SUBJECT TO CHARGE
------------------------ ----------------- -----------------
<S> <C> <C>
First 5% 1%
Second 4% None
Third 3% None
Fourth 3% None
Fifth 2% None
Sixth 1% None
Seventh and following None None
</TABLE>
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
Reduced Sales Charges
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
Initial Sales Charge Exceptions
You will not pay initial sales charges
o on shares purchased by reinvesting dividends and distributions;
o when exchanging shares among certain AIM Funds;
o when using the reinstatement privilege; and
o when a merger, consolidation, or acquisition of assets of an AIM Fund
occurs.
Contingent Deferred Sales Charge (CDSC) Exceptions
You will not pay a CDSC
o if you redeem Class B shares you held for more than six years;
o if you redeem Class C shares you held for more than one year;
o if you redeem shares acquired through reinvestment of dividends and
distributions; and
o on increases in the net asset value of your shares.
A-3
<PAGE> 136
There may be other situations in which you or other shareholders may be able to
purchase or redeem shares at reduced or without sales charges. You should
consult the fund's Statement of Additional Information for details regarding
these situations.
Purchasing Shares
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM
Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Type of Account Initial Additional
Investments Investments
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing plans, 401(k) plans, Simplified $0 ($25 per $25
Employee Pension (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings AIM Fund
Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 investment
plans) for salary
deferrals
from Savings
Plans)
- -------------------------------------------------------------------------------------------------------------------------
Automatic Investment Plans $50 $50
- -------------------------------------------------------------------------------------------------------------------------
IRA, Education IRA or Roth IRA $250 $50
- -------------------------------------------------------------------------------------------------------------------------
All other accounts $500 $50
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE> 137
HOW TO PURCHASE SHARES
There are several ways you can purchase your shares. You can make direct
purchases or select from one of three automatic investment methods.
DIRECT PURCHASES
<TABLE>
<CAPTION>
Opening An Account Adding to An Account
<S> <C> <C>
Through a
Financial
Consultant Contact your financial consultant. Same
By Mail Mail completed Account Mail your check and the
Application and purchase payment to the transfer agent, remittance slip from
A I M Fund Services, Inc., P.O. Box 4739, your confirmation statement
Houston, TX 77210-4739. to the transfer agent.
By Wire Mail completed Account Call the transfer agent to
Application to the transfer agent. receive a reference number.
Call the transfer agent at Then, use the wire
(800) 959-4246 to receive a reference number. instructions at left.
Then, use the following wire instructions:
Beneficiary Bank ABA/Routing #:113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank
Connection(sm) Open your account using one of the methods described Mail completed AIM Bank
above. Connection(sm) form to the
transfer agent. Once
the transfer agent has
received the form, call the
transfer agent to place your
purchase.
</TABLE>
SPECIAL PLANS
Automatic Investment Plan
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
Dollar Cost Averaging
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration and in the same class of shares. The
account from which exchanges are to be made must have a minimum balance of
$5,000 before you can use this option. Exchanges will occur on (or about) the
A-5
<PAGE> 138
10th or 25th day of the month in the amount you specify. The minimum amount you
can exchange to another AIM Fund is $50.
Automatic Dividend Investment
All of your dividends and distributions may be paid in cash or invested at net
asset value in certain AIM Funds without paying a sales charge. Unless you
specify otherwise, your dividends and distributions will automatically be
reinvested in the same AIM Fund. You may invest your dividends and distributions
(1) into another AIM Fund in the same class of shares; or (2) from Class A
shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at
least $500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
Portfolio Rebalancing Program
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. We may modify, suspend or terminate the
Program at any time on 60 days' prior written notice.
Retirement Plans
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-
sponsored retirement plan assesses an annual maintenance fee of $10. Contact
your financial consultant for details.
Redeeming Shares
TIMING OF REDEMPTIONS
You can redeem shares during the hours the New York Stock Exchange (NYSE) is
open for business. An AIM Fund may postpone the right of redemption only under
unusual circumstances, such as when the NYSE restricts or suspends trading.
A-6
<PAGE> 139
REDEMPTION FEES
We will not charge you any fees to redeem your shares; however, your broker or
financial consultant may charge service fees for handling these transactions.
Your shares may be subject to a contingent deferred sales charge (CDSC).
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY
EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within eighteen months of the purchase of the Class A shares,
you will be charged a CDSC.
REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
HOW TO REDEEM SHARES
<TABLE>
<CAPTION>
Through a
Financial Consultant Contact your financial consultant.
<S> <C>
By Mail Send a written request to the transfer agent.
Requests must include (1) original signatures of
all registered owners; (2) the name of the AIM
Fund and your account number; (3) if the transfer
agent does not hold your shares, endorsed share
certificates or share certificates accompanied by
an executed stock power; and (4) signature
guarantees, if necessary (see below). The
transfer agent may require that you provide
additional information, such as corporate
resolutions or powers of attorney, if applicable.
If you are redeeming from an IRA account, you
must include a statement of whether or not you
are at least 59-1/2 years old and whether you
wish to have federal income tax withheld from
your proceeds. The transfer agent may require
certain other information before you can redeem
from an employer-sponsored retirement plan.
Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to
redeem by telephone if (1) the proceeds are to be
mailed to the address on record with us or
transferred electronically to a pre-authorized
checking account; (2) the address on record with
us has not been changed within the last thirty
days; (3) you do not hold physical share
certificates; (4) you can provide proper
identification information; (5) the proceeds of
the redemption do not exceed $50,000; and (6) you
have not previously declined the telephone
redemption privilege. Certain accounts, including
retirement accounts and 403(b) plans, may not
redeem by telephone. The transfer agent must
receive your call during the hours the NYSE is
open for business in order to effect the
redemption at that day's closing price.
</TABLE>
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
A-7
<PAGE> 140
Redemption by mail
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
Redemption by telephone
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
Payment for Systematic Withdrawals
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
Expedited Redemptions (AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of trading
on the New York Stock Exchange (NYSE), we generally will transmit payment on the
next business day.
Redemptions by Check (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash
Reserve Shares of AIM Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record
on the account; or
(4) you request that payment be sent to a new address or an address that
changed in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax- Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference
A-8
<PAGE> 141
between the initial sales charges on those Funds and the ones in which you will
be investing. In addition, if you paid a contingent deferred sales charge (CDSC)
on any reinstated amount, you will not be subject to a CDSC if you later redeem
that amount. You must notify the transfer agent in writing at the time you
reinstate that you are exercising your reinstatement privilege. You may exercise
this privilege only once per year and it may have tax consequences.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
AIM Fund may, in its discretion, redeem the account and distribute the proceeds
to you.
Exchanging Shares
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You also may exchange AIM Cash Reserve Shares of
AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
may be required to pay an initial sales charge when exchanging from a Fund with
a lower initial sales charge than the one into which you are exchanging. If you
exchange from Class A shares not subject to a CDSC into Class A shares subject
to those charges, you will be charged a CDSC when you redeem the exchanged
shares. The CDSC charged on redemption of those shares will be calculated
starting on the date you acquired those shares through exchange.
You will not pay a sales charge when exchanging:
(1) Class A shares with an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate
Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares
of AIM Money Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares
of AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii)you acquired the original shares on or after May 1, 1994 by
way of an exchange from shares with higher sales charges;
A-9
<PAGE> 142
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge
(except for Class A shares of AIM Limited Maturity Treasury Fund
and AIM Tax-Free Intermediate Fund), but only if you acquired the
original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject
to an initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares
subject to an initial sales charge (except for Class A shares
of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund, but only if you acquired the original
shares by exchange from Class A shares subject to an initial sales
charge; or
(4) Class B shares for other Class B shares, and Class C shares for other
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
o You must meet the minimum purchase requirements for the AIM Fund into
which you are exchanging;
o Shares of the AIM Fund you wish to acquire must be qualified for sale in
your state of residence;
o Exchanges must be made between accounts with identical registration
information;
o The account you wish to exchange from must have a certified tax
identification number (or the Fund has received an appropriate Form W-8 or
W-9);
o Shares must have been held for at least one day prior to the exchange; and
o If you have physical share certificates, you must return them to the
transfer agent prior to the exchange.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the issuance of shares
being purchased in an exchange for up to five business days if it determines
that it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
By Mail
A-10
<PAGE> 143
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
By Telephone
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours the NYSE is open for business; however, you still will be
allowed to exchange by telephone even if you have changed your address of record
within the preceding 30 days.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
EACH AIM FUND AND THE DISTRIBUTOR RESERVE THE RIGHT AT ANY TIME TO REJECT OR
CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; MODIFY ANY TERMS OR
CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; OR WITHDRAW ALL OR ANY PART OF
THE OFFERING MADE BY THIS PROSPECTUS.
Pricing of Shares
Each of the AIM Funds prices its shares based on its net asset value. The AIM
Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM High
Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of
Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities. The AIM
Funds value all other securities and assets at their fair value. Securities and
other assets quoted in foreign currencies are valued in U.S. dollars based on
the prevailing exchange rates on that day. In addition, if, between the time
trading ends on a particular security and the close of the New York Stock
Exchange (NYSE), events occur that materially affect the value of the security,
the AIM Funds may value the security at its fair value as determined in good
faith by or under the supervision of the Board of Directors or Trustees of the
AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset
value will be subject to the judgment of the Board of Directors or Trustees or
its designee instead of being determined by the market. Because some of the AIM
Funds may invest in securities that are primarily listed on foreign exchanges,
the value of those Funds' shares may change on days when you will not be able to
purchase or redeem shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the NYSE on each day the NYSE is open for business. AIM Money Market Fund also
determines its net asset value as of 12:00 noon Eastern Time on each day the
NYSE is open for business. The AIM Funds price purchase, exchange and redemption
orders at the net asset value calculated after the transfer agent receives an
order in good form.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions. Every year, an
A-11
<PAGE> 144
account statement showing the amount of dividends and distributions you
received from each AIM Fund during the prior year will be sent to you.
Any long-term or short-term capital gains realized from redemptions of AIM Fund
shares will be subject to federal income tax. Exchanges of shares for shares of
another AIM Fund are treated as a sale of the AIM Fund's shares, and any gain
realized on the transaction will be subject to federal income tax.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
A-12
<PAGE> 145
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities and Exchange Commission (SEC), contains more details
about the fund and is incorporated by reference into the prospectus (is legally
a part of this prospectus). Annual and semi-annual reports to shareholders
contain additional information about the fund's investments. The fund's annual
report also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark--or your account, or wish to obtain free copies of
the fund's current SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semi-annual reports only)
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
AIM International Equity Fund
SEC 1940 Act file number: 811-6463
Back Cover Page
<PAGE> 146
STATEMENT OF
ADDITIONAL INFORMATION
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
AIM INTERNATIONAL EQUITY FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(713) 626-1919
---------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE
FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TX 7710-4739
OR BY CALLING (800) 347-4246
---------
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 1999, RELATING TO
THE AIM ASIAN GROWTH FUND PROSPECTUS DATED MARCH 1, 1999,
THE AIM EUROPEAN DEVELOPMENT FUND PROSPECTUS DATED MARCH 1, 1999,
THE AIM GLOBAL AGGRESSIVE GROWTH FUND PROSPECTUS DATED MARCH 1, 1999,
THE AIM GLOBAL GROWTH FUND PROSPECTUS DATED MARCH 1, 1999,
THE AIM GLOBAL INCOME FUND PROSPECTUS DATED MARCH 1, 1999,
AND THE AIM INTERNATIONAL EQUITY FUND PROSPECTUS DATED MARCH 1, 1999
<PAGE> 147
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION......................................................................................................5
GENERAL INFORMATION ABOUT THE COMPANY.............................................................................5
The Company and its Shares...............................................................................5
PERFORMANCE.......................................................................................................6
Total Return Calculations................................................................................7
Yield Quotations.........................................................................................8
Historical Portfolio Results.............................................................................9
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................12
General Brokerage Policy................................................................................12
Allocation of Portfolio Transactions....................................................................13
Section 28(e) Standards.................................................................................13
Transactions with Regular Brokers.......................................................................14
Brokerage Commissions Paid..............................................................................14
INVESTMENT STRATEGIES AND RISKS..................................................................................15
Asian Fund..............................................................................................15
European Fund...........................................................................................17
Aggressive Growth Fund, Growth Fund and Income Fund.....................................................18
Income Fund.............................................................................................21
Equity Fund.............................................................................................22
Real Estate Investment Trusts ("REITs").................................................................23
Privatized Enterprises..................................................................................24
Cash Management and Temporary Defensive Measures........................................................24
U.S. Government Agency Mortgage-Backed Securities.......................................................25
Repurchase Agreements and Reverse Repurchase Agreements.................................................25
Lending of Portfolio Securities.........................................................................26
Dollar Roll Transactions................................................................................27
Borrowings..............................................................................................27
Securities Issued on a When-Issued or Delayed Delivery Basis............................................27
Short Sales.............................................................................................28
Illiquid Securities.....................................................................................28
Rule 144A Securities....................................................................................28
Foreign Securities......................................................................................28
Close-End Investment Companies..........................................................................30
Portfolio Turnover......................................................................................30
Foreign Exchange Transactions...........................................................................30
Countries in Which Asian Fund and European Fund May Invest..............................................31
Hedging Strategies......................................................................................32
Hedging Foreign Currency Risks..........................................................................33
Options.................................................................................................33
Writing Covered Call Options............................................................................34
Writing Covered Put Options.............................................................................34
Purchasing Put Options..................................................................................35
Purchasing Call Options.................................................................................35
Combined Option Positions...............................................................................35
Stock Index Options and Futures and Financial Futures...................................................35
Restrictions on the Use of Futures Transactions.........................................................37
Restrictions on OTC Options.............................................................................38
Asset Coverage for Futures and Options Positions........................................................38
Risk Factors in Options, Futures, Forward and Currency Transactions.....................................38
</TABLE>
2
<PAGE> 148
<TABLE>
<S> <C>
Other Hedging Techniques................................................................................39
Investment in Other Investment Companies................................................................39
INVESTMENT RESTRICTIONS..........................................................................................40
Aggressive Growth Fund, Growth Fund, and Income Fund....................................................40
Equity Fund.............................................................................................41
Asian Fund and European Fund............................................................................43
MANAGEMENT.......................................................................................................45
Directors and Officers..................................................................................45
Remuneration of Directors...............................................................................49
AIM Funds Retirement Plan for Eligible Directors/Trustees...............................................50
Deferred Compensation Agreements........................................................................51
Investment Advisory, Sub-Advisory and Administrative Services Agreements................................51
THE DISTRIBUTION PLANS...........................................................................................55
The Class A and C Plan..................................................................................55
The Class B Plan........................................................................................56
THE DISTRIBUTOR..................................................................................................60
Sales Charges and Dealer Concessions....................................................................62
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................65
Contingent Deferred Sales Charge Exceptions.............................................................68
HOW TO PURCHASE AND REDEEM SHARES................................................................................70
Backup Withholding......................................................................................70
IRS Penalties...........................................................................................72
Nonresident Aliens......................................................................................72
NET ASSET VALUE DETERMINATION....................................................................................72
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................73
Reinvestment of Dividends and Distributions.............................................................73
Tax Matters.............................................................................................73
Qualification as a Regulated Investment Company.........................................................73
Fund Distributions......................................................................................74
Investment in Foreign Financial Instruments.............................................................75
Hedging Transactions....................................................................................75
PFIC Investments........................................................................................76
Redemption or Exchange of Shares........................................................................77
Foreign Income Taxes....................................................................................77
Backup Withholding......................................................................................78
Reinstatement Privilege.................................................................................78
Foreign Shareholders....................................................................................78
Miscellaneous Considerations; Effect of Future Legislation..............................................79
SHAREHOLDER INFORMATION..........................................................................................79
Timing of Purchase Orders...............................................................................79
Shares Certificates.....................................................................................79
Systematic Withdrawal Plan..............................................................................79
Terms and Conditions of Exchanges.......................................................................80
Exchanges by Telephone..................................................................................80
Redemptions by Telephone................................................................................80
Signature Guarantees....................................................................................81
Dividends and Distributions.............................................................................81
MISCELLANEOUS INFORMATION........................................................................................82
Changes for Certain Account Information.................................................................82
Audit Reports...........................................................................................82
Legal Matters...........................................................................................82
Custodian and Transfer Agent............................................................................82
Principal Holders of Securities.........................................................................83
</TABLE>
3
<PAGE> 149
<TABLE>
<S> <C>
Other Information.......................................................................................90
APPENDIX A.......................................................................................................91
APPENDIX B.......................................................................................................93
APPENDIX C.......................................................................................................99
FINANCIAL STATEMENTS.............................................................................................FS
</TABLE>
4
<PAGE> 150
INTRODUCTION
AIM International Funds, Inc. (the "Company") is a series mutual fund.
The rules and regulations of the Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information is included in the AIM Asian Growth Fund Prospectus, the AIM
European Development Fund Prospectus, the AIM Global Aggressive Growth Fund
Prospectus, the AIM Global Growth Fund Prospectus, the AIM Global Income Fund
Prospectus and the AIM International Equity Fund Prospectus, all dated March 1,
1999 (individually, a "Prospectus" and collectively, the "Prospectuses"). Copies
of each Prospectus and additional copies of this Statement of Additional
Information may be obtained without charge by writing the principal distributor
of the Fund's shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box
4739, Houston, Texas 77210-4739, or by calling (800) 347-4246. Investors must
receive a Prospectus before they invest in the Funds.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds
(hereinafter defined). Some of the information required to be in this Statement
of Additional Information is also included in each Fund's current Prospectus,
and in order to avoid repetition, reference will be made herein to sections of
the applicable Prospectus. Additionally, each Prospectus and this Statement of
Additional Information omit certain information contained in the Company's
Registration Statement filed with the SEC. Copies of the Registration Statement,
including items omitted from each Prospectus and this Statement of Additional
Information, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1991 as a Maryland corporation, and is
registered with the SEC as an open-end, series, management investment company.
The Company currently consists of six separate portfolios: AIM Asian Growth Fund
(the "Asian Fund"), AIM European Development Fund ( the "European Fund"), AIM
Global Aggressive Growth Fund (the "Aggressive Growth Fund"), AIM Global Growth
Fund (the "Growth Fund") and AIM Global Income Fund ( the "Income Fund") and AIM
International Equity Fund (the "Equity Fund") (individually, a "Fund" and
collectively, the "Funds"). Each portfolio of the Company offers Class A, Class
B and Class C shares.
As used in each Prospectus, the term "majority of the outstanding
shares" of the Company, of a particular Fund or of a class of a Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Company, such Fund or such class present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Company, such Fund or such class.
Shares of the classes of each Fund have equal rights and privileges.
Each share of a particular class is entitled to one vote, to participate equally
in dividends and distributions declared by the Company's Board of Directors with
respect to the class of such Fund and, upon liquidation of the Fund, to
participate proportionately in the net assets of the Fund allocable to such
class remaining after satisfaction of outstanding liabilities of the Fund
allocable to such class.
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 different classes
of shares, where applicable, 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
5
<PAGE> 151
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
conversation 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 to elect directors unless a meeting is
required under the Investment Company Act of 1940, as amended, (the "1940 Act").
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.
PERFORMANCE
Each Fund's performance may be quoted in advertising in terms of yield
or total return. All advertisements of the Funds will disclose the maximum sales
charge (including deferred sales charge) to which investments in shares of the
Funds may be subject. If any advertised performance data does not reflect the
maximum sales charge (if any), such advertisement will disclose that the sales
charge has not been deducted in computing the performance data, and that, if
reflected, the maximum sales charge would reduce the performance quoted.
From time to time and in its discretion, A I M Advisors, Inc. ("AIM")
or its affiliates may waive all or a portion of their fees and/or assume certain
expenses of any Fund. The waiver may not be terminated without the approval of
the Fund's Board of Directors. Such a practice will have the effect of
increasing that Fund's yield and total return. The performance of each Fund will
vary from time to time and past results are not necessarily indicative of future
results. A Fund's performance is a function of its portfolio management in
selecting the type and quality of portfolio securities and is affected by
operating expenses of the Fund and market conditions. A shareholder's investment
in a Fund is not insured or guaranteed. These factors should be carefully
considered by the investor before making an investment in any Fund.
Additional performance information is contained in a Fund's Annual
Report to Shareholders, which is available upon request without charge.
Total return and yield figures for the Funds are neither fixed nor
guaranteed, and no Fund's principal is insured. 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:
6
<PAGE> 152
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
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, Inc.
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
Standardized total return for Class A shares of a Fund reflects the
deduction of the maximum initial sales charge at the time of purchase.
Standardized total return for Class B shares of a Fund reflects the deduction of
the maximum applicable contingent deferred sales charge on a redemption of
shares held for the period. Standardized total return for Class C shares of a
Fund reflects the deduction of a 1% contingent deferred sales charge, if
applicable, on a redemption of shares held for the period. 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. The stated period for quotations of average annual
total return will be for periods of one year and the life of a Fund (commencing
as of the effective date of its registration statement). A cumulative total
return reflects a Fund's performance over a stated period of time. An average
annual total return reflects the hypothetical annually compounded return that
would have produced the same cumulative total return if the Fund's performance
had been constant over the entire period.
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
7
<PAGE> 153
share price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns and other performance information
may be quoted numerically or in tables, graphs or similar illustrations. For
Asian Fund, European Fund and Equity Fund total returns may be quoted with or
without taking the Class A shares' 5.50% maximum sales charge, the Class B
shares' 5% maximum contingent deferred sales charge ("CDSC") or the Class C
shares' 1% maximum CDSC into account. For Aggressive Growth Fund, Growth Fund
and Income Fund total returns may be quoted with or without taking the Class A
shares' 4.75% maximum sales charge, the Class B shares' 5% maximum CDSC or the
Class C shares' 1% maximum CDSC into account. Excluding sales charges from a
total return calculation produces a higher total return figure.
YIELD QUOTATIONS
Yield is computed in accordance with the standardized formula described
below and can be expected to fluctuate from time to time and is not necessarily
indicative of future results. Accordingly, 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 is a function of the type and quality of a Fund's
investments, the Fund's maturity and the Fund's operating expense ratio. The
standard formula for calculating yield for the Income Fund, is as follows:
6
YIELD = 2[((a-b)/(c x d) + 1) -1]
Where a = dividends and interest earned during a stated
30-day period. For purposes of this calculation,
dividends are accrued rather than recorded on the
ex-dividend date. Interest earned under this formula
must generally be calculated based on the yield to
maturity of each obligation (or, if more appropriate,
based on yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day
of the period.
The yields for the Class A, Class B and Class C shares of Income Fund
for the 30-day period ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
With Without
Waivers Waivers
------- -------
<S> <C> <C>
Class A.......................... ____% ____%
Class B.......................... ____% ____%
Class C.......................... ____% ____%
</TABLE>
8
<PAGE> 154
HISTORICAL PORTFOLIO RESULTS
Total returns for each of the named Funds, with respect to its Class A
shares, for the one-year and five-year periods (or since inception, if shorter)
ended October 31, 1998 (which include the maximum sales charge and reinvestment
of all dividends and distributions), were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1998 Periods ended October 31, 1998
------------------------------ ------------------------------
One Five One Five
Class A Shares: Year Years Year Years
- --------------- ---- ----- ---- -----
<S> <C> <C> <C> <C>
Aggressive Growth Fund ____% ____%* ____% ____%*
Equity Fund ____% ____% ____% ____%
Growth Fund ____% ____%* ____% ____%*
Income Fund ____% ____%* ____% ____%*
</TABLE>
* The inception date for the Class A shares of each of Aggressive Growth Fund,
Growth Fund and Income Fund was September 15, 1994.
Total returns for each of the named Funds, with respect to its Class B
shares, for the one-year period ended October 31, 1998 and the period September
15, 1994 (inception date) through October 31, 1998 (which include the maximum
contingent deferred sales charge and reinvestment of all dividends and
distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1998 Periods ended October 31, 1998
------------------------------ ------------------------------
One Since One Since
Class B Shares: Year Inception Year Inception
- --------------- ---- --------- ---- ---------
<S> <C> <C> <C> <C>
Aggressive Growth Fund ____% ____% ____% ____%
Equity Fund ____% ____% ____% ____%
Growth Fund ____% ____% ____% ____%
Income Fund ____% ____% ____% ____%
</TABLE>
Total returns for Class C shares of Aggressive Growth Fund, Equity Fund,
Growth Fund and Income Fund for the one-year period ending October 31, 1998 and
the period August 4, 1997 (inception date) through October 31, 1998 (which
include the maximum contingent deferred sales charge and reinvestment of all
dividends and distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1998 Periods ended October 31, 1998
------------------------------ ------------------------------
One Since One Since
Class C Shares: Year Inception Year Inception
- --------------- ---- --------- ---- ---------
<S> <C> <C> <C> <C>
Aggressive Growth Fund ____% ____% ____% ____%
Equity Fund ____% ____% ____% ____%
Growth Fund ____% ____% ____% ____%
Income Fund ____% ____% ____% ____%
</TABLE>
9
<PAGE> 155
Total returns for Class A, B and C shares of Asian Fund and European Fund
for the period November 12, 1997 (inception date) through October 31, 1998
(which include the maximum contingent deferred sales charge or maximum sales
charge and reinvestment of all dividends and distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1998 Periods ended October 31, 1998
------------------------------ ------------------------------
One Since One Since
Class A Shares: Year Inception Year Inception
- --------------- ---- --------- ---- ---------
<S> <C> <C> <C> <C>
Asian Fund ____% ____% ____% ____%
European Fund ____% ____% ____% ____%
</TABLE>
<TABLE>
<CAPTION>
One Since One Since
Class B Shares: Year Inception Year Inception
- --------------- ---- --------- ---- ---------
<S> <C> <C> <C> <C>
Asian Fund ____% ____% ____% ____%
European Fund ____% ____% ____% ____%
</TABLE>
<TABLE>
<CAPTION>
One Since One Since
Class C Shares: Year Inception Year Inception
- --------------- ---- --------- ---- ---------
<S> <C> <C> <C> <C>
Asian Fund ____% ____% ____% ____%
European Fund ____% ____% ____% ____%
</TABLE>
During the one-year period ended October 31, 1998, a hypothetical $1,000
investment in the Class A shares of Aggressive Growth Fund, Equity Fund, Growth
Fund and Income Fund at the beginning of such period would have been worth
$_______, $_______, $_______ and $_______, respectively, assuming the maximum
sales charge was paid and all distributions were reinvested. For the period
September 15, 1994 (inception date for Aggressive Growth Fund, Growth Fund and
Income Fund) through October 31, 1998, and the five-year period ended October
31, 1997, for Equity Fund, a hypothetical $1,000 investment in the Class A
shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund at
the beginning of such period would have been worth $_______, $_______, $_______
and $_______, respectively, assuming the maximum sales charge was paid and all
distributions were reinvested.
During the one-year period ended October 31, 1998, a hypothetical $1,000
investment in the Class B shares of Aggressive Growth Fund, Equity Fund, Growth
Fund and Income Fund at the beginning of such period would have been worth
$_______, $_______, $_______ and $_______, 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, 1998, a
hypothetical $1,000 investment in the Class B shares of Aggressive Growth Fund,
Equity Fund, Growth Fund and Income Fund at the beginning of such period would
have been worth $_______, $_______, $_______ and $_______, respectively,
assuming the maximum contingent deferred sales charge was paid and all
distributions were reinvested.
During the one-year period ended October 31, 1998, a hypothetical $1,000
investment in the Class C shares of Aggressive Growth Fund, Equity Fund, Growth
Fund and Income Fund at the beginning of such period would have been worth
$_______, $_______, $_______ and $_______, respectively, assuming the maximum
contingent deferred sales charge was paid and all distributions were reinvested.
For the period August 4, 1997 (inception date) through October 31, 1998, a
hypothetical $1,000 investment in the Class C shares of Aggressive Growth Fund,
Equity Fund, Growth Fund and Income Fund at the beginning of such period would
have been worth $_______, $______, $_______, and $_______, respectively,
assuming the maximum contingent deferred sales charge was paid and all
distributions were reinvested.
10
<PAGE> 156
During the one-year period ended November 3, 1997 (inception date) through
October 31, 1998, a hypothetical $1,000 investment in the Class A shares of
Asian Fund and European Fund at the beginning of such period would have been
worth $_______ and $_______, assuming the maximum contingent deferred sales
charge was paid and all distributions were reinvested. For the period, November
3, 1997 (inception date) through October 31, 1998, a hypothetical $1,000
investment in the Class B shares of Asian Fund and European Fund at the
beginning of such period would have been worth $_______ and $_______, assuming
the maximum contingent deferred sales charge was paid and all distributions were
reinvested. For the period, November 12, 1997 (inception date) through October
31, 1998, a hypothetical $1,000 investment in the Class C shares of Asian Fund
and European Fund at the beginning of such period would be worth $________ and
$________, assuming the maximum contingent deferred sales charged 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, 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:
Standard & Poor's 500 Stock Index Dow Jones Industrial Average
Consumer Price Index Morgan Stanley Capital International
Bond Buyer Index Indices, including:
NASDAQ EAFE Index
COFI Pacific Basin Index
First Boston High Yield Index Pacific Ex Japan Index
(a widely recognized
series of indices in
international market
performance)
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)
Each Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10 year Treasuries
30 year Treasuries
90 Day Treasury Bills
Advertising for the Income Fund may from time to time include
discussions of general economic conditions and interest rates.
From time to time, each Fund's advertising may include discussions of
general domestic and international economic conditions and interest rates, and
may make reference to international economic sources such as The Bundesbank (the
German equivalent of the U.S. Federal Reserve Board). Each Fund's
11
<PAGE> 157
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
AIM makes decisions to buy and sell securities for the Funds, selects
broker-dealers, effects the Funds' investment transactions, allocates brokerage
fees in such transactions, and where applicable, negotiates commissions and
spreads on transactions. Since purchases and sales of portfolio securities by
the Funds are usually principal transactions, the Funds incur little or no
brokerage commission. AIM's primary consideration in effecting a security
transaction is to obtain the most favorable execution of the order, which
includes the best price on the security and a low commission rate (as
applicable). While AIM seeks reasonably competitive commission rates, the Funds
may not pay the lowest commission or spread available. See "Section 28(e)
Standards" below.
In the event a Fund purchases securities traded over-the-counter, the
Fund deals directly with dealers who make markets in the securities involved,
except when better prices are available elsewhere. Fund transactions placed
through dealers who are primary market makers are effected at net prices without
commissions, but which include compensation in the form of a mark up or mark
down.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Funds and of the other AIM Funds. In connection with (3)
above, the Funds' trades may be executed directly by dealers which sell shares
of the AIM Funds or by other broker-dealers with which such dealers have
clearing arrangements. AIM will not use a specific formula in connection with
any of these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of the
Funds any commissions, fees, brokerage or similar payments paid by the Funds on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of the Funds' securities in a tender or
exchange offer.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Funds, provided the conditions of an exemptive order received
by the Funds from the SEC are met. In addition, the Funds may purchase or sell a
security from or to another AIM Fund provided the Funds follow procedures
adopted by the Board of Directors/Trustees of the various AIM Funds, including
the Company. These inter-fund transactions do not generate brokerage commissions
but may result in custodial fees or taxes or other related expenses.
12
<PAGE> 158
Under the 1940 Act, certain persons affiliated with the Company are
prohibited from dealing with the Company as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. The 1940 Act also prohibits the Company from purchasing a security
being publicly underwritten by a syndicate of which certain persons affiliated
with the Company are members except in accordance with certain conditions. These
conditions may restrict the ability of the Funds to purchase municipal
securities being publicly underwritten by such syndicate, and the Funds may be
required to wait until the syndicate has been terminated before buying such
securities. At such time, the market price of the securities may be higher or
lower than the original offering price. A person affiliated with the Company
may, from time to time, serve as placement agent or financial advisor to an
issuer of Municipal Securities and be paid a fee by such issuer. The Funds may
purchase such Municipal Securities directly from the issuer, provided that the
purchase is reviewed by the Company's Board of Directors and a determination is
made that the placement fee or other remuneration paid by the issuer to a person
affiliated with the Company is fair and reasonable in relation to the fees
charged by others performing similar services. During the fiscal years ended
October 31, 1998, 1997 and 1996, no securities or instruments were purchased by
the Funds from issuers who paid placement fees or other compensation to a broker
affiliated with the Funds.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some
of these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by a Fund
and one or more of these investment accounts. However, the position of each
account in the same securities and the length of time that each account may hold
its investment in the same securities may vary. The timing and amount of
purchase by each account will also be determined by its cash position. If the
purchase or sale of securities is consistent with the investment policies of a
Fund and one or more of these accounts, and is considered at or about the same
time, AIM will fairly allocate transactions in such securities among such Fund
and these accounts. AIM may combine such transactions, in accordance with
applicable laws and regulations, to obtain the most favorable execution.
Simultaneous transactions could, however, adversely affect the Funds' ability to
obtain or dispose of the full amount of a security which it seeks to purchase or
sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Funds. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
SECTION 28(E) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to them, Funds may pay a broker higher
commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual
13
<PAGE> 159
companies; forecasts and interpretations with respect to the U.S. and foreign
economies, securities, markets, specific industry groups and individual
companies; information on federal, state, local and foreign political
developments; portfolio management strategies; performance information on
securities, indexes and investment accounts; information concerning prices of
securities; and information supplied by specialized services to AIM and to the
Company's directors with respect to the performance, investment activities, and
fees and expenses of other mutual funds. Broker-dealers may communicate such
information electronically, orally or in written form. Research services may
also include the providing of custody services, as well as the providing of
equipment used to communicate research information, the providing of specialized
consultations with AIM personnel with respect to computerized systems and data
furnished to AIM as a component of other research services, the arranging of
meetings with management of companies, and the providing of access to
consultants who supply research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Funds. However, the Funds are not under any obligation to deal
with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fees paid by the Funds are not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
TRANSACTIONS WITH REGULAR BROKERS
As of October 31, 1998, Growth Fund had common stock holdings in
Merrill Lynch & Co., Inc. having a market value of $________. Merrill Lynch &
Co., Inc. is a regular broker/dealer of the Company, as defined in Rule 10b-1.
BROKERAGE COMMISSIONS PAID
[Any brokerage commissions paid for Asian Growth and European Dev?]
For the fiscal years ended October 31, 1998, 1997 and 1996, Aggressive
Growth Fund paid brokerage commissions of $________, $6,227,671 and $5,169,447,
respectively. The increase in brokerage commissions from October 31, 1996
through October 31, 1998 was due to the increase in Aggressive Growth Fund's net
assets during such period. For the fiscal year ended October 31, 1998, 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 $________ and the related brokerage
commissions were $________.
For the fiscal years ended October 31, 1998, 1997 and 1996, Equity Fund
paid brokerage commissions of $________, $6,002,915 and $5,666,504,
respectively. The increase in brokerage commissions from October 31, 1996
through October 31, 1998 was due to the increase in Equity Fund's net assets
during such period. For the fiscal year ended October 31, 1998, AIM allocated
certain of Equity Fund's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $5,879,466 and the related brokerage commissions were
$2,967.
14
<PAGE> 160
For the fiscal years ended October 31, 1998, 1997 and 1996, Growth Fund
paid brokerage commissions of $________, $1,249,946 and $826,284, respectively.
The increase in brokerage commissions from October 31, 1996 through October 31,
1998 was due to the increase in Growth Fund's net assets during such period. For
the fiscal year ended October 31, 1998, 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
$5,879,466 and the related brokerage commissions were $17,539.
For the fiscal years ended October 31, 1998, 1997, and 1996, Income
Fund paid brokerage commissions of $________, $162, and $1,570, respectively.
[For the fiscal year ended October 31, 1998, none of Income Fund's brokerage
transactions were allocated to broker-dealers that provided AIM with certain
research, statistical and other information.]
INVESTMENT STRATEGIES AND RISKS
The following discussion of certain investment strategies and risks
supplements the discussion set forth in the Prospectus under the headings
"Investment Objectives and Strategies" and "Principal Risks of Investing in the
Funds."
ASIAN FUND
The investment objective of the Asian Fund, which is a fundamental
policy that may be changed only with the approval of the Asian Fund's
shareholders, is to provide long-term growth of capital. The Asian Fund seeks to
achieve its investment objective by investing in a diversified portfolio of
equity securities, the issuers of which are located in Asia, and which are
considered by AIM to have strong earnings momentum or demonstrate other
potential for capital appreciation. Any income realized by the Asian Fund will
be incidental and will not be an important criterion in the selection of
portfolio securities. There can be no assurance that the Asian 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 Asian Fund, as
described below and elsewhere in this Statement of Additional Information and in
the Prospectus, without approval of the Asian Fund's shareholders, except in
those instances in which shareholder approval is expressly required.
Under normal market conditions the Asian Fund will invest at least 80%
of its total assets in marketable equity securities, including common stock,
preferred stock, depositary receipts for stock and other securities having the
characteristics of stock (such as an equity or ownership interest in a company)
of Asian companies. The Asian 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 Asian issuers. The Asian
Fund may also satisfy such requirement by investing up to 20% of its total
assets in securities exchangeable for or convertible into equity securities of
Asian companies. The Asian Fund will not invest in Japanese securities. Any
change to such policy must be submitted by AIM to the Company's Board of
Directors prior to the effectiveness of such change.
The Asian Fund considers an issuer of securities to be an Asian company
if: (i) it is organized under the laws of a country in Asia and has a principal
office in a country in Asia; (ii) it derives a significant portion (i.e., 50% or
more) of its total revenues from business in Asia; or (iii) its equity
securities are traded principally on a stock exchange in Asia or in an
over-the-counter market in Asia. The Asian Fund also considers shares of Asian
closed-end management investment companies, the assets of which are invested
primarily in Asian equity securities, to be securities of Asian companies.
15
<PAGE> 161
In managing the Asian 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 Asian 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 Asian Fund. It is expected that the Asian Fund's portfolio,
when fully invested, will generally be comprised of two basic categories of
companies: (1) "core" companies, which AIM considers to have experienced
consistent long-term growth in earnings and to have strong prospects for
outstanding future growth, and (2) companies that AIM believes are currently
experiencing a greater than anticipated increase in earnings.
If a particular company meets the quantitative standards determined by
AIM, its securities may be acquired by the Asian Fund regardless of the location
of the company or the percentage of the Asian Fund's investments in the
company's country or region. However, AIM will also consider other factors in
making investment decisions for the Fund, including such factors as the
prospects for relative economic growth among countries or regions, economic and
political conditions, currency exchange fluctuations, tax considerations and the
liquidity of a particular security.
There are no prescribed limits on geographic asset distribution within
Asia. Under normal market conditions, at least three countries will be
represented in the Asian Fund's portfolio of investments. The Asian Fund intends
to invest in securities of issuers in Asia as well as countries such as
Australia and New Zealand. The Asian Fund may invest, without limit, in
"developing" countries or "emerging markets." For a description of the risk
factors associated with investment in emerging markets. The Fund may invest up
to 20% of its total assets in securities of non-Asian companies.
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
Asian 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 Asian equity investment portfolio
than to a portfolio of domestic equity securities.
AIM may invest a portion of the Asian Fund's assets in (i) cash or
high-grade short-term securities, including repurchase agreements, commercial
paper, time deposits and master notes, denominated either in U.S. dollars or
foreign currencies, (ii) U.S. government obligations or investment grade
corporate bonds or other debt securities, and (iii) taxable municipal
securities, when such positions are deemed advisable in light of economic or
market conditions or for daily cash management purposes. In addition, AIM may
invest, for temporary defensive purposes, all or substantially all of the Asian
Fund's assets in the securities described above. To the extent that the Asian
Fund is invested to a significant degree in cash, high-grade short-term
securities, U.S. government obligations, investment grade corporate bonds or
other debt securities, or taxable municipal securities, its ability to achieve
its investment objective of growth of capital may be adversely affected. Under
normal circumstances, the Asian 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 Asian 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 Asian Fund's holding period. In the event of a bankruptcy or
other default of a seller of a repurchase agreement, the Asian Fund could
experience both delays in liquidating the underlying securities and losses,
including (a) a possible decline in the value of the underlying security during
the period while the fund seeks to enforce its rights thereto, (b) possible
reduced levels of income and lack of access to income during this period and (c)
expenses of enforcing its rights. The Asian Fund intends to enter into
repurchase agreements with sellers believed by AIM to present minimal credit
risk. See "Investment Restrictions."
16
<PAGE> 162
EUROPEAN FUND
The investment objective of the European Fund, which is a fundamental
policy that may be changed only with the approval of the European Fund's
shareholders, is to provide long-term growth of capital. The European Fund seeks
to achieve its investment objective by investing in a diversified portfolio of
European equity securities, the issuers of which are considered by AIM to have
strong earnings momentum or demonstrate other potential for capital
appreciation. Any income realized by the European Fund will be incidental and
will not be an important criterion in the selection of portfolio securities.
There can be no assurance that the European 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 European Fund, as
described below and elsewhere in this Statement of Additional Information,
without approval of the European Fund's shareholders, except in those instances
in which shareholder approval is expressly required.
Under normal market conditions the European Fund will invest at least
80% of its total assets in marketable equity securities, including common stock,
preferred stock, depositary receipts for stock and other securities having the
characteristics of stock (such as an equity or ownership interest in a company)
of European companies. The European Fund may satisfy the foregoing requirement
in part by investing in the securities of European issuers which are in the form
of ADRs, EDRs, or other securities representing underlying securities of
European issuers. The European Fund may also satisfy such requirement by
investing up to 20% of its total assets in securities exchangeable for or
convertible into equity securities of European issuers. Investments in foreign
securities may include securities issued by enterprises that have undergone or
are currently undergoing privatization.
The European Fund considers an issuer of securities to be a European
company if; (i) it is organized under the laws of a European country and has a
principal office in a European country; (ii) it derives a significant portion
(i.e., 50% or more) of its total revenues from business in Europe; or (iii) its
equity securities are traded principally on a stock exchange in Europe or in an
over-the-counter market in Europe. The European Fund also considers European
equity securities of closed-end management investment companies, the assets of
which are invested primarily in European equity securities, to be securities of
European companies.
In managing the European Fund, AIM seeks to apply to a diversified
portfolio of European equity securities substantially the same investment
strategy which it applies to several of its other managed portfolios which have
similar investment objectives but which invest primarily in United States
equities markets. The European 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 European Fund. It is expected that the European Fund's
portfolio, when fully invested, will generally be comprised of two basic
categories of European companies: (1) "core" companies, which AIM considers to
have experienced consistent long-term growth in earnings and to have strong
prospects for outstanding future growth, and (2) companies that AIM believes are
currently experiencing a greater than anticipated increase in earnings.
If a particular European company meets the quantitative standards
determined by AIM, its securities may be acquired by the European Fund
regardless of the location of the company or the percentage of the European
Fund's investments in the company's country or region. However, AIM will also
consider other factors in making investment decisions for the European 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.
17
<PAGE> 163
There are no prescribed limits on geographic asset distribution within
the European community. Under normal market conditions, at least three
European countries will be represented in the European Fund's portfolio of
investments. The European Fund intends to invest in securities of issuers in
Western Europe (such as the United Kingdom, Germany and the Netherlands) as
well as companies of issuers in Eastern Europe (such as Croatia, the Czech
Republic, Russia and Turkey). Many of the countries in Eastern Europe are
"developing" countries or "emerging markets." The European Fund may invest up
to 65% of its total assets in securities of European issuers located in
"developing" countries or "emerging markets." The European Fund may invest up
to 20% of its total assets in securities of non-European companies.
AIM recognizes that often there is less public information about
foreign companies than in available in reports supplied by domestic companies,
that foreign companies are not subject not uniform accounting and financial
reporting standards, and that there may be greater delays experienced by the
European Fund in receiving financial information supplied by foreign companies
than comparable information supplied by domestic companies. For these and other
reasons, AIM from time to time may encounter greater difficulty applying its
disciplined stock selection strategy to a European equity investment portfolio
than to a portfolio of domestic equity securities.
AIM may invest a portion of the European 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. dollar or
foreign currencies, (ii) U.S. government obligations or investment grade
corporate bonds or other debt securities, and (iii) taxable municipal
securities, when such positions are deemed advisable in light of economic or
market conditions or for daily cash management purposes. In addition, AIM may
invest, for temporary defensive purposes, all or substantially all of the
European Fund's assets in the securities described above. To the extent that the
European Fund is invested to a significant degree in cash, high-grade short-term
securities, U.S. government obligations, investment grade corporate bonds or
other debt securities, or taxable municipal securities, its ability to achieve
its investment objective of growth of capital may be adversely affected. Under
normal circumstances, the European 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 European 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 European Fund's holding period. In the event of a bankruptcy or
other default of a seller of a repurchase agreement, the European 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 European 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 European Fund intends to
enter into repurchase agreement with sellers believed by AIM to present minimal
credit risk. See "Investment Restrictions."
AGGRESSIVE GROWTH FUND, GROWTH FUND AND INCOME FUND
Aggressive Growth Fund, Growth Fund and Income Fund have their 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 Statement of Additional Information,
without shareholder approval, except in those instances where shareholder
approval is expressly required.
The investment objective of 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.
18
<PAGE> 164
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
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 Aggressive Growth Fund as equivalent to a
complete investment program. 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 judgement possess
superior potential returns similar to companies with formative growth profiles.
The Fund will also invest in established smaller companies (under $1 billion in
market capitalization) which in AIM's judgment offer exceptional value based
upon substantially above average earnings growth potential relative to market
value. Investors should realize that equity securities of small to medium-sized
companies may involve greater risk than is associated with investing in more
established companies. Small to medium-sized companies often have limited
product and market diversification, fewer financial and managerial resources or
may be dependent on a few key managers. Also, because smaller companies
normally have fewer shares outstanding than larger companies and trade less
frequently, it may be more difficult for the Fund to buy and sell shares
without an unfavorable impact on prevailing market prices. Some of the
companies in which the Fund may invest may distribute, sell or produce products
which have recently been brought to market. Any of the foregoing may change
suddenly and have an immediate impact on the value of the Fund's investments.
Furthermore, whenever the securities markets have experienced rapid price
changes due to national economic trends, secondary growth securities have
historically been subject to exaggerated price changes.
The investment objective of 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 section, and any such income should be considered incidental.
In managing both Aggressive Growth Fund and 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 Aggressive Growth Fund and 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
Aggressive Growth Fund and 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, Aggressive Growth Fund and Growth Fund
will invest primarily in marketable equity securities (including common and
preferred stock and other securities having the characteristics of stock (such
as an equity or ownership interest in a company)) of companies which are listed
on a recognized securities exchange or traded in an over-the-counter market.
Each of these Funds may satisfy the foregoing requirement in part by investing
in the securities of issuers which are in the form of ADRs, EDRs, or other
securities representing underlying securities of foreign issuers. Each of
Aggressive Growth Fund and Growth Fund may invest up to 20% of its total assets
in securities convertible into or exchangeable for equity securities of foreign
and domestic issuers which (except in the case of ADRs, EDRs and other
securities representing underlying securities of foreign issuers) are listed on
a recognized securities exchange or traded in an over-the-counter market.
If a particular foreign company meets the quantitative standards
determined by AIM, its securities may be acquired by a Fund regardless of the
location of the company or the percentage of the Fund's investments in the
company's country or region. However, AIM will also consider other factors in
making investment
19
<PAGE> 165
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, Aggressive Growth Fund and
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.
Aggressive Growth Fund and 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.
Aggressive Growth Fund and 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 this 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.
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
securities. Income Fund intends to invest in (i) foreign government securities,
(ii) securities issued by supranational organizations (such as the World Bank),
(iii) foreign and domestic corporate debt securities, including lower-rated or
unrated U.S. dollar-denominated high yield corporate debt securities, commonly
known as "junk bonds" and (iv) U.S. Government securities, including U.S.
Government Agency mortgage-backed securities.
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. 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. Income Fund will generally invest in
the securities of issuers located in at least four countries, including the
United States.
Income Fund will 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. 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 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. Income Fund may also invest
up to 10% of its total assets in convertible debt securities of foreign and
domestic issuers.
20
<PAGE> 166
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 non-investment
grade quality.
During the fiscal year ended October 31, 1998, the percentage of Income
Fund's average annual assets, calculated on a dollar weighted basis, which was
invested in securities within each rating category of Moody's, and in unrated
securities determined by AIM to be of comparable quality, was as follows:
INCOME FUND
<TABLE>
<S> <C>
Aaa............................................................................................ _____%
Aa............................................................................................. _____%
A.............................................................................................. _____%
Baa............................................................................................ _____%
Ba............................................................................................. _____%
B.............................................................................................. _____%
Caa............................................................................................ _____%
Ca............................................................................................. _____%
C.............................................................................................. _____%
D.............................................................................................. _____%
Unrated........................................................................................ _____%
Total Average Annual Assets..................................................... 100.00%
</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 of
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the Inter-American Development Bank.
Supranational organizations are generally formed and supported by the capital
contributions of governmental entities and, in their lending and other
activities, carry out the particular purposes designated by their member
governmental entities.
The value of the debt securities in which 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 Income Fund. 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 "Principal Risks of Investing in the Fund" in the Fund's Prospectus.
21
<PAGE> 167
EQUITY FUND
The investment objective of the Equity Fund, which is a fundamental
policy that may be changed only with the approval of the Equity 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 Equity Fund will be incidental and will no be an important criterion in the
selection of portfolio securities. There can be no assurance that the Equity
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 Equity Fund, as
described below and elsewhere in this Statement of Additional Information,
without approval of the Equity Fund's shareholders, except in those instances in
which shareholder approval is expressly required.
Under normal market conditions the Equity 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
exchanged or traded in a foreign over-the-counter-market. The Equity Fund may
also 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 Equity Fund may also invest up to
20% of its total assets in securities exchangeable for or convertible into
equity securities of foreign companies which are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market.
In managing the Equity 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 Equity 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 Equity Fund. It is expected that the Equity 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 Equity Fund regardless
of the location of the company or their percentage of the Equity Fund's
investments in the company's country or region. However, AIM will also consider
other factors in making investment decisions for the Equity 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
Equity 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.
22
<PAGE> 168
AIM may invest a portion of the Equity Fund's assets in (i) cash or
high-graded 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 Equity
Fund's assets in the securities described above. To the extent that the Equity
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 aversely
affected. Under normal circumstances, the Equity 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 Equity 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 Equity Fund's holding period. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, the Equity
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 Equity Fund seeks to enforce its rights thereto, (b)
possible reduce levels of income and lack of access of income during this period
and (c) expenses of enforcing its rights. The Equity 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 Equity Fund intends to invest in
the securities of foreign companies located in at least four countries outside
the United States. The Equity 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 Equity 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 intent to invest more
than 20% of the Equity Fund's total assets in foreign companies in developing
countries.
REAL ESTATE INVESTMENT TRUSTS ("REITs")
To the extent consistent with the Funds' investment objectives and
policies, the Funds may invest in equity and/or debt securities issued by REITs.
Such investments will not exceed 5% of the total assets of any of the Funds.
REITs are trusts which sell equity or debt securities to investors and
use the proceeds to invest in real estate or interests therein. A REIT may focus
on particular projects, such as apartment complexes, or geographic regions, such
as the Southeastern United States, or both.
To the extent that a Fund has the ability to invest in REITs, such Fund
could conceivably own real estate directly as a result of a default on the
securities it owns. A Fund, therefore, may be subject to certain risks
associated with the direct ownership of real estate including difficulties in
valuing and trading real estate, declines in the value of real estate,
environmental liability risks, risks related to general and local economic
condition, adverse change in the climate for real estate, increases in property
taxes and operating expense, changes in zoning laws, casualty or condemnation
losses, limitations on rents, changes in neighborhood values, the appeal of
properties to tenants, and increases in interest rates.
23
<PAGE> 169
In addition to the risks described above, equity REITs may be affected
by any changes in the value of the underlying property owned by the trusts,
while mortgage REITs may be affected by the quality of any credit extended.
Equity and mortgage REITs are dependent upon management skill, are not
diversified, and are therefore subject to the risk of financing single or a
limited number of projects. Such trusts are also subject to heavy cash flow
dependency, defaults by borrowers, self-liquidation, and the possibility of
failing to maintain exemption from the 1940 Act. Changes in interest rates may
also affect the value of debt securities held by a Fund. By investing in REITs
indirectly through a Fund, a shareholder will bear not only his/her
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs.
PRIVATIZED ENTERPRISES
The governments of certain foreign countries have, to varying degrees,
embarked on privatization programs contemplating the sale of all or part of
their interests in state enterprises. European Fund's investments in the
securities of privatized enterprises include privately negotiated investments in
a government- or state-owned or controlled company or enterprise that has not
yet conducted an initial equity offering, investments in the initial offering of
equity securities of a state enterprise or former state enterprise and
investments in the securities of a state enterprise following its initial equity
offering.
In certain jurisdictions, the ability of foreign entities, such as
European Fund, to participate in privatizations may be limited by local law, or
the price or terms on which European Fund may be able to participate may be less
advantageous than for local investors. Moreover, there can be no assurance that
governments that have embarked on privatization programs will continue to divest
their ownership of state enterprises, that proposed privatizations will be
successful or that governments will not re-nationalize enterprises that have
been privatized.
In the case of the enterprises in which European Fund may invest, large
blocks of the stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those enterprises. The
sale of some portion or all of those blocks could have an adverse effect on the
price of the stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or
former state enterprises go through an internal reorganization or management.
Such reorganizations are made in an attempt to better enable these enterprises
to compete in the private sector. However, certain reorganizations could result
in a management team that does not function as well as the enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which European
Fund may invest enjoy the protection of and receive preferential treatment from
the respective sovereigns that own or control them. After making an initial
equity offering these enterprises may no longer have such protection or receive
such preferential treatment and may become subject to market competition from
which they were previously protected. Some of these enterprises may not be able
to effectively operate in a competitive market and may suffer losses or
experience bankruptcy due to such competition.
CASH MANAGEMENT AND TEMPORARY DEFENSIVE MEASURES
Aggressive Growth Fund, Growth Fund, Income Fund and Equity Fund
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
24
<PAGE> 170
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 Equity Fund will invest no more than 20% of the value
of its total assets in high-grade short-term securities. Aggressive Growth Fund
nor Growth Fund will invest more than 35% of the value of its total assets in
high grade short-term securities, including repurchase agreements. Under normal
circumstances Income Fund will maintain at least 20% of its total assets in
securities of U.S. issues. 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.
Asian Fund and European Fund and European Fund
To a limited extent each Fund may employ certain investment techniques
intended to provide liquidity for temporary 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.
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
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 services 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 C 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 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
25
<PAGE> 171
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 reduced levels 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. Repurchase agreements are
considered to be loans by the Funds under 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.
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. During the time a reverse
repurchase agreement is outstanding, the applicable Fund will segregate liquid
assets 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. The Funds will enter into
reverse repurchase agreements solely for temporary or defensive purposes to
facilitate the orderly sale of portfolio securities to accommodate abnormally
heavy redemption requests should they occur. The Funds will use reverse
repurchase agreements when the interest income to be earned from the securities
that would otherwise have to be liquidated to meet redemption requests is
greater than the interest expense of the reverse repurchase transactions. The
Funds may enter into reverse repurchase agreements in amounts not exceeding
33-1/3% of the value of its total assets. Reverse repurchase agreements involve
the risk that the market value of securities retained by the Fund in lieu of
liquidation may decline below the repurchase price of the securities sold by the
Fund which it is obligated to repurchase. This risk, if encountered, could cause
a reduction in the net asset value of the Fund's shares. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may make
secured loans of portfolio securities amounting to not more than 33-1/3% of each
Fund's respective total assets. Securities loans are made to banks, brokers and
other financial institutions pursuant to agreements requiring that the loans be
continuously secured by collateral at least equal at all times to the value of
the securities lent marked to market on a daily basis. The collateral received
will consist of cash, U.S. Government securities, letters of credit or such
other collateral as may be permitted under the applicable Fund's investment
program. While the securities are being lent, the Fund will continue to receive
the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. The Funds have a right to call each of their respective loans
and obtain the securities on five business days' notice or, in connection with
securities trading on foreign markets, within such longer period of time which
coincides with the normal settlement period for purchases and sales of such
securities in such foreign markets. The Funds will not have the right to vote
securities while they are being lent, but each Fund will call a loan in
anticipation of any important vote. The risks in lending portfolio securities,
as with other extensions of secured credit, consist of possible delay in
receiving additional collateral or in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail financially. Loans
will not be made unless, in the judgment of AIM, the consideration to be earned
from such loans would justify the risk.
26
<PAGE> 172
DOLLAR ROLL TRANSACTIONS
In order to enhance portfolio returns and manage prepayment risk,
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 "Borrowings," below for the applicable limitation on dollar
roll transactions.
BORROWINGS
Each Fund may borrow money to a limited extent from banks (including
the Fund's custodian bank) for temporary or emergency purposes subject to the
limitations under the 1940 Act. The current provisions of the 1940 Act restrict
borrowings (including reverse repurchase agreements) to an aggregate of 33-1/3%
of the Fund's total asset at the time of the transaction. In addition, the
Funds, except for Income Fund, do not intend to engage in leverage; therefore
consistent with current interpretations of the SEC, the Funds, except for Income
Fund will not purchase additional securities while borrowings from bank exceed
5% of the Funds' total assets.
Reverse repurchase agreement transactions and dollar roll transactions
are considered borrowings under the 1940 Act. Any investment gains made by
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."
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
Each Fund may purchase securities on a "when-issued" basis, that is,
delivery of and payment of the securities is not fixed at the date of purchase,
but is set after the securities are issued (normally within forty-five days
after the date of the transaction). Each Fund also may purchase or sell
securities on a delayed delivery basis. The payment obligation and the interest
rate that will be received on the delayed delivery securities are fixed at the
time the buyer enters into the commitment. Each Fund will only make commitments
to purchase when-issued or delayed delivery securities with the intention of
actually acquiring such securities, but each Fund may sell these securities
before the settlement date if it is deemed advisable. If a Fund purchases a
when-issued security or enters into a delayed delivery agreement, the Fund's
custodian bank will segregate cash or liquid securities in an amount at least
equal to the when-issued commitment or delayed delivery agreement commitment.
27
<PAGE> 173
SHORT SALES
Each Fund may from time to time 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 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.
ILLIQUID SECURITIES
Each Fund may invest up to 15% of its net assets in securities that are
illiquid, including restricted securities which are illiquid. Illiquid
securities include securities that have no readily available market quotations
and cannot be disposed of promptly (within seven days) in the normal course of
business at a price at which they are valued. Illiquid securities may include
securities that are subject to restrictions on resale because they have not been
registered under the Securities Act of 1933.
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, each 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.
RULE 144A SECURITIES
The Funds may purchase privately placed securities that 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 securities that have not been 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 net
assets in illiquid securities. Determination of whether a Rule 144A security is
liquid or not is a question of fact. In making this determination AIM will
consider the trading markets for the specific security taking into account the
unregistered nature of a Rule 144A security. In addition, AIM could consider the
(i) frequency of trades and quotes, (ii) number of dealers and potential
purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the
security and of 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 SECURITIES
Each of the Funds may invest in foreign securities. For purposes of
computing such limitation American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs") and other securities representing underlying
securities of foreign issuers are treated as foreign securities. These
securities may
28
<PAGE> 174
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.
To the extent a Fund invests in securities denominated in foreign
currencies, each Fund bears the risk of changes in the exchange rates between
U.S. currency and the foreign currency, as well as the availability and status
of foreign securities markets. These securities will be marketable equity
securities (including common and preferred stock, depositary receipts for stock
and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. Each of the
Funds may also invest in foreign securities listed on recognized U.S. securities
exchanges or traded in the U.S. over-the-counter market. Such foreign securities
may be issued by foreign companies located in developing countries in various
regions of the world. A "developing country" is a country in the initial stages
of its industrial cycle. As compared to investment in the securities markets of
developed countries, investment in the securities markets of developing
countries involves exposure to markets 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.
Investments by a Fund in foreign securities, whether denominated in
U.S. currencies or foreign currencies, may entail all of the risks set forth
below. Investments by a Fund in ADRs, EDRs or similar securities also may entail
some or all of the risks as set forth below.
Currency Risk. The value of each Fund's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated, and increases when the
value of the U.S. dollar falls against such currency.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EMU"). The EMU has established a common European currency
for participating countries which will be known as the "euro." Each
participating country has supplemented its existing currency with the euro on
January 1, 1999, and will replace its existing currency with the euro on July 1,
2002. Any other European country which is a member of the EMU may elect to
participate in the EMU and may supplement its existing currency with the euro
after January 1, 1999.
[The expected introduction of the euro presents unique risks and
uncertainties, including whether the payment and operational systems of banks
and other financial institutions will be ready by January 1, 1999; how
outstanding financial contracts will be treated after January 1, 1999; the
establishment of exchange rates for existing currencies and the euro; and the
creation of suitable clearing and settlement systems for the euro. These and
other factors could cause market disruptions before or after the introduction of
the euro and could adversely affect the value of securities held by the
Portfolio.]
Political and Economic Risk. The economies of many of the countries in
which the Funds 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 each
Fund's investments.
Regulatory Risk. Foreign companies are not registered with the SEC and
are generally not subject
29
<PAGE> 175
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 Funds may be
reduced by a withholding tax at the source, which tax would reduce dividend
income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which
the Funds invest 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. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. 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.
CLOSE-END INVESTMENT COMPANIES
Each Fund may invest up to 10% of its total assets in the securities of
certain closed-end investment companies. Shares of closed-end investment
companies are often traded at market prices that are less than the net asset
values of their shares. Such investments will involve the payment of duplicative
fees through the indirect payment of a portion of the expenses, including
advisory fees, of such closed-end investment companies.
PORTFOLIO TURNOVER
Any particular security will be sold, and the proceeds reinvested,
whenever such action is deemed prudent from the viewpoint of the Fund's
investment objectives, regardless of the holding period of that security. A
higher rate of portfolio turnover may result in higher transaction costs,
including brokerage commissions. Also, to the extent that higher portfolio
turnover results in a higher rate of net realized capital gains to the Fund, the
portion of the Fund's distributions constituting taxable capital gains may
increase. Portfolio turnover is shown under "Financial Highlights" in the
applicable Prospectus.
FOREIGN EXCHANGE TRANSACTIONS
Each Fund has authority to deal in foreign exchange between currencies
of the different countries in which it will invest either for the settlement of
transactions or as a hedge against possible variations in the foreign exchange
rates between those currencies. This may be accomplished through direct
purchases or sales of foreign currency, purchases of futures contracts with
respect to foreign currency (and options thereon), and contractual agreements to
purchase or sell a specified currency at a specified future date (up to one
year) at a price set at the time of the contract. Such contractual commitments
may be forward contracts entered into directly with another party or
exchange-traded futures contracts. The Fund may purchase and sell options on
futures contracts or forward contracts which are denominated in a particular
foreign currency to hedge the risk of fluctuations in the value of another
currency. The Fund's dealings in foreign exchange may involve specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of foreign currency with respect to specific receivables or payables of the Fund
accruing in connection with the purchase or sale of its portfolio securities,
the sale and redemption of shares of the Fund, or the payment of dividends and
distributions by the Fund. Position hedging is the purchase or sale of foreign
currency with respect to portfolio security positions (or underlying portfolio
security positions, such as in an ADR) denominated or quoted in a foreign
currency. The Fund will not speculate in foreign exchange, nor commit a larger
percentage of its total assets to foreign exchange hedges than the percentage of
its total assets that it could invest in foreign securities.
30
<PAGE> 176
COUNTRIES IN WHICH ASIAN FUND AND EUROPEAN FUND MAY INVEST
The Asian Fund considers issuers of securities located in the following
countries to be Asian issuers:
Bangladesh Indonesia Philippines Thailand
China Korea Singapore Vietnam
Hong Kong Malaysia Sri Lanka
India Pakistan Taiwan
In addition to Asian issuers, Asian Fund may invest up to 20% of its
total assets in securities of non-Asian issuers. The following is a list of some
of the non-Asian countries in which Asian Fund may invest from time to time:
Australia New Zealand
31
<PAGE> 177
European Fund considers issuers of securities located in the following
countries to be European issuers:
Austria Germany Netherlands Slovenia
Belgium Greece Norway Spain
Croatia Hungary Poland Sweden
Czech Republic Ireland Portugal Switzerland
Denmark Italy Romania Turkey
Finland Liechtenstein Russia Ukraine
France Luxembourg Slovakia United Kingdom
In addition to European issuers, European Fund may invest up to 20% of
its total assets in securities of non-European issuers. The following is a list
of some of the non-European countries in which European Fund may invest from
time to time:
Bermuda Israel South Africa United States
Egypt
The above lists may include foreign countries that have not yet been
approved by the Company's board. Asian Fund and European Fund will only invest
in foreign countries that have been approved by the board.
The word "Development" in European Fund's name is designed to address
the general restructuring taking place in Europe as well as a more dramatic
political and economic restructuring taking place in regions such as Eastern
Europe. Also consistent with the name, the Fund has the ability to invest a
significant portion of its total assets in securities issued in emerging
markets.
HEDGING STRATEGIES
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. The purpose of such
transactions is to hedge against changes in the market value of the Funds'
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
Funds will not engage in such transactions for speculative purposes. Any change
to such policy must be submitted by AIM to the Company's Board of Directors
prior to the effectiveness of such change. Although certain risks are involved
in options and futures transactions (as discussed 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.
32
<PAGE> 178
HEDGING FOREIGN CURRENCY RISKS
In attempting to manage its currency exposure, each Fund may buy and
sell currencies, either in the spot (cash) market at the spot rate then
prevailing for purchase or selling currency on the foreign exchange market or in
the forward market (through 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.
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. When the Fund purchase 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 an 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. Each Fund may enter into transactions
hedging forward contracts with respect to all a substantial portion of its
trades. 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. Aggressive Growth Fund, Growth Fund and Equity Fund
will not enter into a position hedging commitment if, as a result each Fund
would have more than 10% of the value of their respective total assets committed
to such contracts. Income Fund would not have more than 40% of the value of its
total assets committed to such contracts. Aggressive Growth Fund, Growth Fund,
Income Fund and Equity Fund will not 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."
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 cost.
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 liquid assets 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 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
33
<PAGE> 179
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 transactions 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 served to as a "collar."
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 any time of investment, the aggregate premiums paid for such options will
exceed 5% of the Fund's total assets.
Options purchased or written by each Fund may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to such options. Such
options and the securities used as "cover" for such options, unless otherwise
indicated, would be considered illiquid securities.
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. A call option is "covered" if the
Fund owns the underlying security covered by the call. 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.
34
<PAGE> 180
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. Since
substantially all of the securities held by each Fund may be denominated in
foreign currencies, the value of each 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. 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
35
<PAGE> 181
portfolio against changes in market conditions or in exchange rates between
currencies (including the U.S. dollar). Futures contracts are traded on U.S. and
foreign exchanges and generally contain standardized strike prices and
expiration dates. Certain futures contacts may be satisfied by actual delivery
of the securities or, more typically, by entering into an offsetting
transaction. An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract. In
addition to purchasing or selling futures contracts on currencies and specific
securities, interest rates and exchange rates, each Fund may purchase or sell
stock index futures contracts. A stock index futures contract is an agreement to
take or make delivery of an amount of cash based on the difference between the
value of a stock index at the beginning and at the end of the contract period.
No more than 5% of each Funds' 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 and asset
coverage requirements 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, each Fund will
limit such investments to those which have been approved by the Commodity
Futures Trading Commission for investment by United States investors. 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. Additionally, with respect to a Fund's investments in foreign options,
unless such options are specifically authorized for investment by order of the
Commodities Futures Trading Commission ("CFTC") or meet the definition of "trade
option" as set forth in the 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
36
<PAGE> 182
decrease in the market value of securities. Similarly, a Fund can purchase call
options, or write put options on futures contracts and stock indices, as a
substitute for the purchase of such futures to hedge against the increased cost
resulting from an increase in the market value of securities which the Fund
intends to purchase.
Each Fund is also authorized to engage in options and futures
transactions on U.S. and foreign exchanges and in options in the OTC markets
("OTC options"). In general, exchange traded contracts are third-party contracts
(i.e., performance of the parties' obligations is guaranteed by an exchange or
clearing corporation) with standardized strike prices and expiration dates. OTC
options transactions are two-party contracts with price and terms negotiated by
the buyer and seller. See "Restrictions on OTC Options" below for information as
to restrictions on the use of OTC options.
Each Fund is authorized to purchase or sell listed or OTC foreign
security or currency options, foreign security or currency futures and related
options as a short or long hedge against possible variations in foreign exchange
rates and market movements. Such transactions could be effected with respect to
hedges on non-U.S. dollar denominated securities owned by the Fund, sold by the
Fund but not yet delivered, or committed or anticipated to be purchased by the
Fund. As an illustration, a Fund may use such techniques to hedge the stated
value in U.S. dollars of an investment in a yen-denominated security. In such
circumstances, for example, the Fund can purchase a foreign currency put option
enabling it to sell a specified amount of yen for U.S. dollars at a specified
price by a future date. To the extent the hedge is successful, a loss in the
value of the yen relative to the U.S. dollar will tend to be offset by an
increase in the value of the put option.
Certain differences exist between these hedging instruments. For
example, foreign currency options provide the holder thereof the rights to buy
or sell a currency at a fixed price on a future date. A futures contract on a
foreign currency is an agreement between two parties to buy and sell a specified
amount of a currency for a set price on a future date. Futures contracts and
options on futures contracts are traded on boards of trade or futures exchanges.
The Funds will not speculate in foreign security or currency options, futures or
related options. None of the Funds will hedge a currency substantially in excess
of the market value of securities which any such Fund has committed or
anticipates to purchase which are denominated in such currency, and in the case
of securities which have been sold by such Fund but not yet delivered, the
proceeds thereof in its denominated currency. None of the Funds will incur
potential net liabilities of more than 25% of its total assets from foreign
security or currency options, futures or related options.
RESTRICTIONS ON THE USE OF FUTURES TRANSACTIONS
The purchase or sale of a futures contract differs from the purchase or
sale of a security in that no price or premium is paid or received. Instead, an
amount of cash or securities acceptable to the broker and the relevant contract
market, which varies, but is generally about 5% of the contract amount, must be
deposited with the broker. This amount is known as "initial margin" and
represents a "good faith" deposit assuring the performance of both the purchaser
and seller under the futures contract. Subsequent payments to and from the
broker, called "variation margin," are required to be made on a daily basis as
the price of the futures contract fluctuates making the long and short positions
in the futures contracts more or less valuable, a process known as "marking to
market." At any time prior to the settlement date of the futures contract, the
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
37
<PAGE> 183
total assets. However, if an option is "in-the-money" (the price of the option
exceeds the strike price), the in-the-money portion may be excluded in computing
the 5% limit.
RESTRICTIONS ON OTC OPTIONS
The Funds will engage in transactions involving OTC options, including
over-the-counter stock index options, over-the-counter foreign security and
currency options and options on foreign security and currency futures, only with
member banks of the Federal Reserve System and primary dealers in U.S.
Government securities or with affiliates of such banks or dealers which have
capital of at least $50 million or whose obligations are guaranteed by an entity
having capital of at least $50 million. The Funds will acquire only those OTC
options for which AIM believes a Fund can receive on each business day at least
two independent bids or offers (one of which will be from an entity other than a
party to the option).
The Staff of the SEC has taken the position that purchased OTC options
and the assets used as cover for written OTC options are illiquid securities.
Therefore, the Funds have each adopted an operating policy pursuant to which
each Fund will not purchase or sell OTC options (including OTC options on
futures contracts) if, as a result of such transaction, the sum of (i) the
market value of OTC options currently outstanding which are held by a Fund, (ii)
the market value of the underlying securities covered by OTC call options
currently outstanding which were sold by such Fund, (iii) margin deposits on the
Fund's existing OTC options on futures contracts, and (iv) the market value of
all other assets of the Fund which are illiquid or are not otherwise readily
marketable, would exceed 10% of the net assets of Aggressive Growth Fund, Growth
Fund and Income Fund, and 15% of the net assets of Equity Fund, European Fund
and Asian Fund, taken at market value. However, if an OTC option is sold by a
Fund to a primary U.S. Government securities dealer recognized by the Federal
Reserve Bank of New York, and the Fund has the unconditional contractual right
to repurchase such OTC option from the dealer at a predetermined price, then
such Fund will treat as illiquid such amount of the underlying securities as is
equal to the repurchase price less the amount by which the option is
"in-the-money" (current market value of the underlying security minus the
option's strike price). The repurchase price with primary dealers is typically a
formula price which is generally based on a multiple of the premium received for
the option, plus the amount by which the option is "in-the-money." This policy
as to OTC options is not a fundamental policy of the Funds and may be amended by
the Board of Directors of the Company without approval of the Funds' respective
shareholders. However, the Funds will not change or modify this policy prior to
the change or modification by the SEC staff of its position.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS
The Funds will not use leverage in their options and futures
strategies. Such investments will be made for hedging purposes only. The Funds
will hold securities or other options or futures positions whose values are
expected to offset their obligations under the hedge strategies. None of the
Funds will enter into an option or futures position that exposes a Fund to an
obligation to another party unless it owns either (i) an offsetting position in
securities or other options or futures contracts or (ii) cash, receivables and
short-term debt securities with a value sufficient to cover its potential
obligations. The Funds will comply with guidelines established by the SEC with
respect to coverage of options and futures strategies by mutual funds, and if
the guidelines so require will segregate liquid assets in the amount prescribed.
The segregated liquid assets will not be sold while the futures or option
strategy is outstanding, unless they are replaced with similar liquid assets. As
a result, there is a possibility that segregation of a large percentage of a
Fund's liquid 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
38
<PAGE> 184
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
correlation's, the Funds may purchase or sell stock index options or futures
contracts in a greater dollar amount than the hedged securities if the
volatility of the hedged securities is historically greater than the volatility
of the stock index options or futures contracts. Conversely, the Funds may
purchase or sell fewer stock index options or futures contracts, if the
historical price volatility of the hedged securities is less than that of the
stock index options or futures contracts. The risk of imperfect correlation
generally tends to diminish as the maturity date of the stock index option or
futures contract approaches. Options are also subject to the risks of an
illiquid secondary market, particularly in strategies involving writing options,
which a Fund cannot terminate by exercise. In general, options whose strike
prices are close to their underlying instruments' current value will have the
highest trading volume, while options whose strike prices are further away may
be less liquid.
The Funds intend to enter into options and futures transactions, on an
exchange or in the OTC market, only if there appears to be a liquid secondary
market for such options or futures or, in the case of OTC transactions, AIM
believes a Fund can receive on each business day at least two independent bids
or offers. However, there can be no assurance that a liquid secondary market
will exist at any specific time. Thus, it may not be possible to close an
options or futures position. The inability to close options and futures
positions also could have an adverse impact on a Fund's ability to effectively
hedge its portfolio. There is also the risk of loss by a Fund of margin deposits
or collateral in the event of bankruptcy of a broker with whom the Fund has an
open position in an option, a futures contract or related option.
The exchanges on which options on portfolio securities and currency
options are traded have generally established limitations governing the maximum
number of call or put options on the same underlying security or currency
(whether or not covered) which may be written by a single investor, whether
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written in one or more
accounts or through one or more brokers). "Trading limits" are imposed on the
maximum number of contracts which any person may trade on a particular trading
day. AIM does not believe that these trading and position limits will have any
adverse impact on the portfolio strategies for hedging the Funds' portfolios.
Because the Funds will engage in the options and futures transactions
described above solely in connection with their hedging activities, AIM does not
believe such options and futures transactions necessarily will have any
significant effect on the portfolio turnover rate of any of the Funds.
OTHER HEDGING TECHNIQUES
For hedging purposes, Asian Fund, European Fund and Equity 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES
Each of the Funds may invest in other investment companies, to the
extent permitted by the 1940 Act, and rules and regulations thereunder, and, if
applicable, exemptive orders granted by the SEC.
39
<PAGE> 185
INVESTMENT RESTRICTIONS
AGGRESSIVE GROWTH FUND, GROWTH FUND, AND INCOME FUND
The following fundamental policies and investment restrictions have
been adopted by Aggressive Growth Fund, Growth Fund and Income Fund and, except
as noted, such policies cannot be changed without approval by the vote of a
majority of the outstanding voting securities of the applicable Fund, as defined
in the 1940 Act.
The Funds may not:
1. Purchase or sell real estate or interests in real estate
(except that this restriction does not preclude investments in
marketable securities of companies engaged in real estate
activities).
2. Purchase or sell commodities or commodity contracts, except
that the Funds may purchase and sell stock index and currency
options, stock index futures, interest rate futures, financial
futures and currency futures contracts and related options on
such futures.
3. Purchase any security on margin, except that the Funds may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities. The
payment by the Fund of initial or variation margin in
connection with futures or related options transactions shall
not be considered the purchase of a security on margin.
4. Make loans, although the Funds may (a) purchase money market
securities and enter into repurchase agreements, (b) acquire
bonds, debentures, notes and other debt securities,
governmental obligations and certificates of deposit, and (c)
lend portfolio securities.
5. Issue senior securities, except to the extent permitted by the
1940 Act, including permitted borrowings.
6. Underwrite securities of other persons, except to the extent
that a Fund may be deemed to be an underwriter within the
meaning of the 1933 Act in connection with the purchase and
sale of its portfolio securities in the ordinary course of
pursuing its investment program.
7. Purchase or sell interests in oil, gas or other mineral
exploration or development programs.
8. Purchase the securities of any issuer if, as a result, more
than 25% of the value of a Fund's total assets, taken at market
value, would be invested in the securities of issuers having
their principal business activities in the same industry. This
restriction does not apply to obligations issued or guaranteed
by the U.S. Government or by any of its agencies or
instrumentalities but will (unless and until SEC changes its
position) apply to foreign government obligations unless the
SEC permits their exclusion.
9. Purchase a security if, as a result, with respect to 75% of the
value of a Fund's total assets, taken at market value, more
than 5% of a Fund's total assets, taken at market value, would
be invested in the securities of any one issuer (including
repurchase agreements with any one entity), except securities
issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities and except that a Fund may
purchase securities of other investment
40
<PAGE> 186
companies to the extent permitted by applicable law or
exemptive order. This restriction does not apply to the Income
Fund.
10. Purchase a security if, as a result, with respect to 50% of the
value of the Fund's total assets taken at market value, more
than 5% of the value of the Fund's total assets, taken at
market value, would be invested in securities of any one
issuer, except securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities and
except that a Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order. This restriction applies only to the Income
Fund.
11. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by a
Fund, except that a Fund may purchase securities of other
investment companies to the extent permitted by applicable law
or exemptive order.
12. 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 Aggressive Growth Fund and 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
Aggressive Growth Fund or Growth Fund, such Fund will not make
any additional purchases of securities for investment
purposes.
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:
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."
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.
EQUITY FUND
The following fundamental policies and investment restrictions have been
adopted by Equity Fund and, except as noted, such policies cannot be changed
without approval by the vote of a majority of the outstanding voting securities
of the Fund, as defined in the 1940 Act.
The Fund may not:
1. Purchase or sell real estate or interests in real estate
(except that this restriction does not
41
<PAGE> 187
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. Purchase the securities of any issuer if, as a result, more
than 25% of the value of the Fund's total assets, taken at
market value, would be invested in the securities of issuers
having their principal business activities in the same
industry. This restriction does not apply to obligations issued
or guaranteed by the U.S. Government or by any of its agencies
or instrumentalities but will apply to foreign government
obligations unless the SEC permits their exclusion.
9. Purchase a security if, as a result, with respect to 75% of the
value of the Fund's total assets, taken at market value, more
than 5% of the Fund's total assets, taken at market value,
would be invested in the securities of any one issuer
(including repurchase agreements with any one entity), except
securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities, and except that the Fund
may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order.
10. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by
the Fund, except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law
or exemptive order.
11. Issue senior securities, except as provided in restriction
number 5 above.
42
<PAGE> 188
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Fund will not:
12. Make investments for the purpose of exercising control or
management.
13. Lend its portfolio securities in excess of 33-1/3% of its
total assets, taken at market value; provided that loans of
portfolio securities shall be made in accordance with the
guidelines set forth under the heading "Lending of Portfolio
Securities."
14. Invest in securities which are illiquid if more than 15% of
the Fund's total assets, taken at market value, would be
invested in such securities.
15. Effect short sales of securities, except that the Fund may
make short sales "against the box" to the extent that the
value of the securities sold short, in the aggregate, does not
represent more than 10% of the Fund's total assets, taken at
market value, at any given time.
Percentage restrictions apply as of the time of investment without
regard to later increases or decreases in the values of securities or total
assets.
ASIAN FUND AND EUROPEAN FUND
The following fundamental policies and investment restrictions have been
adopted by Asian Fund and European Fund and, except as noted, such policies
cannot be changed without approval by the vote of a majority of the outstanding
voting securities of the applicable Fund, as defined in the 1940 Act.
The Funds may not:
1. Purchase or sell real estate or interests in real estate
(except that this restriction does not preclude investments in
marketable securities of companies engaged in real estate
activities).
2. Purchase or sell commodities or commodity contracts, except
that the Funds may purchase and sell stock index and currency
options, stock index futures, interest rate futures, financial
futures and currency futures contracts and related options on
such futures.
3. Purchase any security on margin, except that the Funds may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities. The
payment by the Fund of initial or variation margin in
connection with futures or related options transactions shall
not be considered the purchase of a security on margin.
4. Make loans, although the Funds may (a) purchase money market
securities and enter into repurchase agreements, (b) acquire
bonds, debentures, notes and other debt securities,
governmental obligations and certificates of deposit, and (c)
lend portfolio securities.
5. Issue senior securities, except to the extent permitted by the
1940 Act, including permitted borrowings.
6. Underwrite securities of other persons, except to the extent
that a Fund may be deemed to be an underwriter within the
meaning of the 1933 Act in connection with the purchase and
sale of its portfolio securities in the ordinary course of
pursuing its investment program.
7. Purchase the securities of any issuer if, as a result, more
than 25% of the value of a Fund's
43
<PAGE> 189
total assets, taken at market value, would be invested in the
securities of issuers having their principal business
activities in the same industry. This restriction does not
apply to obligations issued or guaranteed by the U.S.
Government or by any of its agencies or instrumentalities but
will (unless and until SEC changes its position) apply to
foreign government obligations unless the SEC permits their
exclusion.
8. Purchase a security if, as a result, with respect to 75% of
the value of a Fund's total assets, taken at market value,
more than 5% of a Fund's total assets, taken at market value,
would be invested in the securities of any one issuer, except
securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities and except that a Fund
may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order.
9. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by a
Fund, except that a Fund may purchase securities of other
investment companies to the extent permitted by applicable law
or exemptive order.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, each of the Funds
will not:
10. Make investments for the purpose of exercising control or
management.
11. Lend its portfolio securities in excess of 33-1/3% of its
total assets, taken at market value; provided that loans of
portfolio securities shall be made in accordance with the
guidelines set forth under the heading "Lending of Portfolio
Securities."
12. Invest in securities which are illiquid if more than 15% of a
Fund's total assets, taken at market value, would be invested
in such securities.
13. Effect short sales of securities, except that the Fund may
make short sales "against the box" to the extent that the
value of the securities sold short, in the aggregate, does not
represent more than 10% of the Fund's total assets, taken at
market value, at any given time.
The following non-fundamental policies apply to all Funds. Subject to
the investment restriction on lending portfolio securities (number 13 for
Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund and number 11
for Asian Fund and European Fund), the Funds may from time to time lend
securities from their respective portfolios to brokers, dealers and financial
institutions such as banks and trust companies and receive collateral in cash or
securities issued or guaranteed by the U.S. Government which will be maintained
in an amount equal to at least 100% of the current market value of the loaned
securities. Such cash will be invested in short-term securities, which will
increase the current income of the applicable Fund. Such loans will not be for
more than 30 days and will be terminable at any time. The Funds will have the
right to regain record ownership of loaned securities to exercise beneficial
rights such as voting rights, subscription rights and rights to dividends,
interest or other distributions. The Funds may pay reasonable fees to persons
unaffiliated with the Funds for services in arranging such loans. With respect
to the lending of portfolio securities, there is the risk of failure by the
borrower to return the securities involved in such transactions.
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.
44
<PAGE> 190
MANAGEMENT
The overall management of the business and affairs of the Funds is
vested with the Company's Board of Directors. The Board of Directors approves
all significant agreements between the Company and persons or companies
furnishing services to a Fund, including the investment advisory agreement with
AIM, the administrative services agreement with AIM, the agreement with AIM
Distributors regarding the distribution of the shares of the Funds, the
agreement with State Street Bank and Trust Company as custodian and the
agreement with A I M Fund Services, Inc. ("AFS" or the "Transfer Agent") as
transfer agent. The day-to-day operations of each Fund are delegated to its
officers of the Company and to AIM, subject always to the objectives and
policies of the Fund and to the general supervision of the Company's 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 and is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific Region.
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during at least the last five years are set forth below. Unless
otherwise indicated, the address of each director and officer is 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173. All of the Company's executive
officers hold similar offices with some or all of the other AIM Funds.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (79) Director and Chairman Chairman of the Board of Directors,
A I M Management Group Inc., A I M Advisors,
Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company; and Vice
Chairman and Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation; and Chairman, Board
of Governors of INTELSAT (international
communications company).
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
45
<PAGE> 191
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
OWEN DALY II (74) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel Corp.,
Baltimore, MD 21210 Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the
Board of Equitable Bancorporation.
- --------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (63) Director Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp.; Formerly, Vice Chairman of the
Baltimore, MD 21201 Board of Directors and President, Mercantile -
Safe Deposit & Trust Co.; and President,
Mercantile Bankshares.
- --------------------------------------------------------------------------------------------------------------------
JACK FIELDS (46) Director Chief Executive Officer, Texana Global, Inc.
Jetero Plaza, Suite E (foreign trading company) and Twenty First
8810 Will Clayton Parkway Century, Inc. (a governmental affairs company).
Humble, TX 77338 Formerly, Member of the U.S. House of
Representatives.
- --------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Director Partner, Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue (law firm). Formerly, Partner, Reid & Priest
New York, NY 10022 (law firm).
- --------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Director and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and
President, A I M Advisors, Inc.; Director and
Senior Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and
Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------
</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.
46
<PAGE> 192
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (48) Director Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for
New York, NY 10118 The Aging; and Member of the Board of Directors,
Metropolitan Transportation Authority of New
York State.
- --------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Director Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- --------------------------------------------------------------------------------------------------------------------
Formerly, Executive Vice President and Chief
IAN W. ROBINSON (75) Director Financial Officer, Bell Atlantic Management
183 River Drive Services, Inc. (provider of centralized
Tequesta, FL 33469 management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
- --------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (59) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
- --------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (54) Senior Vice Director, Senior Vice President and Treasurer,
President and A I M Advisors, Inc.; and Vice President and
Treasurer Treasurer, A I M Management Group Inc.,
A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice President Director and President, A I M Capital Management,
Inc.; Director and Senior Vice President,
A I M Management Group Inc. and A I M Advisors,
Inc.; and Director, A I M Distributors, Inc. and
AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
*** Mr. Arthur and Ms. Relihan are married to each other.
47
<PAGE> 193
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, General Counsel
President and and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, General Counsel and Secretary,
A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management
Company; Vice President, A I M Capital
Management, Inc. and A I M Distributors, Inc.;
and General Counsel and Vice President,
A I M Fund Services, Inc.
- --------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President and Vice President and Fund Controller,
Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
President and Assistant Treasurer, Fund
Management Company.
- --------------------------------------------------------------------------------------------------------------------
ROBERT G. ALLEY (50) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President Vice President and Chief Compliance Officer,
A I M Advisors, Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------
JONATHAN C. SCHOOLAR (37) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
*** Mr. Arthur and Ms. Relihan are married to each other.
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn,
Fields, Frischling, Pennock, Robinson (Chairman), Sklar and Ms. Mathai-Davis .
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 Dunn, Fields, Frischling, Pennock, Robinson, Sklar (Chairman) and Ms.
Mathai-Davis. 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.
48
<PAGE> 194
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock, Robinson, Sklar and Ms.
Mathai-Davis. 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.
All of the company's directors also serve as directors or trustee of
some or all of the investment companies managed or advised by AIM. All of the
company's executive offices hold similar offices with some or all of the other
investment companies managed or advised by AIM.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who is
not also an officer of the Company is compensated for his services according to
a fee schedule which recognizes the fact that such director also serves as a
director or trustee of other AIM Funds. Each such director receives a fee,
allocated among the AIM Funds for which he serves as a director or trustee,
which consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
for each director of the Company:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
DIRECTOR AGGREGATE COMPENSATION RETIREMENT TOTAL
FROM COMPANY(1) BENEFITS COMPENSATION
ACCRUED FROM ALL APPLICABLE
BY ALL APPLICABLE AIM FUNDS(4)
AIM FUNDS(2)(3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------
Bruce L. Crockett [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Owen Daly II [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Jack Fields [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Carl Frischling(4) [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- -------------------------------------------------------------------------------------------------------------
John F. Kroeger(5) [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis 0 [ ] 0
- -------------------------------------------------------------------------------------------------------------
Lewis F. Pennock [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Ian W. Robinson [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
Louis S. Sklar [ ] [ ] [ ]
- -------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE> 195
- ----------
(1) The total amount of compensation deferred by all directors of the
Company during the fiscal year ended October 31, 1998, including
interest earned thereon, was $________.
(2) During the fiscal year ended October 31, 1998, the total amount of
expenses allocated to the Company in respect of such retirement benefits
was $_________. Data reflect compensation earned for the calendar year
ended December 31, 1998.
(3) Each Director serves as director or trustee of a total of twelve
registered investment companies advised by AIM (comprised of over 50
portfolios). Data reflect total compensation earned during the calendar
year ended December 31, 1998.
(4) The Company paid the law firm of Kramer, Levin, Naftalis & Frankel LLP
$________ in legal fees for services provided to the Funds during the
fiscal year ended October 31, 1998. Mr. Frischling, a Director of the
Company, is a partner in such firm.
(5) Mr. Kroeger was a director until June 11, 1998, when he resigned. On
that date he became a consultant to the Company. Of the amount listed
above $________was for compensation for service as a director and the
remainder as a consultant. Mr. Kroeger passed away on November 26, 1998.
Mr. Kroeger's widow will receive his pension as described below under
"AIM Funds Retirement Plan for Eligible Directors/Trustee."
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, AIM Management 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 directors retirement (including amounts deferred under
a separate agreement between the Applicable AIM Funds and the director) for the
number of such director's years of service (not in excess of 10 years of
service) completed with respect to any of the Applicable AIM Funds. Such benefit
is payable to each eligible director in quarterly installments. If an eligible
director dies after attaining the normal retirement date but before receipt of
any benefits under the Plan commences, the director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased director for no more than ten years beginning the first day of
the calendar quarter following the date of the director's death. Payments under
the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger, Pennock,
Robinson, Sklar and Ms. Mathai-Davis are 11,11, 0, 1, 21, [21], 6, 11, 8 and 0
years, respectively.
50
<PAGE> 196
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
================================================================================
Number of Years of Annual Compensation
Service with the Paid by all AIM Funds
AIM Funds
<S> <C>
- --------------------------------------------------------------------------------
$80,000
- --------------------------------------------------------------------------------
10 $60,000
- --------------------------------------------------------------------------------
9 $54,000
- --------------------------------------------------------------------------------
8 $48,000
- --------------------------------------------------------------------------------
7 $42,000
- --------------------------------------------------------------------------------
6 $36,000
- --------------------------------------------------------------------------------
5 $30,000
================================================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. [Kroeger, Daly, Frischling, 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.
INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
AIM is a wholly owned subsidiary of AIM Management, a holding company
that has been engaged in the financial services business since 1976. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London EC2M 4YR, United Kingdom.
AIM and the Company have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions, (c) to refrain from
personally engaging in (i) short-term trading of a security, (ii) transactions
involving a security within seven days of an AIM Fund transaction involving the
same security, and (iii) transactions involving securities being considered for
investment by an AIM Fund and (d) to abide by certain other provisions under the
Code of Ethics. The Code of Ethics also prohibits investment personnel and all
other AIM employees from purchasing securities in an
51
<PAGE> 197
initial public offering. Personal trading reports are reviewed periodically by
AIM, and the Board of Directors reviews quarterly and annual reports (including
information on any substantial violations of the Code of Ethics). Sanctions for
violations of the Code of Ethics may include censure, monetary penalties,
suspension or termination of employment.
The Company, on behalf of the Funds, has entered into a Master
Investment Advisory Agreement ("Investment Advisory Agreement") and a Master
Administrative Services Agreement ("Administrative Services Agreement"), as
amended, with AIM. In addition, AIM has entered into a Master Sub-Advisory
Agreement (the "Sub-Advisory Agreement") with INVESCO Global Asset Management
Limited ("IGAM") with respect to Asian Fund and European Fund. In addition, IGAM
has entered into a Sub-Sub-Advisory Agreement with INVESCO Asia Limited ("IAL")
with respect to Asian Fund and a Sub-Sub-Advisory Agreement with INVESCO Asset
Management Limited ("IAML") with respect to European Fund. See "Fund Management"
in each Fund's Prospectus.
Under the terms of the Master Advisory Agreement, AIM supervises aspects
of the Funds' operations and provides investment advisory services to the Funds.
AIM obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Funds. AIM will not be
liable to the Funds or their shareholders except in the case of AIM's willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
Pursuant to the Master Administrative Services Agreement, AIM has agreed
to provide or arrange for the provision of certain accounting and other
administrative services to the Funds, including the services of a principal
financial officer of the Funds and related staff. As compensation to AIM for its
services under the Master Administrative Service Agreements, the Funds reimburse
AIM for expenses incurred by AIM or its subsidiaries in connection with such
services.
By the terms of the Sub-Advisory Agreement and Sub-Sub-Advisory
Agreement, AIM has appointed IGAM and IGAM has appointed IAL to provide AIM with
international economic and market research, securities analyses and investment
recommendations with respect to the Fund's investment portfolio. IGAM has
delegated certain of its responsibilities to IAL through the Sub-Sub-Advisory
Agreement. IAL provides international economic and market research, securities
analyses and investment recommendations with respect to the Fund's investment
portfolio. The Sub-Advisor Agreement and Sub-Sub-Advisor Agreement provide that
neither IGAM nor IAL are responsible for the actual portfolio investment
decisions of the Fund or for the execution of portfolio transactions on behalf
of the Fund. The Fund's portfolio investment decisions and the execution of
securities transactions to carry out such decisions are solely the
responsibility of AIM as the Fund's investment advisor. The professional
investment staffs of IGAM and IAL include experienced portfolio managers and
research staffs.
The Investment Advisory Agreement and, with respect to Asian Fund and
European Fund, the Sub-Advisory Agreement and Sub-Sub-Advisory Agreements
provide that each Fund will pay or cause to be paid all expenses of the Fund not
assumed by AIM (or IGAM, IAL and IAML), 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 for the Funds and the Sub-Advisory
Agreement and Sub-Sub-Advisory Agreements for Asian Fund and European Fund, each
provides that such agreement will
52
<PAGE> 198
continue in effect for two years, and from year to year thereafter only if such
continuance is specifically approved at least annually by the Company's Board of
Directors and by the affirmative vote of a majority of the directors who are not
parties to the agreement or "interested persons" of any such party (the
"Non-Interested Directors") by votes cast in person at a meeting called for such
purpose. The Investment Advisory Agreement and the Sub-Advisory Agreement each
provides that the Funds or AIM and, with respect to the Sub-Sub-Advisory
Agreements each provides that the applicable Fund, Sub-Sub-Advisor or the
Sub-Advisor, may terminate such agreement on sixty (60) days' written notice
without penalty. The Investment Advisory Agreement, Sub-Advisory Agreement and
Sub-Sub-Advisory Agreements each terminates automatically in the event of its
assignment. Under the Investment Advisory Agreement, AIM is entitled to receive
from each Fund a fee calculated at the following annual rates based on the
average daily net assets of the Fund:
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
- ---------- -----------
<S> <C>
First $ 500 million................................................. 0.95%
Over $ 500 million.................................................. 0.90%
</TABLE>
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
- ---------- -----------
<S> <C>
First $1 billion.................................................... 0.90%
Over $1 billion..................................................... 0.85%
</TABLE>
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
- ---------- -----------
<S> <C>
First $1 billion.................................................... 0.85%
Over $1 billion..................................................... 0.80%
</TABLE>
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
- ---------- -----------
<S> <C>
First $1 billion.................................................... 0.70%
Over $1 billion..................................................... 0.65%
</TABLE>
AIM INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
- ---------- -----------
<S> <C>
First $1 billion.................................................... 0.95%
Over $1 billion..................................................... 0.90%
</TABLE>
53
<PAGE> 199
AIM may from time to time waive or reduce its fee. Fee waivers or
reductions, other than those set forth in the Master Advisory Agreement, may be
rescinded at any time without further notice to investors, provided however,
that the discontinuance of each fee waiver described below will be approved by
the Board of Directors of AIM.
AIM has voluntarily agreed to waive advisory fees under the Investment
Advisory Agreement in order to achieve the following annual fee structure for
Equity Fund: 0.95% of the first $500 million of Equity Fund's average daily net
assets; 0.90% of the next $500 million of Equity Fund's average daily net
assets; and 0.85% of Equity Fund's average daily net assets exceeding $1
billion.
For the fiscal years ended October 31, 1998, 1997 and 1996, and for the
period November 12, 1997 (inception date) through October 31, 1998 relating to
Asian Fund and European Fund, AIM received advisory fees, net of advisory fee
waivers, from each Fund as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------- ----------- ------------
<S> <C> <C>
Aggressive Growth Fund $ $19,996,061 $ 8,571,918
Asian Fund $ $ $
Equity Fund $ $17,546,102 $ 10,085,495
European Fund $ $ $
Growth Fund $ $ 2,895,282 $ 1,163,814
Income Fund $ $ 44,375 $ -0-
</TABLE>
Under the Sub-Advisory Agreement, IGAM is entitled to receive from AIM
with respect to each of Asian Fund and European Fund, a fee calculated at the
following annual rates based on the average daily net assets of the Fund:
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $ 500 million.......................... 0.20%
Over $ 500 million........................... 0.175%
</TABLE>
Under the Sub-Sub-Advisory Agreements IAL, with respect to Asian Fund,
and IAML, with respect to European Fund, are each entitled to receive from IGAM
an annual fee equal to 100% of the fee received by the Sub-Advisor with respect
to the applicable Fund.
For the fiscal years ended October 31, 1998, 1997 and 1996, and for the
period November 12, 1997 (inception date) through October 31, 1998 relating to
Asian Fund and European Fund, AIM waived advisory fees for each Fund as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ $ -0- $ -0-
Asian Fund $ $ $
Equity Fund $ $ 738,005 $ 299,147
European Fund $ $ $
Growth Fund $ $ -0- $ -0-
Income Fund $ $ 302,278 $ 182,596
</TABLE>
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
54
<PAGE> 200
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 will continue in effect with June 30, 1999, 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, and
by the affirmative vote of the Non-Interested Directors by votes cast in person
at a meeting called for such purpose.
For the fiscal years ended October 31, 1998, 1997 and 1996, and for the
period November 12, 1997 (inception date) through October 31, 1998 relating to
Asian Fund and European Fund, AIM received reimbursement of administrative
service costs from each Fund as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ $ 109,161 $ 86,330
Asian Fund $ $ $
Equity Fund $ $ 105,163 $ 94,250
European Fund $ $ $
Growth Fund $ $ 87,673 $ 78,151
Income Fund $ $ 74,031 $ 74,433
</TABLE>
In addition, the Transfer Agency and Service Agreement for the Funds
provides that AFS, P.O. Box 4739, Houston, Texas 77210-4739, 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 DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Company has adopted a Master Distribution Plan pursuant to Rule
12b-1 under the 1940 Act relating to the Class A and Class C shares of the Funds
(the "Class A and C Plan"). The Class A and C Plan provides that for Aggressive
Growth Fund, Growth Fund and Income Fund the Class A shares pay 0.50% per annum
of their average daily net assets, for Equity Fund the Class A shares pay 0.30%
per annum of their average daily net assets and for Asian Fund and European Fund
the Class A shares pay 0.35% per annum of their average daily net assets as
compensation to AIM Distributors for the purpose of financing any activity which
is primarily intended to result in the sale of Class A shares. Under the Class A
and C Plan, Class C
55
<PAGE> 201
shares of each Fund pay compensation to AIM Distributors at an annual rate of
1.00% of the average daily net assets attributable to Class C shares. The Class
A and C Plan is designed to compensate AIM Distributors, on a quarterly basis,
for certain promotional and other sales-related costs, and to implement a dealer
incentive program which provides for periodic payments to selected dealers who
furnish continuing personal shareholder services to their customers who purchase
and own Class A or Class C shares of a Fund. Payments can also be directed by
AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A and Class C shares of each Fund and who
provide continuing personal services to their customers who own Class A and
Class C shares of each Fund and who provide continuing personal services to
their customers who own Class A and Class C shares of the Fund. The service fees
payable to selected institutions are calculated at the annual rate of 0.25% of
the average daily net asset value of those Fund shares that are held in such
institution's customers' accounts which were purchased on or after a prescribed
date set forth in the Plan. Activities appropriate for financing under the Class
A and C Plan include, but are not limited to, the following: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders; overhead; preparation and distribution of advertising
material and sales literature; expenses of organizing and conducting sales
seminars; supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments
to dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund. Payments pursuant to the Plans are subject to any applicable limitations
imposed by rules of the National Association of Securities Dealers, Inc.
THE CLASS B PLAN
The Company has also adopted a Master Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (the
"Class B Plan", and collectively with the Class A and C Plan, the "Plans").
Under the Class B Plan, each Fund pays compensation to AIM Distributors at an
annual rate of 1.00% of the average daily net assets attributable to Class B
shares. Of such amount, each Fund pays a service fee of 0.25% of the average
daily net assets attributable to Class B shares to selected dealers and other
institutions which furnish continuing personal shareholder services to their
customers who purchase and own Class B shares. 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, 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.
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
56
<PAGE> 202
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 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 may in its discretion from time to time agree to waive
voluntarily all or any portion of its 12b-1 fee for Class A and Class C shares,
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 Funds pursuant to the respective Plans. 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
Funds will obtain a representation from such financial institutions that they
will ether 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.
57
<PAGE> 203
For the fiscal year ended October 31, 1998, the Funds paid the
following amounts under the Class A and C Plan and the Class B Plan:
<TABLE>
<CAPTION>
% of Class
Average Daily
Net Assets
----------
Class A Class B Class C Class A Class B Class C
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund $ $ $ 0.50% 1.00% 1.00%
Asian Fund $ $ $
Equity Fund $ $ $ 0.30% 1.00% 1.00%
European Fund $ $ $
Growth Fund $ $ $ 0.50% 1.00% 1.00%
Income Fund $ $ $ 0.50% 1.00% 1.00%
</TABLE>
An estimate by category of actual fees paid by the Funds with regard to the
Class A shares under the Class A and C Plan during the year ended October 31,
1998 follows:
<TABLE>
<CAPTION>
Aggressive Asian Equity European Growth Income
Growth Fund Fund Fund Fund Fund Fund
----------- ---- ---- ---- ---- ----
CLASS A
<S> <C> <C> <C> <C> <C> <C>
Advertising ............................. $ $ $ $ $ $
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) ........................... $ $ $ $ $ $
Seminars ................................ $ $ $ $ $ $
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs ................... $ $ $ $ $ $
Compensation to Dealers ................. $ $ $ $ $ $
Compensation to Sales Personnel ......... $ $ $ $ $ $
Annual Report Total ..................... $ $ $ $ $ $
</TABLE>
An estimate by category of actual fees paid by the Funds under the
Class B Plan during the year ended October 31, 1998 as follows:
58
<PAGE> 204
<TABLE>
<CAPTION>
Aggressive Asian Equity European Growth Income
Growth Fund Fund Fund Fund Fund Fund
----------- ---- ---- ---- ---- ----
CLASS B
<S> <C> <C> <C> <C> <C> <C>
Advertising................................. $ $ $ $ $ $
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)............................... $ $ $ $ $ $
Seminars.................................... $ $ $ $ $ $
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs....................... $ $ $ $ $ $
Compensation to Dealers .................... $ $ $ $ $ $
Compensation to Sales Personnel............. $ $ $ $ $ $
Annual Report Total......................... $ $ $ $ $ $
</TABLE>
An estimate by category of actual fees paid by the Funds with regard to the
Class C shares under the Class A and C Plan during the year ended October 31,
1998 as follows:
<TABLE>
<CAPTION>
Aggressive Asian Equity European Growth Income
Growth Fund Fund Fund Fund Fund Fund
----------- ---- ---- ---- ---- ----
CLASS C
<S> <C> <C> <C> <C> <C> <C>
Advertising................................. $ $ $ $ $ $
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders)............................... $ $ $ $ $ $
Seminars.................................... $ $ $ $ $ $
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs....................... $ $ $ $ $ $
Compensation to Dealers .................... $ $ $ $ $ $
Compensation to Sales Personnel............. $ $ $ $ $ $
Annual Report Total......................... $ $ $ $ $ $
</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.
59
<PAGE> 205
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 the plans are terminated earlier in accordance with their terms,
the Plans continue in effect until June 30, 1999 and thereafter, each Plan
continues as long as such continuance is specifically approved at least annually
by the Board of Directors, including a majority of the Qualified Directors.
The Plans may be terminated by the vote of a majority of the
Independent Directors, or, with respect to a particular class, by the vote of a
majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the directors, including a majority of the Qualified
Directors, by votes cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plans are in effect, the selection or
nomination of the Qualified Directors is committed to the discretion of the
Qualified Directors. In the event the Class A and C Plan is amended in a manner
which the Board of Directors determines would materially increase the charges
paid under the Class A and C Plan, the Class B shares of the Funds will no
longer convert into Class A shares of the same Funds unless the Class B shares,
voting separately, approve such amendment. If the Class B shareholders do not
approve such amendment, the Board of Directors will (i) create a new class of
shares of the Funds which is identical in all material respects to the Class A
shares as they existed prior to the implementation of the amendment and (ii)
ensure that the existing Class B shares of the Funds will be exchanged or
converted into such new class of shares no later than the date the Class B
shares were scheduled to convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of up
to 0.50% of average daily net assets of the Class A shares of Aggressive Growth
Fund, Income Fund, and Growth Fund, of up to 0.35% of average daily net assets
of the Class A shares of Asian Fund and European Fund, and of up to 0.30% of
average daily net assets of the Class A shares of Equity Fund, as compared to
1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan
obligates the Class B shares to continue to make payments to AIM Distributors
following termination of the Class B shares Distribution Agreement with respect
to Class B shares sold by or attributable to the distribution efforts of AIM
Distributors unless there has been a complete termination of the Class B Plan
(as defined in such Plan) and (iii) the Class B Plan expressly authorizes AIM
Distributors to assign, transfer or pledge its rights to payments pursuant to
the Class B Plan.
THE DISTRIBUTOR
The Company has entered into distribution arrangements with AIM
Distributors, P. O. Box 4739, Houston, Texas 77210-4739, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor in
the continuous offering of class A, Class B and Class C shares of the Funds.
Certain directors and officers of the Company are affiliated with AIM
Distributors. A Master Distribution Agreement with AIM Distributors relating to
the Class A and Class C shares of the Funds was approved by the Board of
Directors on June 11, 1997. A Master Distribution Agreement with AIM
Distributors relating to the Class B shares of the Funds was also approved by
the Board of Directors on December 11, 1996. Both such Master Distribution
Agreements are hereinafter collectively referred to as the "Distribution
Agreements."
60
<PAGE> 206
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 sale 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.
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Funds' shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Funds.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares of the
Funds at the time of such sales. Payments with respect to Class B shares will
equal 4.0% of the purchase price of the Class B shares sold by the dealer or
institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. The portion of the payments to
AIM Distributors under the Class B Plan which constitutes an asset-based sales
charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it will require a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve a
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record.
61
<PAGE> 207
The Company (on behalf of any class of the Funds) or AIM Distributors
may terminate the Distribution Agreements on sixty (60) days' written notice
without penalty. The Distribution Agreements will terminate automatically in the
event of their assignment. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based distribution fees in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors; provided, however,
that a complete termination of the Class B Plan (as defined in such Plan) would
terminate all payments to AIM Distributors. Termination of the Class B Plan or
Distribution Agreement does not affect the obligation of the Funds and their
Class B shareholders to pay contingent deferred sales charges.
From time to time, AIM Distributors may transfer and sell its right to
payments under the Distribution Agreements relating to Class B shares in order
to finance distribution expenditure in respect of Class B shares.
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, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------ ------------------------- --------------------------
Sales Amount Sales Amount Sales Amount
Charges Retained Charges Retained Charges Retained
----------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund $ $ $12,462,271 $2,200,552 $17,453,757 $3,270,278
Asian Fund* $ $
Equity Fund $ $ $ 7,481,513 $1,172,508 $ 8,663,571 $1,489,975
European Fund* $ $
Growth Fund $ $ $ 1,621,736 $ 286,414 $ 2,044,262 $ 388,799
Income Fund $ $ $ 348,033 $ 59,763 $ 325,210 $ 57,096
</TABLE>
The following chart reflects the contingent deferred sales charges paid
by Class A, Class B and Class C shareholders for the fiscal years ended October
31, 1998, 1997 and 1996 for Class A, Class B and Class C shares:
<TABLE>
<CAPTION>
1998 1997 1996
---- -------- --------
<S> <C> <C> <C>
Aggressive Growth Fund $ $133,018 $ 84,130
Asian Fund $
Equity Fund $ $ 91,984 $ 39,753
European Growth $
Growth Fund $ $ 25,870 $ 14,106
Income Fund $ $ 3,397 $ 4,924
</TABLE>
- ---------------------
*Asian Fund and European Fund commenced operations November 12, 1997.
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge
ranging from 5.50% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund,
AIM Advisor MultiFlex Fund, AIM Aggressive Growth Fund, AIM Asian Growth Fund,
AIM Basic Value Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM
Charter Fund, AIM Constellation Fund, AIM European Development Fund, AIM Europe
Growth Fund, AIM Global Utilities Fund, AIM Global Growth & Income Fund, AIM
International Equity Fund, AIM International Growth Fund, AIM Japan Growth Fund,
AIM Large Cap Growth Fund, AIM Mid Cap Equity Fund, AIM Money Market Fund, AIM
New Pacific Growth Fund, AIM Select Growth Fund, AIM Small Cap Growth Fund, AIM
Small Cap Opportunities Fund, AIM Value Fund, AIM Weingarten Fund and AIM
Worldwide Growth Fund.
62
<PAGE> 208
<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>
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real
Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Emerging
Markets Fund, AIM Emerging Markets Debt Fund, AIM Global Aggressive Growth Fund,
AIM Global Consumer Products and Services Fund, AIM Global Financial Services
Fund, AIM Global Government Income Fund, AIM Global Growth Fund, AIM Global
Health Care Fund, AIM Global Income Fund, AIM Global Infrastructure Fund, AIM
Global Resources Fund, AIM Global Telecommunications Fund, AIM Global Trends
Fund, AIM High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund
II, AIM Income Fund, AIM Intermediate Government Fund, AIM Latin American Fund,
AIM Municipal Bond Fund, AIM Strategic Income Fund and AIM Tax-Exempt Bond Fund
of Connecticut.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ------------
------------------------------ As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------ -------------- ------------ ------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $ 1,000,000 2.00 2.04 1.60
</TABLE>
CATEGORY III. Certain AIM Funds are currently sold with a sales charge
ranging from 1.00% to 0.50% of the offering price on purchases of less than
$1,000,000. These AIM Funds are the Class A shares of each of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
63
<PAGE> 209
<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 $ 1,000,0000 .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 as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the
entire initial sales charge to dealers for all sales with respect to which
orders are placed with AIM Distributors during a particular period. Dealers to
whom substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury
Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. AIM Distributors may make payments to dealers
and institutions who are dealers of record for purchases of $1 million or more
of Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class B shares of the AIM Funds at the time of such sales. Payments
with respect to Class B shares will equal 4.00% of the purchase price of the
Class B shares sold by the dealer or institution, and will consist of a sales
commission equal to 3.75% of the purchase price of the Class B shares sold plus
an advance of the first year service fee
64
<PAGE> 210
of 0.25% with respect to such shares. The portion of the payments to AIM
Distributors under the Class B Plan which constitutes an asset-based sales
charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. These
commissions are not paid on sales to investors exempt from the CDSC, including
shareholders of record on April 30, 1995, who purchase additional shares in any
of the Funds on or after May 1, 1995, and in circumstances where AIM
Distributors grants an exemption on particular transactions.
AIM Distributors may pay investment dealers or other financial service
firms for share purchases (measured on an annual basis) of Class A Shares of all
AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate
Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit
plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the
next $1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases and
up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity
Treasury Fund sold at net asset value to an employee benefit plan in accordance
with this paragraph.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
B and Class C shares of the AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including any
trust established exclusively for the benefit of any such person;
or a pension, profit-sharing, or other benefit plan established
exclusively for the benefit of any such person, such as an IRA,
Roth IRA, a single-participant money-purchase/profit-sharing plan
or an individual participant in a 403(b) Plan (unless such 403(b)
plan qualifies as the purchaser as defined below);
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"), if:
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);
65
<PAGE> 211
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 (SAR-SEP) or a
Savings Incentive Match Plans for Employees IRA (SIMPLE IRA),
where the employer has notified the distributor in writing that
all of its related employee SEP, SAR-SEP or SIMPLE IRS accounts
should be linked; or
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.
Investors or dealers seeking to qualify orders for a reduced initial
sales charge must identify such orders and, if necessary, support their
qualification for the reduced charge. AIM Distributors reserves the right to
determine whether any purchaser is entitled, by virtue of the foregoing
definition, to the reduced sales charge. No person or entity may distribute
shares of the AIM Funds without payment of the applicable sales charge other
than to persons or entities who qualify for a reduction in the sales charge as
provided herein.
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay
reduced initial sales charges by completing the appropriate section of the
account application and by fulfilling a Letter of Intent ("LOI"). The LOI
privilege is also available to holders of the Connecticut General Guaranteed
Account, established for tax qualified group annuities, for contracts purchased
on or before June 30, 1992. The LOI confirms such purchaser's intention as to
the total investment to be made in shares of the AIM Funds (except for (i) Class
A shares of AIM Tax-Exempt Cash Fund, and AIM Cash Reserve Shares of AIM Money
Market Fund and (ii) Class B and Class C shares of the AIM 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.
66
<PAGE> 212
To assure compliance with the provisions of the 1940 Act, out of the
initial purchase (or subsequent purchases if necessary) the Transfer Agent will
escrow in the form of shares an appropriate dollar amount (computed to the
nearest full share). All dividends and any capital gain distributions on the
escrowed shares will be credited to the purchaser. All shares purchased,
including those escrowed, will be registered in the purchaser's name. If the
total investment specified under this LOI is completed within the 13-month
period, the escrowed shares will be promptly released. If the intended
investment is not completed, the purchaser will pay the Transfer Agent the
difference between the sales charge on the specified amount and the amount
actually purchased. If the purchaser does not pay such difference within 20 days
of the expiration date, he irrevocably constitutes and appoints the Transfer
Agent as his attorney to surrender for redemption any or all shares, to make up
such difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes
to cancel the agreement, he must give written notice to AIM Distributors. If at
any time before completing the LOI Program the purchaser requests the Transfer
Agent to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may
also qualify for reduced initial sales charges based upon such purchaser's
existing investment in shares of any of the AIM Funds (except for (i) Class A
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund and (ii) Class B and Class C shares of the AIM Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve
Shares of AIM Money Market Fund and (ii) Class B and Class C shares of the AIM
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; (b) exchanges of shares of certain other funds; (c) use of the
reinstatement privilege; or (d) a merger, consolidation or acquisition of assets
of a fund.
The following purchasers will not pay initial sales charges on
purchases of Class A shares because there is a reduced sales effort involved in
sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members
of their immediate family) of AIM Management, its affiliates or
The AIM Family of Funds--Registered Trademark--; and any
foundation, trust or employee
67
<PAGE> 213
benefit plan established exclusively for the benefit of, or by,
such persons;
o Any current or retired officer, director, or employee (and
members of their immediate family), of CIGNA Corporation or its
affiliates, or of First Data Investor Services Group; and any
deferred compensation plan for directors of investment companies
sponsored by CIGNA Investments, Inc. or its affiliates;
o Sales representatives and employees (and members of their
immediate family) of selling group members or financial
institutions that have arrangements with such selling group
members;
o Purchases through approve fee-based programs;
o Employee benefit plans designated as qualified purchasers as
defined above, provided the initial investment in the Fund(s) is
at least $1 million; the sponsor signs a $1 million LOI; the
employer-sponsored plan has at least 100 eligible employees; or
all plan transactions are executed through a single omnibus
account per Fund and the financial institution or service
organization has entered into the appropriate agreement with the
distributor. Section 403(b) plans sponsored by public educational
institutions are not eligible for a sales charge exception based
on the aggregate investment made by the plan or the number of
eligible employees. Purchases of AIM Small Cap Opportunities Fund
by such plans are subject to initial sales charges;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or AIM
Constellation Fund on September 8, 1996, or of AIM Charter Fund
on November 17, 1986, who have continuously owned shares having a
market value of at least $500 and who purchase additional shares
of the same Fund;
o Unitholders of G/SET series unit investment trusts investing
proceeds from such trusts in shares of Weingarten or
Constellation; provided, however, prior to the termination date
of the trusts, a unitholder may invest proceeds from the
redemption or repurchase of his units only when the investment in
shares of Weingarten and Constellation is effected within 30 days
of the redemption or repurchase;
o A shareholder of a fund that merges or consolidates with an AIM
Fund or that sells its assets to an AIM Fund in exchange for
shares of an AIM Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who
since that date continually have owned shares of one or more of
these funds; and
o Certain former AMA Investment Advisers' shareholders who became
shareholders of the AIM Global Health Care Fund in October 1989,
and who have continuously held shares in the GT Global funds
since that time.
As used above, immediate family includes an individual and his or her
spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex Fund,
AIM Advisor International Value Fund, AIM Advisor Large Cap Value
Fund, AIM Advisor MultiFlex Fund and AIM Advisor Real Estate Fund
by shareholders of record on April 30, 1995, of these Funds,
except that shareholders
68
<PAGE> 214
whose broker-dealers maintain a single omnibus account with AFS
on behalf of those shareholders, perform sub-accounting functions
with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995, from shareholders
whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settle of
a living trust, of shares held in the account at the time of
death or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result 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 that
does not exceed 12% annually of the participant's or
beneficiary's account value in a particular AIM Fund; (ii) in
kind transfers of assets where the participant or beneficiary
notifies the distributor of the transfer no later than the time
the transfer occurs; (iii) tax-free rollovers or transfers of
assets to another plan of the type described above invested in
Class B or Class C shares of one or more of the AIM Funds; (iv)
tax-free returns of excess contributions or returns of excess
deferral amounts; and (v) distributions on the death or
disability (as defined in the Internal Revenue Code of 1986, as
amended) of the participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual
amount of 12% of the account value on a per fund basis, at the
time the withdrawal plan is established, provided the investor
reinvests his dividends;
o Liquidation by the Fund when the account value falls below the
minimum required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer or record notifies the
distributor prior to the time of investment that the dealer
waives the payment otherwise payable to him.
Upon the redemption of shares in Categories I and II purchased in
amounts of $1 million or more, no CDSC will be applied in the following
situations:
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as qualified
purchasers, as defined above, where the redemptions are in
connection with employee terminations or withdrawals, provided
the total amount invested in the plan is at least $1,000,000; the
sponsor signs a $1 million LOI; or the employer-sponsored plan
has at least 100 eligible employees; provided, however, that
403(b) plans sponsored by public educational institutions shall
qualify for the CDSC waiver 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;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's dealer
waives the amounts otherwise payable to it by the distributor and
notifies the distributor prior to the time of investment; and
69
<PAGE> 215
o Shares acquired by exchange from Class A shares in Categories I
and II unless the shares acquired by exchange are redeemed within
18 months of the original purchase of the Class A shares.
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 heading "Purchasing Shares."
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 "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "Redeeming 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 Funds to redeem shares, AIM Distributors also can repurchase shares. AIM
may redeem all shares of Aggressive Growth Fund, Equity 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 AFS, 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 ("the NYSE ") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposition of portfolio securities or the
valuation of the net assets of a Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will be subject to backup withholding.
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
70
<PAGE> 216
provide the Fund with a taxpayer identification number ("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. 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:
o a corporation
o an organization exempt from tax under Section 501(a), an
individual retirement plan (IRA), or a custodial account under
Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United
States, or any of their political subdivisions or
instrumentalities
o a foreign government or any of its political subdivisions,
agencies or instrumentalities
o an international organization or any of its agencies or
instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the
U.S. or a possession of the U.S.
o a futures commission merchant registered with the Commodity
Futures Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the
1940 Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o 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
71
<PAGE> 217
o 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.
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 federal
income tax withholding at a 30% rate on ordinary income dividends and
distributions 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.
NET ASSET VALUE DETERMINATION
In accordance with the current rules and regulations of the SEC, the
net asset value of a share of each 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 on the NYSE will generally be
used. The net asset values per share of the Retail Classes and the Institutional
Class will differ because different expenses are attributable to each class. The
income or loss and the expenses (except those listed below) of a Fund are
allocated to each class on the basis of the net assets of the Fund allocable to
each such class, calculated as of the close of business on the previous business
day, as adjusted for the current day's shareholder activity of each class.
Distribution and service fees and transfer agency fees (to the extent different
rates are charged to different classes) are allocated only to the class to which
such expenses relate. The net asset value per share of a class is determined by
subtracting the liabilities (e.g., the expenses) of the Fund allocated to the
class from the assets of the Fund allocated to the class and dividing the result
by the total number of shares outstanding of such class. Determination of each
Fund's net asset value per share is made in accordance with generally accepted
accounting principles.
A security listed or traded on an exchange (except convertible bonds)
is valued at its last sales price on the exchange where the security is
principally traded or, lacking any sales on a particular day, the security is
valued at the closing bid price on that day. Each security traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market system) is valued on the basis of prices provided by independent
pricing services. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date, or lacking a last sale, at
the closing bid price on that day; option contracts are valued at the mean
between the closing bid and asked prices on the exchange where the
72
<PAGE> 218
contracts are principally traded; futures contracts are valued at final
settlement price quotations from the primary exchange on which they are traded.
Debt obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by an independent
pricing service may be determined without exclusive reliance on quoted prices
and may reflect appropriate factors such as dividend rate, yield, type of issue,
coupon rate and maturity date. Securities for which market quotations are not
readily available or for which market quotations are not reflective of fair
value 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 sixty (60) days
or less to maturity are valued at amortized cost, which approximates market
value. (See also "Purchasing Shares," and "Redeeming Shares" and "Pricing of
Shares" in the Prospectus.)
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 a 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.
Fund securities primarily traded in foreign markets may be traded in
such markets on days which are not business days of the Fund. Because the net
asset value per share of each Fund is determined only on business days of the
Fund, the net asset value per share of a Fund may be significantly affected on
days when an investor can not exchange or redeem shares of the Fund.
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 Investment Plan", and "Special Plans - Automatic Dividend
Investment." 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.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
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
73
<PAGE> 219
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"). Foreign currency gains
(including gains from options, futures or forward contracts on foreign
currencies) that are not "directly related" to a Fund's principal business may,
under regulations not yet issued, not be qualifying income for purposes of the
Income Requirement.
At the close of each quarter of its taxable year, at least 50% of the
value of each Fund's assets must consist of cash and cash items, U.S. Government
securities, securities of other regulated investment companies, and securities
of other issuers (as to which the Fund has not invested more than 5% of the
value of its total assets in securities of such issuer and as to which the Fund
does not hold more than 10% of the outstanding voting securities of such
issuer), and no more than 25% of the value of its total assets may be invested
in the securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which the Fund controls and which are engaged in the same or similar trades or
businesses (the "Asset Diversification Test"). For purposes of the Asset
Diversification Test, it is unclear under present law who should be treated as
the issuer of forward foreign currency exchange contracts, of options on foreign
currencies, or of foreign currency futures and related options. It has been
suggested that the issuer in each case may be the foreign central bank or
foreign government backing the particular currency. Consequently, a Fund may
find it necessary to seek a ruling from the Internal Revenue Service on this
issue or to curtail its trading in forward foreign currency exchange contracts
in order to stay within the limits of the Asset Diversification Test.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits. Such distributions will be
eligible for the dividends received deduction in the case of corporate
shareholders.
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, net foreign currency gain 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
74
<PAGE> 220
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.
HEDGING TRANSACTIONS
Some of the forward foreign currency exchange contracts, options and
futures contracts that the Funds may enter into will be subject to special tax
treatment as "Section 1256 contracts." Section 1256 contracts are treated as if
they are sold for their fair market value on the last business day of the
taxable year, regardless of whether a taxpayer's obligations (or rights) under
such contracts have terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
combined with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. The net amount
of such gain or loss for the entire taxable year (including gain or loss arising
as a consequence of the year-end deemed sale of such contracts) is deemed to be
60% long-term (taxable at a maximum 20%) 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.
The Funds may engage in certain hedging transactions (such as short
sales "against the box") that may be subject to special tax treatment as
"constructive sales" under section 1259 of the Code if a Fund holds certain
"appreciated financial positions" (defined generally as any interest (including
a future or forward contract, short sale or option) with respect to stock,
certain debt instruments, or partnership interest if there would be a gain were
such interest sold, assigned, or otherwise terminated at its fair market value.)
Upon entering into a constructive sales transaction with respect to an
appreciated financial position, a Fund will be deemed to have constructively
sold such appreciated financial position and will recognize gain as if such
position were sold, assigned or otherwise terminated at its fair market value on
the date of such constructive sale (and will take into account any gain in the
taxable year which includes such date unless the closed transaction exception
applies.)
Other 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
75
<PAGE> 221
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 any of the foregoing rules governing Section
1256 contracts, constructive sales, straddle and conversion transactions may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected investment or 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
transactions.
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 (the "QEF 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. Because the QEF Election imposes substantial requirements on the
PFIC, it is unlikely that a fund will be able to make the QEF Election. For
Taxable years beginning after December 31, 1997, each Fund will alternatively be
able to make an election to mark any shares of PFIC stock that it holds to
market (the "Section 1296 Election"). If the Section 1296 election is made with
respect to any PFIC stock, a Fund will recognize ordinary income to the extent
that the fair market value of such PFIC stock at the close of any taxable year
exceeds its adjusted basis and will also recognize ordinary income in the event
that it disposes of any shares of such PFIC stock at a gain. In each case, such
ordinary income will be treated as dividend income for purposes of the Income
Requirement. A Fund making the Section 1296 Election with respect to any PFIC
stock will similarly recognize a deductible ordinary loss to the extent that the
adjusted basis of such PFIC stock exceeds its fair market value at the close of
any taxable year and will also recognize a deductible ordinary loss in the event
that it disposes of such PFIC stock at a loss. However, the amount of any
ordinary loss recognized by a Fund making a Section 1296 Election with respect
to any PFIC stock may not exceed the amount of ordinary income previously
recognized by such Fund by reason of marking such PFIC stock to market. If
either the QEF Election or the Section 1296 Election is made, the special rules,
discussed above, relating to the taxation of excess distributions, would not
apply. The Funds' intentions to qualify annually as regulated investment
companies may limit their ability to invest and hold PFIC stock.
76
<PAGE> 222
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. Except to the extent otherwise
provided in future Treasury regulations any long-term capital gain recognized by
a non-corporate shareholder will be subject to tax at a maximum rate of 20%. Any
loss recognized by a shareholder on the sale of Fund shares held six months or
less will be treated as a long-term capital loss to the extent of any
distributions of net capital gains received by the shareholder with respect to
such shares.
If a shareholder exercises the exchange privilege within 90 days of
acquiring Class A shares, then the loss such shareholder recognizes on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid upon the purchase of Class A shares reduces any charge such shareholder
would have owed upon purchase of the new Class A shares in the absence of the
exchange privilege. Instead, such sales charge will be treated as an amount paid
for the new Class A shares. In addition, any loss recognized on a sale or
exchange will be disallowed to the extent that disposed Class A shares, Class B
shares or Class C shares are replaced within the 61-day period beginning 30 days
before and ending 30 days after the disposition of such shares. In such a case,
the basis of the shares acquired will be increased to reflect the disallowed
loss. Shareholders should particularly note that this loss disallowance rule
applies even where shares are automatically replaced under the dividend
reinvestment plan.
FOREIGN INCOME TAXES
Investment income received by each Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Funds to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant to
the Foreign Tax Election, shareholders will be required (i) to include in gross
income, even though not actually received, their respective pro-rata shares of
the foreign income taxes paid by the Fund that are attributable to any
distributions they receive; and (ii) either to deduct their pro-rata share of
foreign taxes in computing their taxable income, or to use it (subject to
various Code limitations) as a foreign tax credit against Federal income tax
(but not both). No deduction for foreign taxes may be claimed by a non-corporate
shareholder who does not itemize deductions or who is subject to alternative
minimum tax.
Unless certain requirements are met, 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
77
<PAGE> 223
to the source of the income realized by the Fund. Each Fund's gains from the
sale of stock and securities and certain currency fluctuation gains and losses
will generally be treated as derived from U.S. sources. In addition, the
limitation on the foreign tax credit is applied separately to foreign source
"passive" income, such as dividend income. Because of these limitations,
shareholders may be unable to claim a credit for the full amount of their
proportionate shares of the foreign income taxes paid by a Fund.
BACKUP WITHHOLDING
Under certain provisions of the Code, the Funds may be required to
withhold 31% of reportable dividends, capital gains distributions and redemption
payments ("backup withholding"). Generally, shareholders subject to backup
withholding will be those for whom a certified taxpayer identification number is
not on file with the Company or who, to the Company's knowledge, have furnished
an incorrect number, or who have been notified by the Internal Revenue Service
that they are subject to backup withholding. When establishing an account, an
investor must provide his or her taxpayer identification number and certify
under penalty of perjury that such number is correct and that he or she is not
otherwise subject to backup withholding. Corporate shareholders and other
shareholders specified in the Code are exempt from backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against a shareholder's U.S. federal income tax liability.
REINSTATEMENT PRIVILEGE
For federal income tax purposes, exercise of your reinstatement
privilege may increase the amount of gain or reduce the amount of loss
recognized in the original redemption transaction, because the initial sales
charge will not be taken into account in determining such gain or loss to the
extent there has been a reduction in the initial sales charge payable upon
reinvestment.
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 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
78
<PAGE> 224
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 at the date
of this SAI. 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.
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus
under the title "Shareholder Information."
TIMING OF PURCHASE ORDERS
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. If a check used to purchase shares does not clear, or if
any investment order must be canceled due to nonpayment, the investor will be
responsible for any resulting loss to an AIM Fund or to AIM Distributors.
SHARES CERTIFICATES
AIM Funds will issue share certificates upon written request to AFS.
Otherwise, shares are held on the shareholder's behalf and recorded on the Fund
books. AIM Funds will not issue certificates for shares held in prototype
retirement plans.
SYSTEMATIC WITHDRAWAL PLAN
Under a Systematic Withdrawal Plan, all shares are to be held by the
Transfer Agent and all dividends and distributions are reinvested in shares of
the applicable AIM Fund by the Transfer Agent. To provide funds for payments
made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient
full and fractional shares at their net asset value in effect at the time of
each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events.
Since such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
79
<PAGE> 225
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGES
If a shareholder is exchanging into a fund paying daily dividends, 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.
EXCHANGES BY TELEPHONE
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
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.
By signing an 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 modify or terminate the telephone exchange privilege at any time
without notice. An investor may elect not to have this privilege by marking the
appropriate box on the application. Then any exchanges must be effected in
writing by the investor.
REDEMPTIONS BY TELEPHONE
By signing an 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
80
<PAGE> 226
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor.
SIGNATURE GUARANTEES
In addition to those circumstances listed in the "Shareholder
Information" section of each Fund's Prospectus, signature guarantees are
required in the following situations: (1) requests to transfer the registration
of shares to another owner; (2) telephone exchange and telephone redemption
authorization forms; (3) changes in previously designated wiring or electronic
funds transfer instructions; and (4) 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. The AIM Funds
may waive or modify any signature guarantee requirements at any time.
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 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.
DIVIDENDS AND DISTRIBUTIONS
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.
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.
Dividends on Class B and Class C shares are expected to be lower than
those for Class A shares or AIM Cash Reserve Shares because of higher
distribution fees paid by Class B and Class C shares. Dividends on all shares
may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made
by the shareholder at any time by notice to the Transfer Agent and are effective
as to any subsequent payment if such notice is received by the Transfer Agent
prior to the record date of such payment. Any dividend and distribution election
remains in effect until the Transfer Agent receives a revised written election
by the shareholder.
81
<PAGE> 227
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.
MISCELLANEOUS INFORMATION
CHANGES FOR CERTAIN ACCOUNT INFORMATION
The Transfer Agent may impose certain copying changes for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
AUDIT REPORTS
The Board of Directors will issue to shareholders 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, 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, LLP, 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. AFS, a wholly owned subsidiary of AIM, P.O.
Box 4739, Houston, Texas 77210-4739, is the transfer and dividend disbursing
agent for the Class A, Class B and Class C shares of each of the Funds. Each
Fund pays the Custodian and the Transfer Agent such compensation as may be
agreed upon from time to time.
Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank National
Association), 712 Main, Houston, Texas 77002, serves as Sub-Custodian for retail
purchases of the AIM Funds.
82
<PAGE> 228
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 ________________, and the amount of outstanding
shares held by such holders are set forth below:
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
AIM International Merrill Lynch, Pierce, %** %
Equity Fund ? Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, %** %
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, %** %
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 Fund may
be presumed to be in "control" of such Fund, as defined in the 1940 Act.
83
<PAGE> 229
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
AIM Global Aggressive Merrill Lynch, Pierce, % %
Growth Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, %** %
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, %** %
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Global Growth Merrill Lynch, Pierce, % %
Fund - Fenner & Smith
Class A shares 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 Fund may
be presumed to be in "control" of such Fund, as defined in the 1940 Act.
84
<PAGE> 230
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Class B shares Merrill Lynch, Pierce, % %
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce %** %
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Global Income Fund ? Merrill Lynch, Pierce % %
Class B shares Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Dain Rauscher Incorporated % %
FBO Guarantee & Trust Co.
Cust. J. Stuart Johnson IRA
3000 Penn Avenue W. Ext.
Warren, PA 16365
Merrill Lynch Pierce % %
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: 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 Fund may
be presumed to be in "control" of such Fund, as defined in the 1940 Act.
85
<PAGE> 231
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Karl Walker & % %
Peggy Walker C/PROP
RT 2, Box 186
Hockley, TX 77447
Joyce N. Wilson % %
TRST. Wilson Family Trust
2524 E. Ames Ave.
Anaheim, CA 92806-4701
Class B Shares PaineWebber % %
FBO Robert S. Carpenter &
Alma Lee Carpenter TTEES
FBO Robert S. Charit.
Remnder TR
9 Lowell Road
Wellesley, MA 02181-2723
Donaldson Lufkin, Jenrette % %
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
AIM European
Development Fund -
Class A shares Jonathan C. Schoolar % %**
3722 Tartan Lane
Houston, TX 77025
INVESCO Trust Company %** %
Attn: Sheila Wendland
7800 E. Union Avenue
Denver, CO 80237-0000
Michael J. Cemo % %
5604 Buffalo Speedway
Houston, Texas 77005
Obie & Co. % %
FBO Charles T. Bauer
02 001 1365200
P. O. Box 200547
Mutual Fund Unit 16-HCB-09
Houston, Texas 77216-0547
</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 Fund may
be presumed to be in "control" of such Fund, as defined in the 1940 Act.
86
<PAGE> 232
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Joel Dobberpuhl and % %
Holly Dobberpuhl JTWROS
9006 Ensemble Ct
Houston, TX 77040-0000
Class B shares Merrill Lynch Pierce %** %
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
PaineWebber for the Benefit of % %
William F. Manus and
Maryette Manus JT TEN
11 Meeker Street
West Orange, NJ 07052-4328
Fahnestock & Co. Inc. % %
FBO A013235138
Jack Sweeney
125 Broad Street
New York, NY 10004
Interstate/Johnson Lane % %
FBO 238-82128-19
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
Interstate/Johnson Lane % %
FBO 238-82073-14
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
Interstate/Johnson Lane % %
FBO 238-75290-15
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
</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 Fund may
be presumed to be in "control" of such Fund, as defined in the 1940 Act.
87
<PAGE> 233
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Class C shares Donaldson Lufkin Jenrette %** %
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Interstate/Johnson Lane % %**
FBO 238-75485-10
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
AIM Asian Growth Fund -
Class A shares INVESCO Trust Company %** %
Attn: Sheila Wendland
7800 E Union Ave.
Denver, CO 80237-0000
Arthur Dale Griffin III % %
36 Windemere Lane
Houston, TX 77063
Jonathan C. Schoolar % %
3722 Tartan Lane
Houston, TX 77025
Obie & Co % %
FBO Charles T. Bauer
02 001 1365200
PO Box 200547
Mutual Fund Unti 16-HCB-09
Houston, TX 77216-0547
Class B shares Merrill Lynch Pierce % %
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: 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 Fund may
be presumed to be in "control" of such Fund, as defined in the 1940 Act.
88
<PAGE> 234
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
John Hamilton Mueller TTEE % %
John Hamilton Mueller Revocable
Living Trust
DTD 02-26-88
3110 E. Fernan Hill Rd
Coeur D Alene, ID 83814-7564
Thomas F. Weigel and % %
Kathleen M. Weigel JTWROS
309 4th Ave NW
Mandan, ND 58554-0000
Donaldson Lufkin Jenrette % %
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Class C shares Interstate/Johnson Lane % %**
FBO 238-75485-10
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
NFSC FEBO # X33-102920 % %**
Gregory S. Beck
8217 W 146th Ter
Overland Park, KS 66223
</TABLE>
As of ____________, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of Aggressive Growth Fund,
Growth Fund, Equity Fund, Income Fund, Class B and Class C shares of Asian Fund
and Class B and Class C shares of European Fund. Also as ____________, the
directors and officers of the Company as a group owned ____% and ____% of the
outstanding Class A shares of Asian Fund and European Fund, respectively.
- ----------
* 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 Fund may
be presumed to be in "control" of such Fund, as defined in the 1940 Act.
89
<PAGE> 235
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.
90
<PAGE> 236
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.
91
<PAGE> 237
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.
92
<PAGE> 238
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.
93
<PAGE> 239
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
94
<PAGE> 240
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
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.
95
<PAGE> 241
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.
96
<PAGE> 242
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.
97
<PAGE> 243
C
Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D
Bonds are in default on interest and/or principal payments. Such bonds
are extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the obligor. `DDD' represents
the highest potential for recovery on these bonds, and `D' represents the lowest
potential for recovery.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the `AAA', `DDD', `DD', or `D' categories.
98
<PAGE> 244
APPENDIX C
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY
U.S. GOVERNMENT AGENCIES OR INSTRUMENTSALITIES
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, and 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 OF "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, $200,00, $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.
99
<PAGE> 245
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-loan 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. FMNA may remove
service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual interest rate
borne y 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 and certain other amounts collected, such as late
charges.
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
100
<PAGE> 246
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 lie 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 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
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 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 BOND--are bonds issued by
Washington Metropolitan Area Transit Authority and are guaranteed by the
Secretary of Transportation of the U.S. Government.
101
<PAGE> 247
FINANCIAL STATEMENTS
FS
<PAGE> 248
PART C: OTHER INFORMATION
Item 23. Exhibits
(a) (1) - Articles of Incorporation of Registrant were filed as an
Exhibit to Registrant's Registration Statement on December
19, 1991.
(2) - Articles of Amendment, dated May 21, 1992, were filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1
on February 23, 1993.
(3) - Articles of Amendment, dated May 21, 1992, were filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1
on February 23, 1993.
(4) - 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.
(5) - 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.
(6) - Articles of Amendment, dated November 14, 1994, were
filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996.
(7) - 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.
(8) - Articles Supplementary to Articles of Incorporation of
Registrant, dated June 12, 1997, were filed electronically
as an Exhibit to Post-Effective Amendment No. 12 on August
4, 1997, and are hereby incorporated by reference.
(9) - Articles of Amendment to Articles of Incorporation of
Registrant, dated October 14, 1997, were filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997, and are hereby incorporated by
reference.
(b) (1) - 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.
(2) - 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.
(3) - Amended and Restated By-Laws, dated effective
December 11, 1996, were filed electronically as an Exhibit
to Post-Effective Amendment No. 10 on February 24, 1997,
and are hereby incorporated by reference.
(c) - Instruments Defining Rights of Security Holders - None.
(d) (1) - (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.
C-1
<PAGE> 249
(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.
(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.
(d) Master Investment Advisory Agreement, dated February
28, 1997, between A I M Advisors, Inc. and Registrant was
filed electronically as an Exhibit to Post-Effective
Amendment No. 11 on May 16, 1997, and is hereby
incorporated by reference.
(e) Amendment No. 1, dated as of November 1, 1997, to
Master Investment Advisory Agreement, dated February 28,
1997, between A I M Advisors, Inc. and Registrant was
filed electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is hereby
incorporated by reference.
(f) Copy of Foreign Country Selection and Mandatory
Securities Depository Responsibilities Delegation
Agreement, dated September 9, 1998, between Registrant and
A I M Advisors, Inc. is hereby filed electronically.
(g) Amendment No. 1, dated September 28, 1998, to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. is
hereby filed electronically.
(2) - (a) Master Sub-Advisory Agreement, dated as of November 1,
1997, between A I M Advisors, Inc. and INVESCO Global
Asset Management Limited was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(b) Sub-Sub-Advisory Agreement, dated as of November 1,
1997, between INVESCO Global Asset Management Limited and
INVESCO Asset Management Limited was filed electronically
as an Exhibit to Post-Effective Amendment No. 13 on
October 17, 1997, and is hereby incorporated by reference.
(c) Sub-Sub-Advisory Agreement, dated as of November 1,
1997, between INVESCO Global Asset Management Limited and
INVESCO Asia Limited was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(e) (1) - (a) 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.
- (b) 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.
C-2
<PAGE> 250
- (c) 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.
- (d) 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.
- (e) 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.
- (f) Master Distribution Agreement, dated February 28,
1997, between Registrant (on behalf of the portfolios'
Class A shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment
No. 11 on May 16, 1997.
- (g) (i) Master Distribution Agreement, dated February 28,
1997, between Registrant (on behalf of the portfolios'
Class B shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment
No. 11 on May 16, 1997, and is hereby incorporated by
reference.
- (g) (ii)Amendment No. 1, dated November 1, 1997, to Master
Distribution Agreement between Registrant (on behalf of
the portfolios' Class B shares) and A I M Distributors,
Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17, 1997, and
is hereby incorporated by reference.
- (h) (i) Amended and Restated Master Distribution
Agreement, dated as of August 4, 1997, between Registrant
(on behalf of the portfolios' Class A and Class C shares)
and A I M Distributors, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 13 on October
17, 1997, and is hereby incorporated by reference.
- (h) (ii)Amendment No. 1, dated November 1, 1997, to
Amended and Restated Master Distribution Agreement, dated
as of August 4, 1997, (on behalf of the portfolios' Class
A and Class C shares) was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(2) - Form of Selected Dealer Agreement between A I M
Distributors, Inc. and selected dealers is filed herewith
electronically.
(3) - Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks is filed herewith
electronically.
(f) (1) - 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.
(2) - 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.
(3) - 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.
C-3
<PAGE> 251
(4) - 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.
(5) - Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors as approved March 12, 1997, was
filed as an Exhibit to Post-Effective Amendment No. 14 on
February 20, 1998, and is hereby incorporated by
reference.
(g) (1) - 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.
(2) - 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.
(3) - 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.
(4) - Amendment No. 3, dated November 1, 1997, to the Custodian
Contract, dated November 8, 1991, between Registrant and
State Street Bank and Trust Company was filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997, and is hereby incorporated by
reference.
(5) - Amendment, dated September 9, 1998, to the Custodian
Contract, dated November 8, 1991, between Registrant and
State Street Bank and Trust Company is filed herewith
electronically.
(6) - 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.
(h) (1) - (a) 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.
- (b) 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.
- (c) 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.
C-4
<PAGE> 252
- (d) 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.
- (e) (i) 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.
- (e) (ii) Amendment No. 1, dated August 4, 1997, to the
Transfer Agency and Service Agreement, dated as of
November 1, 1994, between the Registrant and A I M Fund
Services, Inc., was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17, 1997, and
is hereby incorporated by reference.
- (f) (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.
- (f) (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, Inc. (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.
- (f) (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, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 9 on February
28, 1996, and is hereby incorporated by reference.
- (f)(iv) Amendment No. 3, dated as of February 1, 1997, to
the Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First Data
Investor Services Group, Inc. was filed electronically as
an Exhibit to Post- Effective Amendment No. 12 on August
4, 1997, and is hereby incorporated by reference.
- (f)(v) Amendment No. 4, dated June 30, 1998, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between the Registrant and First Data Investor
Services Group, Inc. is filed herewith electronically.
- (f)(vi) Amendment No. 5, dated July 1, 1998, to the Remote
Access and Related Services Agreement, dated December 23,
1994, between the Registrant and First Data Investor
Services Group, Inc. is filed herewith electronically.
- (f)(vii) Exhibit 1, effective as of August 4, 1997, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First Data
Investor Services Group, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 14 on February
20, 1998, and is hereby incorporated by reference.
- (f)(viii) Preferred Registration Technology Escrow
Agreement, dated September 10, 1997, between Registrant
and First Data Investor Services Group, Inc., was filed
C-5
<PAGE> 253
electronically as an Exhibit to Post-Effective Amendment
No. 14 on February 20, 1998, and is hereby incorporated by
reference
(2) - (a) 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.
- (b) 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.
- (c) 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 to Post-Effective Amendment No. 9 on February 28,
1996.
- (d) (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.
- (d) (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.
- (d) (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.
- (d) (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.
- (e) (i) Administrative Services Agreement, dated as of
February 28, 1997, between A I M Advisors, Inc. and
Registrant was filed as an Exhibit to Post-Effective
Amendment No. 11 on May 16, 1997, and is hereby
incorporated by reference.
- (e) (ii) Amendment No. 1, dated November 1, 1997, to
Master Administrative Services Agreement, dated February
28, 1997, between A I M Advisors, Inc. and Registrant was
filed electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is hereby
incorporated by reference.
(3) - (a) 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.
C-6
<PAGE> 254
- (b) 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.
(4) - (a) 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.
- (b) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated February 1, 1993,
was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 1 on February 23, 1993, and was filed
electronically as an Exhibit to Post-Effective Amendment
No. 10 on February 24, 1997, and is hereby incorporated by
reference.
- (c) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of November 1,
1997, among the Registrant, First Data Investor Services
Group, Inc., Financial Data Services, Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated was filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997, and is hereby incorporated by
reference.
(i) - Opinion and Consent of Ballard Spahr Andrews &
Ingersoll, LLP relating to AIM Asian Growth Fund and AIM
European Development Fund was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(j) (1) - Consent of KPMG Peat Marwick LLP to be filed
electronically.
(2) - Consent of Ballard Spahr Andrews & Ingersoll, LLP is
filed herewith electronically.
(k) - Financial Statements - None.
(l) (1) - (a) Agreement Concerning Initial Capitalization of the
Registrant's AIM Global Aggressive Growth Fund, AIM Global
Growth Fund and AIM Global Income Fund, dated as of July
1, 1994, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on February
23, 1995, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996, and
is hereby incorporated by reference.
(b) Agreement concerning Initial Capitalization of the
Registrant's AIM Asian Growth Fund and AIM European
Development Fund, dated November 3, 1997, was filed
electronically as an Exhibit to Post-Effective Amendment
No. 14 on February 20, 1998, and is hereby incorporated by
reference.
(m) (1) - (a) Registrant's Distribution Plan was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993.
- (b) 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.
C-7
<PAGE> 255
- (c) 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.
- (d) 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.
- (e) 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.
- (f) 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.
- (g) 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.
- (h) Amended and Restated Master Distribution Plan, dated
as of September 10, 1994, as amended as of September 10,
1994, and amended and restated as of June 30, 1997, for
Registrant's Class A shares was filed electronically as an
Exhibit to Post-Effective Amendment No. 12 on August 4,
1997.
- (i) (i) Second Amended and Restated Master Distribution
Plan, dated as of September 10, 1994, as amended September
10, 1994, and as amended and restated as of May 2, 1995,
and amended and restated as of June 30, 1997, for
Registrant's Class B shares was filed electronically as an
Exhibit to Post-Effective Amendment No. 12 on August 4,
1997, and is hereby incorporated by reference.
- (i) (ii) Amendment No. 1, dated November 1, 1997, to
Second Amended and Restated Master Distribution Plan for
Registrant's Class B shares was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
- (j) (i) Second Amended and Restated Master Distribution
Plan, dated as of September 10, 1994, as amended as of
September 10, 1994, as amended and restated as of June 30,
1997, and as amended and restated as of August 4, 1997,
for Registrant's Class A and Class C shares was filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997.
- (j) (ii) Amendment No. 1, dated November 1, 1997, to
Second Amended and Restated Master Distribution Plan for
Registrant's Class A and Class C shares was filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997.
- (k) Third Amended and Restated Master Distribution Plan
for Registrant's Class A and Class C shares is filed
herewith electronically.
C-8
<PAGE> 256
(2) - Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is
filed herewith electronically .
(3) - Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is
filed herewith electronically.
(4) - (a) Form of Agency Pricing Agreement (for Class A
Shares) to be used in connection with Registrant's Master
Distribution Plan is filed herewith electronically.
- (b) 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.
(5) - Forms of Service Agreement for Brokers for Bank Trust
Departments and for Bank Trust Departments to be used in
connection with Registrant's Master Distribution Plan are
filed herewith electronically.
(6) - Form of Variable Group Annuity Contractholder Service
Agreement to be used in connection with Registrant's
Master Distribution Plan is filed herewith electronically.
(n) - Financial Data Schedule to be filed electronically.
(o) (1) - Amended and Restated Multiple Class Plan (Rule 18f-3
Plan), effective as of July 1, 1997, was filed
electronically as an Exhibit to Post-Effective Amendment
No. 12 on August 12, 1997.
(2) - Second Amended and Restated Multiple Class Plan (Rule
18f-3 Plan), effective September 1, 1997, was filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997, and is hereby incorporated by
reference.
Item 24. Persons Controlled by or Under Common Control with Registrant
Provide a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant. For any person
controlled by another person, disclose the percentage of voting securities owned
by the immediately controlling person or other basis of that person's control.
For each company, also provide the state or other sovereign power under the laws
of which the company is organized.
Not Applicable
Item 25. 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 against any liability incurred in their official
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.
C-9
<PAGE> 257
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 $25,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature that each investment advisor of the Registrant, and each
director, officer or partner of the advisor, is or has been engaged within the
last two fiscal years for his or her own account or in the capacity of director,
officer, employee, partner, or trustee.
The only employment of a substantial nature of the Advisor's directors
and officers is with the Advisor and its affiliated companies.
Reference is also made to the caption "Management--Investment Advisor"
of the Prospectus which comprises Part A of the Registration Statement,
and to the caption "Management" of the Statement of Additional
Information which comprises Part B of the Registration Statement, and
to Item 27(b) of this Part C.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
Registrant's securities also act as a principal underwriter, depositor,
or investment advisor.
A I M Distributors, Inc., the Registrant's principal underwriter,
also acts as a principal underwriter to the following investment
companies:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM Growth Series
AIM Investment Funds
AIM Investment Portfolios
AIM Investment Securities Funds (Retail Classes)
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
GT Global Floating Rate Fund, Inc.
(b) Provide the information required by the following table for each
director, officer, or partner of each principal underwriter named in
the response to Item 20:
C-10
<PAGE> 258
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with 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
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
James L. Salners Executive Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B. J. Thompson First Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, Assistant Assistant Secretary
Secretary & General Counsel
Melville B. Cox Vice President & Vice President
Chief Compliance Officer
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Sidney M. Dilgren Vice President None
</TABLE>
- ------------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-11
<PAGE> 259
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
Tony D. Green Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President
& Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Gary K. Wendler Vice President None
David E. Hessel Assistant Vice President, None
Controller & Assistant Treasurer
Luke P. Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Kim T. Auliffe Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
Mary C. Mangham Assistant Vice President None
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
</TABLE>
- ---------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-12
<PAGE> 260
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ -------------------- ---------------------
<S> <C> <C>
Norman W. Woodson Assistant Vice President None
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
P. Michelle Grace Assistant Secretary Assistant Secretary
Lisa A. Moss Assistant Secretary Assistant Secretary
</TABLE>
(c) Provide information required by the following table for all commissions
and other compensation received, directly or indirectly, from the
Registrant during the last fiscal year by each principal underwriter
who is not an affiliated person of the Registrant or any affiliated
person of an affiliated person:
Not Applicable
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical
possession of each account, book, or other document required to be maintained by
section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, maintains physical possession of each such account, book or
other document of the Registrant at its principal executive offices,
except for those maintained by the Registrant's Custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, and the Registrant's Transfer Agent and Dividend Paying Agent,
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739.
Item 29. Management Services
Provide a summary of the substantive provisions of any
management-related service contract not discussed in Part A or B, disclosing the
parties to the contract and the total amount paid and by whom for the
Registrant's last three fiscal years.
Not Applicable
Item 30. Undertakings
In initial registration statements filed under the Securities Act,
provide an undertaking to file an amendment to the registration statement with
certified financial statements showing the initial capital received
before accepting subscriptions from more than 25 persons if the Registrant
intends to raise its initial capital under section 14(a)(3) [15 U.S.C.
80a-14(a)(3)].
- --------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-13
<PAGE> 261
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 23rd day of
December, 1998.
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 December 23, 1998
------------------------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Director & President December 23, 1998
----------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Director December 23, 1998
------------------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Director December 23, 1998
------------------------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Director December 23, 1998
------------------------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Director December 23, 1998
------------------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Director December 23, 1998
------------------------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Director December 23, 1998
------------------------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Director December 23, 1998
------------------------------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Director December 23, 1998
------------------------------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Director December 23, 1998
------------------------------------------
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President & December 23, 1998
------------------------------------------ Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 262
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
(d)(1)(f) Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M Advisors,
Inc.
(d)(1)(g) Amendment No. 1, dated September 28, 1998, to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc.
(e)(2) Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers
(e)(3) Form of Bank Selling Group Agreement between
A I M Distributors, Inc. and banks
(g)(5) Amendment, dated September 9, 1998, to the Custodian
Contract, dated November 8, 1991, between Registrant and
State Street Bank and Trust Company
(h)(1)(f)(v) Amendment No. 4, dated June 30, 1998, to the Remote Access
and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group, Inc.
(h)(1)(f)(vi) Amendment No. 5, dated July 1, 1998, to the Remote Access and
Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group, Inc.
(j)(2) Consent of Ballard Spahr Andrews & Ingersoll, LLP
(m)(1)(k) Third Amended and Restated Master Distribution Plan for
Registrant's Class A and Class C Shares.
(m)(2) Form of Shareholder Service Agreement
(m)(3) Form of Bank Shareholder Service Agreement
(m)(4)(a) Form of Agency Pricing Agreement
(m)(5) Forms of Service Agreement for Brokers for Bank Trust
Departments and for Bank Trust Departments
(m)(6) Form of Variable Group Annuity Contractholder Service
Agreement
</TABLE>
<PAGE> 1
EXHIBIT (d)(1)(f)
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This FOREIGN COUNTRY SELECTION AND MANDATORY SECURITIES DEPOSITORY
RESPONSIBILITIES DELEGATION AGREEMENT (the "Agreement") is made this 9th day of
September, 1998 by and between A I M ADVISORS, INC., a Delaware corporation
("AIM") and each registered investment company (the "Investment Companies") and
its respective portfolios (the "Funds") listed on the signature page hereof.
W I T N E S S E T H:
WHEREAS, AIM has agreed to accept responsibility for selecting and
monitoring relationships with compulsory depositories; and
WHEREAS, AIM has agreed to accept responsibility for the selection of
foreign countries in which the Funds may invest;
NOW, THEREFORE, AIM hereby agrees to exercise reasonable care, prudence and
diligence such as a person having safekeeping of fund assets would exercise in
performing the following responsibilities:
1. DEFINITIONS.
A. "FOREIGN ASSETS" means any of a Fund's investments (including foreign
currencies) for which the primary market is outside the United States,
currency contracts that are settled outside the United States, and
such cash and cash equivalents as are reasonably necessary to effect
the Fund's transactions in such investments.
B. "FOREIGN CUSTODY MANAGER" means State Street Bank and Trust Company.
C. "MANDATORY SECURITIES DEPOSITORY" means a foreign securities
depository or clearing agency that, either as a legal or practical
matter, must be used if a Fund determines to place Foreign Assets in a
country outside the United States (i) because required by law or
regulation; (ii) because securities cannot be withdrawn from such
foreign securities depository or clearing agency; or (iii) because
maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
D. "PREVAILING COUNTRY RISKS" means all factors reasonably related to the
systemic risk of holding Foreign Assets in a particular country,
including but not limited to, such country's political environment;
economic and financial infrastructure (including any Mandatory
Securities Depositories operating in the country); prevailing or
developing custody and settlement practices; laws and regulations
applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country; and factors comprising "prevailing country
risk", including the effects of foreign law on the safekeeping of Fund
assets, the likelihood of expropriation, nationalization, freezing or
confiscation of the Fund's assets and any reasonably foreseeable
difficulties in repatriating the Fund's assets.
<PAGE> 2
E. "SECURITIES DEPOSITORY" means a system for the central handling of
securities where all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical
delivery of the securities. A Securities Depository includes a
Mandatory Securities Depository.
2. FOREIGN COUNTRY SELECTION. Selection of foreign countries in which a Fund
invests. AIM may determine that an issuer is located in a particular
country based on various factors, including the following: (i) the issuer
is organized under the laws of and maintains a principal office in that
country; (ii) the issuer derives 50% or more of its total revenues from
business in that country; or (iii) the primary market for the issuer's
securities is in that country. In addition, in determining whether to
maintain assets of a Fund in a foreign country, AIM shall consider
Prevailing Country Risks. AIM may rely on information provided by
computerized information services, such as Bloomberg terminals, in making
the foregoing determinations. AIM may also rely on information and
opinions provided by the Foreign Custody Manager in making such
determinations. AIM may add or delete foreign countries to or from the
list of approved foreign countries from time to time, as determined by the
AIM employees who are portfolio managers of the Funds.
3. MANDATORY SECURITIES DEPOSITORIES SELECTION. Selection of Mandatory
Securities Depositories for the placement and maintenance of Foreign
Assets. AIM shall not make any such selection unless and until it has
complied with the terms of paragraphs 4 through 6 of this Agreement.
4. DETERMINATION OF REASONABLE CARE. Determinations by AIM that the Foreign
Assets will be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, if such Assets are held
with a Mandatory Securities Depository. In making such determinations, AIM
shall consider all factors relevant to the safekeeping of such Foreign
Assets, including without limitation:
A. The practices, procedures, and internal controls of the Mandatory
Securities Depository, including, but not limited to, the physical
protections available for certificated securities (if applicable), the
method of keeping custodial records, and the security and data
protection practices;
B. Whether the Mandatory Securities Depository has the requisite
financial strength to provide reasonable care for the Foreign Assets;
C. The general reputation and standing of the Mandatory Securities
Depository and its operating history and number of participants; and
D. Whether the Fund will have jurisdiction over and be able to enforce
judgments against the Mandatory Securities Depository, such as by
virtue of the existence of any offices of the Mandatory Securities
Depository in the United States or the consent by the Mandatory
Securities Depository to service of process in the United States.
5. FOREIGN CUSTODY ARRANGEMENTS. Implementation of the Funds' foreign custody
arrangements pursuant to written contracts, by the rules or established
practices or
<PAGE> 3
procedures of the Mandatory Securities Depository, or by any combination of the
foregoing that AIM determines will provide reasonable care for the Funds'
Foreign Assets based on the standards specified in paragraph A.2. above. Any
such contracts shall include provisions that provide:
A. For indemnification or insurance arrangements (or any combination of
the foregoing) such that the Funds will be adequately protected
against the risk of loss of Foreign Assets held in accordance with
such contracts;
B. That the Funds' Foreign Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
custodian or its creditors except a claim of payment for their safe
custody or administration or, in the case of cash deposits, liens or
rights in favor of creditors of the custodian arising under
bankruptcy, insolvency, or similar laws;
C. That beneficial ownership for the Funds' Foreign Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
D. That adequate records will be maintained identifying the Foreign
Assets as belonging to a Fund or as being held by a third party for
the benefit of the Fund;
E. That each Fund's independent public accountants will be given access
to those records or confirmation of the content of those records; and
F. That a Fund will receive periodic reports with respect to the
safekeeping of the Fund's Foreign Assets, including, but not limited
to, notification of any transfer to or from the Fund's accounts or a
third party account containing Foreign Assets held for the benefit of
the Fund.
In lieu of any or all of the provisions specified in a. through f.
above, such contracts may contain such other provisions that AIM
determines will provide, in their entirety, the same or a greater
level of care and protection for Fund Foreign Assets as the specified
provisions, in their entirety.
6. MONITORING MANDATORY SECURITIES DEPOSITORIES. Establishment of a system
(a) to monitor the appropriateness of maintaining the Fund's Foreign Assets
with a particular Mandatory Securities Depository under Section 4 above,
and the contracts governing the Funds' arrangements under Section 5 above;
and (b) to notify the Funds promptly if an arrangement no longer meets the
requirements of [this section B] and to withdraw promptly the Funds'
Foreign Assets from such Mandatory Securities Depository in such event.
7. REPORTS AND OTHER INFORMATION.
A. ANNUAL REPORTS AND OTHER INFORMATION. AIM shall furnish annually to
the Boards of Directors/Trustees information regarding the factors
used in its system to monitor Mandatory Securities Depositories.
B. QUARTERLY REPORTS. AIM will submit to the Boards of
Directors/Trustees a quarterly report listing all newly approved
countries and all countries in which a Fund invested
<PAGE> 4
for the first time during the preceding quarter. Such report shall
include a revised Appendix 1 to the Foreign Custody and Country
Selection Procedures, if applicable, listing the approved countries.
AIM will submit to the Boards of Directors/Trustees a quarterly report
indicating changes to Mandatory Securities Depositories to the extent
such report is not provided by the Foreign Custody Manager.
C. OTHER REPORTS. AIM will notify the Boards of Directors/Trustees in
writing of any material change in the Mandatory Securities
Depositories for a Fund that has not been reported by the Foreign
Custody Manager promptly after the occurrence of the material change.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
A I M ADVISORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------ -------------------------
Assistant Secretary Name:
Title:
(SEAL)
AIM ADVISOR FUNDS, INC. AIM SUMMIT FUND, INC.
AIM Advisor Flex Fund
AIM Advisor International Value Fund AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Large Cap Value Fund AIM Asian Growth Fund
AIM Advisor MultiFlex Fund AIM European Development Fund
AIM Advisor Real Estate Fund AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM EQUITY FUNDS, INC. AIM Global Growth Fund
AIM Aggressive Growth Fund AIM Global Income Fund
AIM Blue Chip Fund
AIM Capital Development Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Charter Fund AIM V.I. Aggressive Growth Fund
AIM Constellation Fund AIM V.I. Balanced Fund
AIM Weingarten Fund AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM FUNDS GROUP AIM V.I. Diversified Income Fund
AIM Balanced Fund AIM V.I. Global Utilities Fund
AIM Global Utilities Fund AIM V.I. Government Securities Fund
AIM High Yield Fund AIM V.I. Growth Fund
AIM Income Fund AIM V.I. Growth & Income Fund
AIM Money Market Fund AIM V.I. High Yield Fund
AIM Select Growth Fund AIM V.I. International Equity Fund
AIM Value Fund AIM V.I. Money Market Fund
AIM V.I. Value Fund
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Small Cap Opportunities Fund
Attest: /s/ P. MICHELLE GRACE By: /s/ JOHN J. ARTHUR
------------------------ ---------------------------
Assistant Secretary Name: John J. Arthur
Title: Senior Vice President
(SEAL)
<PAGE> 1
EXHIBIT (d)(1)(g)
AMENDMENT NO. 1
TO
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This Amendment No. 1 dated as of September 28, 1998, amends the Foreign
Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement (the "Agreement"), dated September 9, 1998, between A I M
Advisors, Inc., a Delaware corporation and each registered investment company
(the "Investment Companies") and its respective portfolios (the "Funds") listed
on the signature page thereof.
W I T N E S S E T H:
WHEREAS, the parties to the Agreement desire to amend the Agreement to
add AIM Investment Securities Funds on behalf of its AIM High Yield Fund II
portfolio as a party to the agreement;
NOW, THEREFORE, the parties agree as follows;
1. The list of Investment Companies and Funds covered by the
Agreement is hereby amended to include the following:
"AIM INVESTMENT SECURITIES FUNDS
AIM High Yield Fund II"
2. In all other respects, the Agreement is hereby confirmed and
remains in full force and effect.
<PAGE> 2
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be
executed by their respective officers on the date first written above.
A I M ADVISORS, INC.
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
------------------------- ----------------------------------
Assistant Secretary President
(SEAL)
AIM ADVISOR FUNDS, INC. AIM SPECIAL OPPORTUNITIES FUNDS
AIM Advisor Flex Fund AIM Small Cap Opportunities Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund AIM SUMMIT FUND, INC.
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund AIM INTERNATIONAL FUNDS, INC.
AIM Asian Growth Fund
AIM EQUITY FUNDS, INC. AIM European Development Fund
AIM Aggressive Growth Fund AIM International Equity Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund
AIM Capital Development Fund AIM Global Growth Fund
AIM Charter Fund AIM Global Income Fund
AIM Constellation Fund
AIM Weingarten Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Aggressive Growth Fund
AIM FUNDS GROUP AIM V.I. Balanced Fund
AIM Balanced Fund AIM V.I. Capital Appreciation Fund
AIM Global Utilities Fund AIM V.I. Capital Development Fund
AIM High Yield Fund AIM V.I. Diversified Income Fund
AIM Income Fund AIM V.I. Global Utilities Fund
AIM Money Market Fund AIM V.I. Government Securities Fund
AIM Select Growth Fund AIM V.I. Growth Fund
AIM Value Fund AIM V.I. Growth & Income Fund
AIM V.I. High Yield Fund
AIM INVESTMENT SECURITIES FUNDS AIM V.I. International Equity Fund
AIM High Yield Fund II AIM V.I. Money Market Fund
AIM V.I. Value Fund
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
----------------------------- ---------------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT (e)(2)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares (the
"Shares") of the registered investment companies for which we now or in the
future act as underwriter, as disclosed in each Fund's prospectus, which may be
amended from time to time by us (the "Funds"), understands that you are a member
in good standing of the National Association of Securities Dealers, Inc.
("NASD"), or, if a foreign dealer, that you agree to abide by all of the rules
and regulations of the NASD for purposes of this Agreement (which you confirm by
your signature below). In consideration of the mutual covenants stated below,
you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares (the "Sales Charge")), as determined in accordance with the
then effective prospectus or Statement of Additional Information used in
connection with the offer and sale of Shares (collectively, the
"Prospectus"), which public offering price may reflect scheduled variations
in, or the elimination of, the Sales Charge on sales of the Funds' Shares
either generally to the public or in connection with special purchase plans,
as described in the Prospectus. You agree that you will apply any scheduled
variation in, or elimination of, the Sales Charge uniformly to all offerees
in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
Prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole discretion to reject any order.
4 With respect to the Funds the Shares of which are indicated in that Fund's
Prospectus as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the Load
Funds' Prospectus and/or periodic instruction from us. With respect to the
Funds, the Shares of which are indicated in that Fund's Prospectus as being
sold with a contingent deferred sales charge or early withdrawal charge (the
"CDSC Funds"), you will be paid a commission or concession as disclosed in
the CDSC Fund's Prospectus and/or periodic instructions from us. With
respect to the Funds whose Shares are indicated as being sold without a
Sales Charge or a contingent deferred sales charge (the "No-Load Funds"),
you may charge a reasonable administrative fee. For the purpose of this
Agreement the term Dealer Commission means commissions or concessions
payable to you as disclosed in the Fund's Prospectuses and the terms "Sales
Charge" and "Dealer Commission" apply only to the Load Funds and the CDSC
Funds. All Dealer Commissions are subject to change without notice by us and
will comply with any changes in regulatory requirements. You agree that you
will not combine customer orders to reach breakpoints in commissions for any
purpose whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in Shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders or where
applicable, through tender offers. Redemptions by a Fund and repurchases by
us will be effected in the manner and upon the terms described in the
Prospectus. We will, upon your request, assist you in processing such orders
for redemptions or repurchases. To facilitate prompt payment following a
redemption or repurchase of Shares, the owner's signature shall appear as
registered on the Funds' records and, as described in the Prospectus, it may
be required to be guaranteed by a commercial bank, trust company or a member
of a national securities exchange.
5/98
<PAGE> 2
6 Sales and exchanges of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer Commission
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any Dealer Commission plus interest thereon.
9 You and we agree to abide by the Conduct Rules of the NASD and all other
federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within seven
(7) business days after the date of our confirmation to you of your original
purchase order therefore, you agree to pay forthwith to us the full amount
of the Dealer Commission allowed to you on the original sale and we agree to
pay such amount to the Fund when received by us. We also agree to pay to the
Fund the amount of our share of the Sales Charge on the original sale of
such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospectus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representation, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
5/98
<PAGE> 3
16 We will supply you with copies of the Prospectuses of the Funds (including
any amendments thereto) in reasonable quantities upon request. You will
provide all customers with a Prospectus prior to or at the time such
customer purchases Shares. You will provide any customer who so requests a
copy of the Statement of Additional Information within the time dictated by
regulatory requirements, as they may be amended from time to time.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ ---------------------------------------------
Signature
---------------------------------------------
Print Name Title
---------------------------------------------
Dealer's Name
---------------------------------------------
Address
---------------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
5/98
<PAGE> 1
EXHIBIT (e)(3)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies for which we now or in the future act as
underwriter, as disclosed in each Fund's prospectus, which may be amended from
time to time by us (the "Funds"). As exclusive agent for the Funds, we are
offering to make available shares of the Funds (the "Shares") for purchase by
your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
prospectus or Statement of Additional Information, (collectively, the
"Prospectus" of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated in the Fund's Prospectus as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus and/or periodic instructions
from us. With respect to the Funds, the Shares of which are indicated on the
attached Schedule A as being sold with a contingent deferred sales charge or
early withdrawal charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
5/98
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 100, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X
------------------ ---------------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ ---------------------------------------------
Signature
---------------------------------------------
Print Name Title
---------------------------------------------
Dealer's Name
---------------------------------------------
Address
---------------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
5/98
<PAGE> 1
EXHIBIT (g)(5)
AMENDMENT TO CUSTODIAN CONTRACT
This Amendment to the Custodian Contract is made as of September 9, 1998 by
and between AIM International Funds, Inc., (the "Fund") and State Street Bank
and Trust Company (the "Custodian"). Capitalized terms used in this Amendment
without definition shall have the respective meanings ascribed to such terms in
the Custodian Contract referred to below.
WHEREAS, the Fund and the Custodian entered into a Custodian Contract
dated as of November 8, 1991 (as amended and in effect from time to time, the
"Contract"); and
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets, and the Fund has made AIM Asian Growth Fund; AIM European
Development Fund; AIM Global Aggressive Growth Fund; AIM Global Growth Fund; AIM
Global Income Fund; AIM International Equity Fund subject to the Contract (each
such series, together with all other series subsequently established by the
Fund and made subject to the Contract in accordance with the terms thereof,
shall be referred to as a "Portfolio", and, collectively, the "Portfolios"); and
WHEREAS, the Fund and the Custodian desire to amend certain provisions of
the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund and the Custodian desire to amend and restate certain
other provisions of the Contract relating to the terms and conditions of the
custody of assets of each of the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereby agree to amend the
Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 17 of
the Contract are hereby amended, as of the effective date of this
Amendment, by renumbering same as Articles 5 through 18, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective
date of this Amendment, as set forth below.
3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
3.1. DEFINITIONS.
Capitalized terms in this Article 3 of the Contract shall have the following
meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's
<PAGE> 2
political environment; economic and financial infrastructure (including any
Mandatory Securities Depositories operating in the country); prevailing or
developing custody and settlement practices; laws and regulations applicable to
the safekeeping and recovery of Foreign Assets held in custody in that country;
and factors comprising the "prevailing country risk", including the effects of
foreign law on the safekeeping of Portfolio assets, the likelihood of
expropriation, nationalization, freezing, or confiscation of a Portfolio's
assets and any reasonably foreseeable difficulties in repatriating a
Portfolio's assets.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of
Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank
(as defined in Rule 17f-5), a bank holding company meeting the requirements of
an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other
appropriate action of the SEC, or a foreign branch of a Bank (as defined in
Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under
Section 17(f) of the 1940 Act, except that the term does not include Mandatory
Securities Depositories.
"Foreign Assets" means any of the Portfolio's investments (including foreign
currencies) for which the primary market is outside the United States, currency
contracts that are settled outside the United States and such cash and cash
equivalents as are reasonably necessary to effect the Portfolio's transactions
in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if
the Fund determines to place Foreign Assets in a country outside the United
States (i) because required by law or regulation; (ii) because securities
cannot be withdrawn from such foreign securities depository or clearing agency;
or (iii) because maintaining or effecting trades in securities outside the
foreign securities depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
3.2. DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Fund, by resolution adopted by its Board of Directors (the "Board"), hereby
delegates to the Custodian, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Article 3 with respect to Foreign Assets
held outside the United States, and the Custodian hereby accepts such
delegation, as Foreign Custody Manager of each Portfolio.
3.3. COUNTRIES COVERED.
The Foreign Custody Manager shall be responsible for performing the delegated
responsibilities defined below only with respect to (a) the countries listed on
Schedule A hereto as approved by the Board, which list of Board-approved
countries may be amended from time to time by the Fund with the agreement of
the Foreign Custody Manager, and (b) the custody arrangements set forth on such
Schedule A. The Foreign Custody Manager shall list on Schedule A the Eligible
Foreign Custodians selected by the Foreign Custody Manager to maintain the
assets of each Portfolio, which list of Eligible Foreign Custodians may be
amended from time to time in the sole discretion of
<PAGE> 3
the Foreign Custody Manager. Mandatory Securities Depositories are listed on
Schedule B to this Contract, which Schedule B may be amended from time to time
by the Foreign Custody Manager. The Foreign Custody Manager will provide
amended versions of Schedules A and B in accordance with Section 3.7 of this
Article 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account, or to place or maintain Foreign Assets, in a country listed on
Schedule A, and the fulfillment by the Fund of the account opening requirements
for such country (if any), the Foreign Custody Manager shall be deemed to have
been appointed by the Board as Foreign Custody Manager with respect to that
country and to have accepted the delegation. Execution of this Amendment by the
Fund shall be deemed to be a Proper Instruction to open an account, or to place
or maintain Foreign Assets, in each Board-approved country listed on Schedule A
in which the Custodian has previously placed or currently maintains Foreign
Assets pursuant to the terms of the Contract. Following the receipt of Proper
Instructions directing the Foreign Custody Manager to close the account of a
Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody
Manager in a designated country, the delegation by the Board to the Custodian as
Foreign Custody Manager for that country shall be deemed to have been withdrawn
and the Custodian shall immediately cease to be the Foreign Custody Manager of
the Portfolio with respect to that country.
The Foreign Custody Manger may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to
the Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to a Portfolio with
respect to the country as to which the Custodian's acceptance of delegation is
withdrawn.
3.4 SCOPE OF DELEGATED RESPONSIBILITIES
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS
Subject to the provisions of this Article 3, the Foreign Custody Manager may
place and maintain the Foreign Assets in the care of the Eligible Foreign
Custodians selected by the Foreign Custody Manager in each country listed as
"approved" on Schedule A, as such Schedule is amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to
place or maintain the Foreign Assets with an Eligible Foreign Custodian, the
Foreign Custody Manager shall determine that the Foreign Assets will be subject
to reasonable care, based on the standards applicable to custodians in the
country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation, the factors specified in Rule
17f-5(c)(1).
<PAGE> 4
3.4.2 CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.
The Foreign Custody Manager shall determine that the contract (or the rules or
established practices or procedures in the case of an Eligible Foreign Custodian
that is a foreign securities depository or clearing agency) governing the
foreign custody arrangements with each Eligible Foreign Custodian selected by
the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
3.4.3 MONITORING
In each case in which the Foreign Custody Manager maintains Foreign Assets with
an Eligible Foreign Custodian, selected by the Foreign Custody Manager, the
Foreign Custody Manager shall maintain a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian, and (ii) the contract governing the custody arrangements established
by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules
or established practices and procedures in the case of an Eligible Foreign
Custodian selected by the Foreign Custody Manager which is a foreign securities
depository or clearing agency that is not a Mandatory Securities Depository).
The Foreign Custody Manager shall provide the Board with information at least
annually as to the factors used in such monitoring system. In the event the
Foreign Custody Manager determines that the custody arrangements with an
Eligible Foreign Custodian that it has selected are no longer appropriate,
the Foreign Custody Manager shall promptly transfer the Fund's Foreign Assets
to another Eligible Foreign Custodian in the market and shall notify the
Board in accordance with Section 3.7 hereunder.
3.5 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY.
For purposes of this Article 3, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of a Portfolio, and the Board shall be deemed to be monitoring
on a continuing basis such Country Risk to the extent that the Board considers
necessary or appropriate.
Notwithstanding any provision of this Contract to the contrary, the Fund on
behalf of the Portfolios and the Custodian expressly acknowledge and agree that
the Foreign Custody Manager shall not be delegated any responsibilities under
this Article 3 with respect to Mandatory Securities Depositories, and that the
determination by or on behalf of the Board to place the Foreign Assets in a
particular country shall be deemed to include the determination to place such
Foreign Assets eligible for any Mandatory Securities Depository with such
Mandatory Securities Depository, whether the Mandatory Securities Depository
exists at the time the Foreign Assets are acquired, or after the acquisition
thereof.
<PAGE> 5
3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO.
In performing the responsibilities delegated to it, the Foreign Custody Manager
shall exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of assets of management investment companies
registered under the 1940 Act would exercise.
3.7. REPORTING REQUIREMENTS.
The Foreign Custody Manager shall report at least quarterly on the Foreign
Assets held with each Eligible Foreign Custodian and in connection therewith if
applicable, provide to the Board amended Schedules A or B at the end of the
calendar quarter in which an amendment to either Schedule has occurred. The
Foreign Custody Manager will make written reports notifying the Board of any
other material change in the foreign custody arrangement of the Portfolios
described in this Article 3 promptly after the occurrence of the material
change.
3.8. REPRESENTATIONS WITH RESPECT TO RULE 17f-5.
The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to the Custodian that the Board has determined that it is
reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Contract to the Custodian as the
Foreign Custody Manager of each Portfolio.
3.9. EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Board's delegation to the Custodian as Foreign Custody Manager of a
Portfolio shall be effective as of the date hereof and shall remain in effect
until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective thirty days after receipt by the non-terminating party of such notice.
The provisions of Section 3.3 hereof shall govern the delegation to and
termination of the Custodian as Foreign Custody Manager of the Fund with respect
to designated countries.
3.10. FUTURE NEGOTIATIONS.
If at any time prior to termination of this Amendment the Custodian as a matter
of standard business practice, accepts delegation as Foreign Custody Manager for
its U.S. mutual fund clients on terms materially different than set forth in
this Amendment, the Custodian hereby agrees to negotiate with the fund in good
faith with respect thereto.
<PAGE> 6
4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD
OUTSIDE THE UNITED STATES.
4.1. DEFINITIONS.
Terms used in this Article 4 and not defined below shall have the meanings
ascribed them in the Contract or in this Amendment:
"Foreign Securities System" means either a clearing agency or a securities
depository which is listed on Schedule A hereto or a Mandatory Securities
Depository.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
4.2. HOLDING SECURITIES.
The Custodian shall identify on its books as belonging to the Portfolios the
foreign securities held by each Foreign Sub-Custodian or Foreign Securities
System. The Custodian may hold foreign securities for all of its customers,
including the Portfolios, with any Foreign Sub-Custodian in an account that is
identified as belonging to the Custodian for the benefit of its customers,
provided however, that (i) the records of the Custodian with respect to foreign
securities of the Portfolios which are maintained in such account shall identify
those securities as belonging to the Portfolios and (ii), to the extent
permitted and customary in the market in which the account is maintained, the
Custodian shall require that securities so held by the Foreign Sub-Custodian be
held separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian.
4.3. FOREIGN SECURITIES SYSTEMS.
Foreign securities shall be maintained in a Foreign Securities System in a
designated country only through arrangements implemented by the Foreign
Sub-Custodian in such country pursuant to the terms of this Contract.
4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS.
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign
securities of a Portfolio held by such Foreign Sub-Custodian, or in a Foreign
Securities System account, only upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
(i) upon sale of such foreign securities for the Portfolio in accordance
with reasonable market practice in the country where such Foreign
Assets are held or traded, including, without limitation: (A) delivery
against expectation of receiving later payment; or (B), in the case of
a sale
<PAGE> 7
effected through a Foreign Securities System, in accordance with
the rules governing the operation of the Foreign Securities
System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolio;
(iv) to the issuer thereof or its agent when such foreign securities
are called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name
of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian (or such Foreign
Sub-Custodian)) or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with reasonable
market practices in the country where such securities are held or
traded; provided that in any such case the Sub-Custodian shall
have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the
Fund requiring a pledge of assets by the Portfolio;
(x) in connection with trading in options and futures contracts
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a copy of a resolution of the
Board or of an Executive Committee of the Board so authorized by
the Board, signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary that the resolution was duly
adopted and is in full force and effect (a "Certified
Resolution"), specifying the Foreign Assets to be
<PAGE> 8
delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such Foreign Assets shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES.
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out, or direct the
respective Foreign Sub-Custodian or the respective Foreign Securities System to
pay out, moneys of a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, in accordance with
reasonable market settlement practice in the country where such
foreign securities are held or traded, including, without
limitation: (A) delivering money to the seller thereof or to a
dealer therefor (or an agent for such seller or dealer) against
expectation of receiving later delivery of such foreign
securities; or (B) in the case of a purchase effected through a
Foreign Securities System, in accordance with the rules governing
the operations of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio
including but not limited to the following payments; interest,
taxes, investment advisory fees, transfer agency fees, fees under
this Contract, legal fees, accounting fees, and other operating
expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed
with or through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a Certified Resolution
specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to
be a proper purpose, and naming the person or persons to whom
such payment is to be made.
<PAGE> 9
4.4.3. MARKET CONDITIONS; MARKET INFORMATION.
Notwithstanding any provision of this Contract to the contrary, settlement and
payment for Foreign Assets received for the account of a Portfolio and delivery
of Foreign Assets maintained for the account of a Portfolio may be effected in
accordance with the customary established securities trading or processing
practices and procedures in the country or market in which the transaction
occurs generally accepted by Institutional Clients, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Foreign Assets from such
purchaser or dealer. For purposes of this Contract, "Institutional Clients"
means U.S. registered investment companies or major U.S. based commercial
banks, insurance companies, pension funds or substantially similar institutions
which, as a part of their ordinary business operations, purchase or sell
securities and make use of global custody services.
The Custodian shall provide to the Board the information with respect to
custody and settlement practices in countries in which the Custodian employs a
Foreign Sub-Custodian, including without limitation information relating to
Foreign Securities Systems, described on Schedule C hereto at the time or times
set forth on such Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board being provided
with substantively less information than had been previously provided hereunder
and, provided further, that the Custodian shall in any event provide to the
Board and to A I M Advisors, Inc. annually the following information and
opinions with respect to the Board-approved countries listed on Schedule A:
(i) legal opinions relating to whether local law restricts with
respect to U.S. registered mutual funds (a) access of a fund's
independent public accountants to books and records of a Foreign
Sub-Custodian or Foreign Securities System, (b) a fund's ability
to recover in the event of bankruptcy or insolvency of a Foreign
Sub-Custodian or Foreign Securities System, (c) a fund's ability
to recover in the event of a loss by a Foreign Sub-Custodian or
Foreign Securities System, and (d) the ability of a foreign
investor to convert cash and cash equivalents to U.S. dollars;
(ii) summary of information regarding Foreign Securities Systems; and
(iii) country profile information containing market practice for (a)
delivery versus payment, (b) settlement method (c) currency
restrictions, (d) buy-in practices, (e) foreign ownership limits,
and (f) unique market arrangements.
4.5. REGISTRATION OF FOREIGN SECURITIES.
The foreign securities maintained in the custody of a Foreign Custodian (other
than bearer securities) shall be registered in the name of the Fund (on behalf
of the applicable Portfolio) or in the name of the Custodian or in the name of
any Foreign Sub-Custodian
<PAGE> 10
or in the name of any nominee of the foregoing, and the Fund agrees to hold any
such nominee harmless from any liability as a holder of record of such foreign
securities, except to the extent that the Fund incurs loss or damage due to
failure of such nominee to meet its standard of care as set forth in the
Contract. The Custodian or a Foreign Sub-Custodian shall not be obligated to
accept securities on behalf of the Fund (on behalf of the applicable Portfolio)
under the terms of this Contract unless the form of such securities and the
manner in which they are delivered are in accordance with reasonable market
practice.
4.6. BANK ACCOUNTS.
The Custodian shall identify on its books as belonging to a Portfolio cash
(including cash denominated in foreign currencies) deposited with the
Custodian. Where the Custodian is unable to maintain, or market practice does
not facilitate the maintenance of, cash on the books of the Custodian, a bank
account or bank accounts opened and maintained outside the United States on
behalf of a Portfolio with a Foreign Sub-Custodian shall be subject only to
draft or order by the Custodian or such Foreign Sub-Custodian, acting pursuant
to the terms of this Contract to hold cash received by or from or for the
account of the Portfolio.
4.7. COLLECTION OF INCOME.
The Custodian shall use reasonable commercial efforts to collect all dividends,
income and other payments with respect to the Foreign Assets held hereunder to
which a Portfolio shall be entitled and shall credit such income, as collected,
to the Portfolio. In the event the Custodian or a Foreign Sub-Custodian must
use measures beyond those which are customary in a particular country to
collect such payments, the Fund and the Custodian shall consult as to such
measures and as to the compensation and expenses of the Custodian attendant
thereto.
4.8. SHAREHOLDER RIGHTS.
With respect to the foreign securities held under this Article 4, the Custodian
will use commercially reasonable efforts to facilitate the exercise by the Fund
on behalf of the Portfolios of voting and other shareholder rights, subject
always to the laws, regulations and practical constraints that may obtain in
the country where such securities are issued. The Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice and other factors may have the effect of severely limiting the
ability of the Fund to exercise shareholder rights.
4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES.
The Custodian shall transmit promptly to the Fund written information
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith) received by the
Custodian via the Foreign Sub-Custodians from issuers of the foreign securities
being held for the account of a Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund written information
so received by the Custodian from issuers of the foreign securities whose
tender or exchange is sought or from the party (or its agents) making the
<PAGE> 11
tender or exchange offer. Subject to the standard of care to which the Custodian
is held under this Contract, the Custodian shall not be liable for any untimely
exercise of any tender, exchange or other right or power in connection with
foreign securities or other property of the Portfolio of any time held by it
unless (i) the Custodian or the respective Foreign Sub-Custodian is in actual
possession of such Foreign securities or property and (ii) the Custodian
receives Proper Instructions with regard to the exercise of any such right or
power, and both (i) and (ii) occur at least two New York business days prior to
the date on which the Custodian is to take action to exercise such right or
power.
4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES SYSTEMS.
Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian
shall, to the extent possible consistent with prevailing market practice,
require the Foreign Sub-Custodian to exercise reasonable care in the performance
of its duties and to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with such Foreign Sub-Custodian's performance of such obligations. At
the election of the Fund, the Fund shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund and any applicable
Portfolio has not been made whole for any such loss, damage, cost, expense,
liability or claim.
4.11. TAX LAW.
The Custodian shall have no responsibility or liability for any obligations now
or hereafter imposed on the Fund or the Custodian as custodian of the Portfolios
by the tax law of the United States or of any state or political subdivision
thereof. With respect to jurisdictions other than the United States, the sole
responsibility of the Custodian with regard to the tax law of any such
jurisdiction shall be to use reasonable efforts to (a) notify the Fund of the
obligations imposed on the Fund with respect to the Portfolios or the Custodian
as custodian of such Portfolios by the tax law of such jurisdictions, including
responsibility for withholding and other taxes, assessment or other governmental
charges, certifications and government reporting and (b) perform such
ministerial steps as are required to collect any tax refund, to ascertain the
appropriate rate of tax withholding and to provide such documents as may be
required to enable each Fund to receive appropriate tax treatment under
applicable tax laws and any applicable treaty provisions. The Custodian, in
performance of its duties under this Section, shall be entitled to treat each
Fund as a Maryland corporation which is a "registered investment company" under
the laws of the United States, and it shall be the duty of each Fund to inform
the Custodian of any change in the organization, domicile or, to the extent
within the knowledge of the Fund, other relevant facts concerning tax treatment
of the Fund and further to inform the Custodian if the Fund is or becomes the
beneficiary of any special ruling or treatment not applicable to the general
nationality and category of entity of which the Fund is a part under general
laws and treaty provisions. The Custodian shall be entitled to rely on any
information supplied by the Fund. The Custodian may engage reasonable
professional advisors disclosed to the Fund by the Custodian, which may include
attorneys, accountants or financial institutions in the regular business of
investment administration and may rely upon advice received therefrom.
<PAGE> 12
4.12. LIABILITY OF CUSTODIAN.
Except as may arise from the Custodian's own negligence or willful misconduct or
the negligence or willful misconduct of a Sub-Custodian, the Custodian shall be
without liability to the Fund for any loss, liability, claim or expense
resulting from or caused by Country Risk (as such term is defined in Article 3
hereof), regardless of whether assets are maintained in the custody of a Foreign
Sub-Custodian or a Foreign Securities Depository, the Custodian shall be without
liability for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism, or any other similar loss beyond the reasonable control of the
Custodian or the Sub-Custodian.
The Custodian shall be liable to the Fund on account of any actions or omissions
of any Foreign Sub-Custodian to the same extent as such Foreign Sub-Custodian
shall be liable to the Custodian.
4.13. USE OF TERM "FUND"; ASSETS AND LIABILITIES.
All references in this Article 4 or in Article 3 of this Agreement to "Fund"
shall mean the Fund, or a Portfolio of the Fund, as the context requires or as
applicable.
The Custodian shall maintain separate and distinct records for each Portfolio
and the assets allocated solely with such Portfolio shall be held and accounted
for separately from the assets of the Fund associated solely with any other
Portfolio. The debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Portfolio shall be
enforceable against the assets of such Portfolio only, and not against the
assets of the Fund generally or the assets of any other Portfolio.
III. Except as specifically superseded or modified herein, the terms and
provisions of the Contract shall continue to apply with full force and effect.
In the event of any conflict between the terms of the Contract prior to this
Amendment and this Amendment, the terms of this Amendment shall prevail. If the
Custodian is delegated the responsibilities of Foreign Custody Manager pursuant
to the terms of Article 3 hereof, in the event of any conflict between the
provisions of Articles 3 and 4 hereof, the provisions of Article 3 shall
prevail.
<PAGE> 13
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and behalf by its duly authorized representative as of the
date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST COMPANY
/s/ MARC L. PARSONS By: /s/ RONALD E. LOGUE
- --------------------------- ---------------------------
Marc L. Parsons Name: Ronald E. Logue
Associate Counsel Title: Executive Vice President
WITNESSED BY: AIM INTERNATIONAL FUNDS, INC.
/s/ P. MICHELLE GRACE By: /s/ JOHN J. ARTHUR
- --------------------------- ---------------------------
Name: P. Michelle Grace Name: John J. Arthur
Title: Assistant Secretary Title: Senior Vice President
<PAGE> 14
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited) --
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
</TABLE>
8/13/98
<PAGE> 15
SCHEDULE A
TO CUSTODIAN CONTRACT BETWEEN
AIM INTERNATIONAL FUNDS, INC. AND
STATE STREET BANK AND TRUST COMPANY
Investment by the AIM Asian Growth Fund, AIM European Development Fund,
AIM International Equity Fund, AIM Global Aggressive Growth Fund, AIM Global
Growth Fund and AIM Global Income Fund portfolios of AIM International Funds,
Inc. in the following countries has been approved by A I M Advisors, Inc.
<TABLE>
<CAPTION>
APPROVED COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSIT
<S> <C> <C> <C>
X Argentina Citibank, N.A. --
X Australia Westpac Banking Corporation --
X Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
X Bangladesh Standard Chartered Bank --
X Belgium Generale de Banque --
X Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
X Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
X Canada Canada Trustco Mortgage Company --
X Cayman Islands(1) -- --
X Chile Citibank, N.A. --
X Peoples's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
X Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
</TABLE>
- ----------
(1) This country does not have an approved foreign sub-custodian.
(2) This country will use the same foreign sub-custodian as Germany.
<PAGE> 16
<TABLE>
<CAPTION>
APPROVED COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C> <C>
X Croatia Privredna Banka Zagreb d.d. --
X Cyprus Barclays Bank Plc. --
Cyprus Offshore Banking Unit
X Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
X Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
X Egypt National Bank of Egypt --
Estonia Hansabank --
X Finland Merita Bank Limited --
X France Banque Paribas --
X Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
X Greece National Bank of Greece S.A. The Bank of Greece,
System for Monitoring Transactions
in Securities in Book-Entry Form
X Hong Kong Standard Chartered Bank --
X Hungary Citibank Budapest Rt. --
Iceland Iceland Ltd. --
X India Deutsche Bank AG --
The Hongkong and Shanghai
Banking Corporation Limited
X Indonesia Standard Chartered Bank --
X Ireland Bank of Ireland --
X Israel Bank Hapoalim B.M. --
X Italy Banque Paribas --
</TABLE>
- --------------------------
(1) This country does not have an approved foreign sub-custodian.
(2) This country will use the same foreign sub-custodian as Germany.
2
<PAGE> 17
<TABLE>
<CAPTION>
APPROVED COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C> <C>
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and --
Merchant Bank Ltd.
X Japan The Diawa Bank, Limited Japan Securities Depository
Center
The Fuji Bank, Limited
Jordan British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
X Republic of Korea The Hongkong and Shanghai Banking --
Corporation Limited
Latvia JSC Hansabank-Latvija --
Lebanon British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited
X Liechtenstein(1) -- --
Lithuania Vilnlaus Bankas AB --
X Luxembourg(2) -- --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
X Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
X The Netherlands MeesPierson N.V. --
X New Zealand ANZ Banking Group --
(New Zealand) Limited
</TABLE>
- ---------------------
1 This country does not have an approved foreign sub-custodian.
2 This country will use the same foreign sub-custodian as Germany.
3
<PAGE> 18
<TABLE>
<CAPTION>
APPROVED COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C> <C>
X Norway Christiania Bank og --
Kreditkaase
Oman British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
X Pakistan Deutsche Bank AG --
X Panama(1) -- --
X Peru Citibank, N.A. --
X Philippines Standard Chartered Bank --
X Poland Citibank (Poland) S.A. --
Bank Polska Kasa Opieki S.A.
X Portugal Banco Comercial Portugues --
X Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
X Singapore The Development Bank of --
Singapore Limited
X Slovak Republic Ceskoslovenska Obchodna --
X Slovenia Banka Creditanstalt d.d. --
X South Africa Standard Bank of South Africa Limited --
X Spain Banco Santander, S.A. --
X Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
X Sweden Skandinaviska Enskilda Banken --
X Switzerland UBS AG --
X Taiwan - R.O.C. Central Trust of China --
</TABLE>
- ----------
(1) This country does not have an approved foreign sub-custodian.
(2) This country will use the same foreign sub-custodian as Germany.
4
<PAGE> 19
<TABLE>
<CAPTION>
APPROVED COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C> <C>
X Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
X Turkey Citibank, N.A. --
Ottoman Bank
X Ukraine ING Bank, Ukraine --
X United Kingdom State Street Bank and Trust Company, --
London Branch
X Uruguay Citibank, N.A. --
X Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)/State Street
London Limited
Cedel, S.A. (Cedel Bank, societe anonyme)/State
Street London Limited
INTERSETTLE (for EASDAQ Securities)
</TABLE>
Certified:
/s/ P. MICHELLE GRACE
- --------------------------
P. Michelle Grace
Assistant Secretary
Dated: November 4, 1998
- ------------------
(1) This country does not have an approved foreign sub-custodian.
(2) This country will use the same foreign sub-custodian as Germany.
5
<PAGE> 1
EXHIBIT (h)(1)(f)(v)
AMENDMENT NUMBER 4 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of June 30, 1998 is made to the Remote Access
and Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on Exhibit 1 of
the Agreement (the "Fund") and First Data Investor Services Group, Inc,
("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree that as of the date first referenced above, the
Agreement shall be amended as follows:
1. Section 14(a) of the Agreement (as amended by Amendment Number 3) is
hereby deleted in its entirety and replaced with the following new Section
14(a):
"(a) This Agreement which became effective as of December 23, 1994 is
hereby extended and shall continue through December 31, 2002 (the
"Initial Term"). Upon the expiration of the Initial Term, this
Agreement shall automatically renew for successive terms of one
(1) year ("Renewal Terms") each, unless the Fund or FDISG
provides written notice to the other of its intent not to renew.
Such notice must be received not less than one-hundred and eighty
(180) days prior to the expiration of the Initial Term or the
then current Renewal Term."
2. Effective January 1, 1999, Section I "Shareholder Account Fees" of
Schedule C "Fee Schedule" (as amended by Amendment Number 3) is amended by
deleting Section I in its entirety and adding the following new Section I:
"I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following
fees:
For the period beginning on January 1, 1999, and continuing through
December 31, 2002, the Fund shall pay FDISG an annualized fee for
shareholder accounts open during any monthly period ("Open Account
Fee") as follows:
<TABLE>
<CAPTION>
Account Volume Fee per shareholder account
-------------- ---------------------------
<S> <C> <C>
1-1.5 million $3.50
1.5-3 million $2.40
3-4 million $2.00
4-5 million $1.90
Exceeding 5 million $1.80
</TABLE>
<PAGE> 2
The Fund also shall pay FDISG Group an annualized fee of $1.60 per
shareholder account that is closed during any monthly period (Closed
Account Fee")(The Open Account Fees and Closed Account Fees hereafter
collectively referred to as "Shareholder Account Fees"). The
Shareholder Account Fees shall be billed by FDISG monthly in arrears on
a prorated basis of 1/12 of the annualized fee, for all such accounts.
In addition, on January 1 of the years 2001 and 2002 the Shareholder
Account fees may be increased by FDISG in an amount equal to the lesser
of (i) the cumulative percentage increase in the Consumer Price Index
for all Urban Consumers (CPI-U) U.S. City Average, All Items
(unadjusted = (1982-84 + 100). published by the U.S. Department of
Labor, or (ii) seven percent (7%) of the Shareholder Account Fees
charged by FDISG to the Fund for the preceding twelve (12) month
period.
In return for the Shareholder Account Fees, FDISG agrees to provide the
following to the Fund:
o Remote Access to FDISG's FSR System
o License for 512 IMPRESS Plus seats. Includes six weeks of
technical training (Completed)
o Conversion of the GT Global Funds into the AIM Family of Funds.
Conversion estimated at 4500 hours of systems development
o License for up to 15 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H
o Dedicated Programming Support equivalent to 1 Systems Manager, 4
Programmers, and 2 Business Systems Analysts
o Separate FSR processing cycle
o Implementation of a Separate FSR processing cycle by September
15, 1997, as more fully described in the attached Exhibit 3 of
this Schedule C (Completed)
o Implementation of the core TA system functionality identified in
Exhibit 1 of this Schedule C (Completed)
o Implementation of IWT Release 5.x functionality as identified in
Exhibit 2 of this Schedule C (Completed)
o Continued use of FDISG's Price/Rate Transmission (PRAT)
application. The PRAT Application will accept prices and dividend
rates from the Fund Accounting Department of the Fund
electronically and post them to the FDISG Pricing System. The
PRAT application will run interconnected via Local Area Network
hardware and software."
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties with
respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant
<PAGE> 3
or other agent of either party is authorized to make any representation,
warranty, or other promises not expressly contained herein with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 of the Agreement, as amended and as may be amended in the future from
time to time.
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: AIM Fund Services, Inc.
-----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: Executive VP
-----------------------------------
<PAGE> 1
EXHIBIT (h)(1)(f)(vi)
AMENDMENT NUMBER 5 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of July 1, 1998 is made to the Remote Access
and Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on Exhibit 1 of
the Agreement (the "Fund") and First Data Investor Services Group, Inc.
("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree that as of the date first referenced above, the
Agreement shall be amended as follows:
1. Exhibit 1 of the Agreement is hereby deleted and replaced with the
Attached revised Exhibit 1.
2. Section III "Additional Fees" of Schedule C "Fee Schedule" is hereby
amended to add the following new subsection h:
"h. Fees for IMPRESS Plus COLD:
(i) IMPRESS Plus COLD Software License Fees - The Fund shall pay an
initial license fee of $302,469 (the "License Fee) based on 512
IMPRESS Plus COLD seats licensed, which includes the use of the
INSCI Software. The initial License Fee shall be financed over a
period of 36 months and be payable monthly in arrears in amounts of
$8,401.66. Thereafter, the then current monthly License Fee
payments shall continue so long as the Fund continues to license
and use the IMPRESS Plus COLD Software. License Fee payments shall
commence on the earlier of a) first production usage of IMPRESS
Plus COLD software or b) September 1, 1998.
(ii) IMPRESS Plus Software Usage Fees. In addition to the License
Fee set forth above, the Fund shall pay a monthly usage fee of
$9,728.00 (the "Usage Fee") based on 512 IMPRESS Plus COLD seats
licensed, which includes the use of the INSCI Software. The Usage
Fee shall commence on the earlier of a) first production usage of
IMPRESS Plus COLD software or b) September 1, 1998.
(iii) IMPRESS Plus COLD Installation Fees. - Thirty (30) days
following the execution of Amendment Number 4 to the Agreement and
receipt of an invoice, the Fund shall pay to FDISG one-time
installation fee of $140,000. Installation
<PAGE> 2
covers 3 line data application and 1 Intelligent Data Stream
application. Installation activities include:
o Hardware installation at FDISG site
o IMPRESS Plus COLD application installation
o IMPRESS Plus COLD third party software installation
o Network Design Assistance
o Project Management
o Post Installation Support
(iv) Additional IMPRESS Plus COLD Fees:
o One-time fee for each additional Line Data Application - $10,000
o One-time fee for each additional Intelligent Data Stream
Application - $20,000
o Application Enhancements - $150/hr
(v) Maintenance and Support for IMPRESS Plus COLD includes items
listed in Section III.b above and the following:
o Report conversion to Express Delivery/IMPRESS Plus COLD
o Hardware support and maintenance
(v) IMPRESS Plus COLD License and Usage and IMPRESS Plus COLD
Installation Fees do not include the following:
o Hardware
o Network and Server Software not listed in Exhibit 1 of
Schedule G
o Customization or application integration
o Support for IMPRESS Plus COLD applications customized or built
by the Fund (see Section 3 of Exhibit 3 of Schedule G)
o Installation, Integration and On-going Support of hardware,
network, and software components not included in Schedule G
o Travel Expenses for install and support staff for on-site
visits (billed separately per Schedule D)
o Application Source Code
(vi) IMPRESS Plus COLD Hardware and Network Fees:
<TABLE>
<CAPTION>
One-time* Monthly Support Fee*
--------- --------------------
(Due Upon Execution)
<S> <C> <C>
Hardware $308,729.52 $3276.27
</TABLE>
* Fee is subject to change based on actual vendor costs"
<PAGE> 3
3. Section 1.3 of Schedule G is amended by adding the following:
"Notwithstanding the foregoing provisions of this Section 1.3 to the
contrary, FDISG shall install and maintain the equipment associated
with FDISG's IMPRESS Plus COLD product set forth in Exhibit 2.3 of this
Schedule G at its facility for the fees set forth in Section III.h. of
Schedule C. At the expense of the Fund, upon termination of the
Agreement or at the request of the Funds FDISG shall deliver to the
Fund such equipment."
4. Exhibit 1 of Schedule G is hereby amended as follows:
(a) Section 1.1 is amended by adding "IMPRESS Plus COLD Release 6.0" to
the list of IMPRESS Plus software products.
(b) Section 2.1 "FDISG Provided Third Party Software" is amended by
adding the following new section 2.1.3:
"2.1.3 INSCI Software. The following Third Party Software is
licensed directly to the Fund by FDISG subject to the terms and
conditions set forth in this Agreement:
Advanced COINSERV Software w/Hierarchical Storage Mgr.
WINCOINS Software
Vector Forms Software
Jukebox Driver Software, Two, 12" Drives
Metacode Server License
CDP Metacode Viewer, 300 Concurrent Users
Metacode Desktop & Converter
Operating Kit (Includes Dial-In for Trouble Shooting)"
5. Exhibit 1.1 of Schedule G "Specifications" is hereby amended to add the
IMPRESS Plus COLD Specifications attached hereto as Exhibit 1.1a of Schedule G.
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties with
respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant or other agent of either
party is authorized to make any representation, warranty, or other promises not
expressly contained herein with respect to the subject matter hereof.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 attached hereto as may be amended from time to time.
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: Senior Vice President
--------------------------------
FMT DATA INVESTOR SERVICES GROUP, INC.
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: Executive VP
--------------------------------
<PAGE> 5
EXHIBIT 1
List of Funds
<TABLE>
<CAPTION>
Fund# Fund Name
<S> <C>
1 AIM WEINGARTEN FUND - CLASS A
2 AIM CONSTELLATION FUND - CLASS A
6 AIM BALANCED FUND - CLASS A
7 AIM LIMITED MATURITY TREASURY FUND - CL
8 AIM TAX-FREE INTERMEDIATE SHARES
10 AIM CHARTER FUND - CLASS A
16 AIM INTERNATIONAL EQUITY FUND - CLASS A
17 AIM HIGH INCOME MUNICIPAL FUND - CLASS
30 AIM EUROPEAN DEVELOPMENT FUND - CLASS A
31 AIM ASIAN GROWTH FUND - CLASS A
34 AIM SMALL CAP OPPORTUNITIES FUND - CLASS
81 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS
82 AIM GLOBAL GROWTH FUND - CLASS A
83 AIM GLOBAL INCOME FUND - CLASS A
301 AIM WEINGARTEN FUND - CLASS C
302 AIM CONSTELLATION FUND - CLASS C
303 AIM MUNICIPAL BOND FUND - CLASS C
305 AIM VALUE FUND - CLASS C
306 AIM BALANCED FUND - CLASS C
308 AIM GLOBAL UTILITIES FUND - CLASS C
310 AIM CHARTER FUND - CLASS C
314 AIM CAPITAL DEVELOPMENT FUND - CLASS C
315 AIM BLUE CHIP FUND - CLASS C
316 AIM INTERNATIONAL EQUITY FUND - CLASS C
317 AIM HIGH INCOME MUNICIPAL FUND - CLASS
320 AIM ADVISOR LARGE CAP VALUE FUND - CLASS
321 AIM ADVISOR INCOME FUND - CLASS C
322 AIM ADVISOR FLEX FUND - CLASS C
323 AIM ADVISOR CASH MANAGEMENT FUND - CLASS
324 AIM ADVISOR MULTIFLEX FUND - CLASS C
325 AIM ADVISOR REAL ESTATE FUND - CLASS C
326 AIM ADVISOR INTERNATIONAL VALUE FUND -
330 AIM EUROPEAN DEVELOPMENT FUND - CLASS C
331 AIM ASIAN GROWTH FUND - CLASS C
350 AIM SELECT GROWTH FUND - CLASS C
360 AIM INTERMEDIATE GOVERNMENT FUND - CLASS
365 AIM INCOME FUND - CLASS C
375 AIM HIGH YIELD FUND - CLASS C
380 AIM MONEY MARKET FUND - CLASS C
381 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS
382 AIM GLOBAL GROWTH FUND - CLASS C
383 AIM GLOBAL INCOME FUND - CLASS C
384 AIM NEW DIMENSION FUND - CLASS C
401 AIM MONEY MARKET FUND - CLASS A
402 AIM INCOME FUND - CLASS A
403 AIM MUNICIPAL BOND FUND - CLASS A
404 AIM INTERMEDIATE GOVERNMENT FUND - CLASS
405 AIM VALUE FUND - CLASS A
</TABLE>
Page 1
<PAGE> 6
EXHIBIT 1
List of Funds
<TABLE>
<S> <C>
406 AIM SELECT GROWTH FUND - CLASS A
407 AIM AGGRESSIVE GROWTH FUND - CLASS A
408 AIM GLOBAL UTILITIES FUND - CLASS A
421 AIM CASH RESERVE SHARES
422 AIM TAX-EXEMPT CASH FUND
425 AIM HIGH YIELD FUND - CLASS A
430 CG GUARANTEED ACCT 71-73
431 CG GUARANTEED ACCT 74-77
432 CG GUARANTEED ACCT 1978
433 CG GUARANTEED ACCT 1979
434 CG GUARANTEED ACCT 1980
435 CG GUARANTEED ACCT 1981
436 CG GUARANTEED ACCT 1982
437 CG GUARANTEED ACCT 1983
438 CG GUARANTEED ACCT 1984
439 CG GUARANTEED ACCT 1985
440 CG GUARANTEED ACCT 1985A
441 CG GUARANTEED ACCT 1985B
442 CG GUARANTEED ACCT 1986
443 CG GUARANTEED ACCT 1986A
444 CG GUARANTEED ACCT 1987
445 CG GUARANTEED ACCT 1988
446 CG GUARANTEED ACCT 1989
447 CG GUARANTEED ACCT 1990
448 CG GUARANTEED ACCT 1991
449 CG GUARANTEED ACCT 1992
460 AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
514 AIM CAPITAL DEVELOPMENT FUND - CLASS A
515 AIM BLUE CHIP FUND - CLASS A
520 AIM ADVISOR LARGE CAP VALUE FUND - CLASS
521 AIM ADVISOR INCOME FUND - CLASS A
522 AIM ADVISOR FLEX FUND - CLASS A
523 AIM ADVISOR CASH MANAGEMENT FUND - CLASS
524 AIM ADVISOR MULTIFLEX FUND - CLASS A
525 AIM ADVISOR REAL ESTATE FUND - CLASS A
526 AIM ADVISOR INTERNATIONAL VALUE FUND -
541 AIM DOLLAR FUND CLASS A
542 AIM NEW PACIFIC GROWTH FUND CLASS A
543 AIM EUROPE GROWTH FUND CLASS A
544 AIM JAPAN GROWTH FUND CLASS A
546 AIM MID CAP GROWTH FUND CLASS A
547 AIM WORLDWIDE GROWTH FUND CLASS A
548 AIM STRATEGIC INCOME FUND CLASS A
549 AIM GLOBAL GOVERNMENT INCOME FUND CLASS
551 AIM GLOBAL HEALTH CARE FUND CLASS A
553 AIM LATIN AMERICAN GROWTH FUND CLASS A
556 AIM EMERGING MARKETS FUND CLASS A
557 AIM FINANCIAL SERVICES FUND CLASS A
558 AIM GLOBAL HIGH INCOME - CLASS A
</TABLE>
Page 2
<PAGE> 7
EXHIBIT 1
List of Funds
<TABLE>
<S> <C>
559 AIM GLOBAL INFRASTRUCTURE - CLASS A
561 AIM GLOBAL RESOURCES - CLASS A
562 AIM GLOBAL CONSUMER PRODUCTS & SERVICES
563 AIM AMERICA VALUE FUND - CLASS A
564 AIM SMALL CAP EQUITY FUND - CLASS A
576 AIM DEVELOPING MARKETS FUND - CLASS A
577 AIM INTERNATIONAL GROWTH FUND - CLASS A
578 AIM GLOBAL GROWTH AND INCOME FUND - CLASS
579 AIM GLOBAL TELECOMMUNICATIONS FUND - CLASS
584 AIM NEW DEVELOPING MARKETS FUND - CLASS
602 AIM CONSTELLATION FUND - CLASS B
614 AIM CAPITAL DEVELOPMENT FUND - CLASS B
615 AIM BLUE CHIP FUND - CLASS B
617 AIM HIGH INCOME MUNICIPAL FUND - CLASS
620 AIM ADVISOR LARGE CAP VALUE FUND - CLASS
622 AIM ADVISOR FLEX FUND - CLASS B
624 AIM ADVISOR MULTIFLEX FUND - CLASS B
625 AIM ADVISOR REAL ESTATE FUND - CLASS B
626 AIM ADVISOR INTERNATIONAL VALUE FUND - CLASS
630 AIM EUROPEAN DEVELOPMENT FUND - CLASS B
631 AIM ASIAN GROWTH FUND - CLASS B
634 AIM SMALL CAP OPPORTUNITIES - CLASS B
640 AIM WEINGARTEN FUND - CLASS B
641 AIM DOLLAR FUND CLASS B
642 AIM NEW PACIFIC GROWTH FUND CLASS B
643 AIM EUROPE GROWTH FUND CLASS B
644 AIM JAPAN GROWTH FUND CLASS B
645 AIM CHARTER FUND - CLASS B
646 AIM MID CAP GROWTH FUND CLASS B
647 AIM WORLDWIDE GROWTH FUND CLASS B
648 AIM STRATEGIC INCOME FUND CLASS B
649 AIM GLOBAL GOVERNMENT INCOME FUND CLASS
650 AIM SELECT GROWTH FUND - CLASS B
651 AIM GLOBAL HEALTH CARE FUND CLASS B
653 AIM LATIN AMERICAN GROWTH FUND CLASS B
655 AIM GLOBAL UTILITIES FUND - CLASS B
656 AIM EMERGING MARKETS FUND CLASS B
657 AIM GLOBAL FINANCIAL SERVICES FUND CLASS
658 AIM GLOBAL HIGH INCOME FUND CLASS B
659 AIM GLOBAL INFRASTRUCTURE FUND CLASS B
660 AIM INTERMEDIATE GOVERNMENT FUND - CLASS
661 AIM GLOBAL RESOURCES FUND CLASS B
662 AIM GLOBAL CONSUMER PRODUCTS AND SERVICE
663 AIM AMERICA VALUE FUND CLASS B
664 AIM SMALL CAP EQUITY FUND CLASS B
665 AIM INCOME FUND - CLASS B
670 AIM MUNICIPAL BOND FUND - CLASS B
675 AIM HIGH YIELD FUND - CLASS B
676 AIM DEVELOPING MARKETS FUND CLASS B
</TABLE>
Page 3
<PAGE> 8
EXHIBIT I
List of Funds
<TABLE>
<S> <C>
677 AIM INTERNATIONAL GROWTH FUND CLASS B
678 AIM GLOBAL GROWTH AND INCOME FUND CLASS
679 AIM GLOBAL TELECOMMUNICATIONS FUND CLASS
680 AIM MONEY MARKET FUND - CLASS B
684 AIM NEW DIMENSION FUND CLASS B
685 AIM BALANCED FUND - CLASS B
690 AIM VALUE FUND - CLASS B
691 AIM GLOBAL AGGRESSIVE GROWTH FUND - CLASS
692 AIM GLOBAL GROWTH FUND - CLASS B
693 AIM GLOBAL INCOME FUND - CLASS B
694 AIM INTERNATIONAL EQUITY FUND. - CLASS B
695 AIM FLOATING RATE FUND
800 SHORT-TERM INVESTMENTS TRUST - TREASURY
841 AIM DOLLAR FUND ADVISOR CLASS
842 AIM NEW PACIFIC GROWTH ADVISOR CLASS
843 AIM EUROPE GROWTH ADVISOR CLASS
844 AIM JAPAN GROWTH ADVISOR CLASS
846 AIM MID CAP GROWTH ADVISOR CLASS
847 AIM WORLDWIDE GROWTH ADVISOR CLASS
848 AIM STRATEGIC INCOME ADVISOR CLASS
849 AIM GLOBAL GOVT INCOME ADVISOR CLASS
851 AIM GLOBAL HEALTH CARE ADVISOR CLASS
853 AIM LATIN AMERICAN GROWTH ADVISOR CLASS
856 AIM EMERGING MARKETS ADVISOR CLASS
857 AIM GLOBAL FINANCIAL SERVICES ADVISOR CLASS
858 AIM GLOBAL HIGH INCOME ADVISOR CLASS
859 AIM GLOBAL INFRASTRUCTURE ADVISOR CLASS
861 AIM GLOBAL RESOURCES ADVISOR CLASS
862 AIM GLOBAL CONSUMER PRODUCTS & SERVICES
863 AIM AMERICAN VALUE FUND ADVISOR CLASS
864 AIM SMALL CAP EQUITY ADVISOR CLASS
876 AIM DEVELOPING MARKETS ADVISOR CLASS
877 AIM INTERNATIONAL GROWTH ADVISOR CLASS
878 AIM GLOBAL GROWTH & INCOME ADVISOR CLASS
879 AIM GLOBAL TELECOMMUNICATIONS ADVISOR CLASS
884 AIM NEW DIMENSION ADVISOR CLASS
</TABLE>
Page 4
<PAGE> 9
EXHIBIT 1.1a OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
III. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
E. Computer Output to Laser Disc (COLD)
This item is the property of First Data Investor Services Group (First Data) of
Boston, Massachusetts, and contains confidential and trade secret information.
This Item may not be transferred from the custody or control of First Data
except as authorized by, and then only by way of loan for limited purposes. It
must be returned to First Data upon request and, in all events, upon completion
of the purpose of the loan. Neither this item nor the information it contains
may be used or disclosed to persons not having a need for such use or disclosure
consistent with the purpose of the loan, without the prior written consent of
First Data.
Copyright First Data Investor Services Group
1994,1995,1996,1997
ALL RIGHTS RESERVED
This media contains unpublished, confidential, and proprietary information of
First Data Investor Services Group. No disclosure or use of any portion of these
materials may be made without the express written consent of First Data Investor
Services Group.
<PAGE> 10
COMPUTER OUTPUT TO LASER DISC (COLD)
IMPRESS PLUS COMPUTER OUTPUT TO LASER DISC (COLD)
The IMPRESS Plus COLD module is a client/server based, graphical user interface
(GUI) system designed to provide an intelligent real-time application to enable
clients to improve the quality of the service provided to both shareholders and
broker dealers. This system provides functionality in the following areas:
STATEMENTS AND TAX FORMS
IMPRESS Plus COLD provides the client with on-line access to shareholder and
broker statements and tax forms. The print mail output stream is stored on
optical platters for retrieval and printing later. The forms and statements can
be searched for on-line through a common browse window integrated with the
IMPRESS Plus Imaging application. Daily output journals can also be migrated to
on-line access eliminating microfiche.
TECHNICAL OVERVIEW
IMPRESS Plus Cold is a high-speed, electronic document storage and retrieval
system which utilizes the high-density, low-cost storage capabilities of optical
and RAID disks. IMPRESS Plus COLD operates in a true client-server environment
and has the capability to simultaneously store multiple document types in a
single system. Among these document types are traditional Line Data; AFP;
Metacode; DJDE; Scanned Images, etc. Each of these data types can be stored on a
single system and are all viewed with a common viewer.
IMPRESS Plus utilizes third-party Metacode composition software from Gentext,
Inc. and third-party viewing software from CDP for local viewing and Adobe
Intranet/Internet viewing.
<PAGE> 11
EXHIBIT 2.3 OF SCHEDULE C
IMPRESS PLUS COLD
EQUIPMENT LIST AND NETWORK CONFIGURATION
<TABLE>
<CAPTION>
QUANTITY CATEGORY DESCRIPTION
=================================================================================
<S> <C> <C>
1 JUKEBOX Phillips 12Gb Tower Drive w/onsite installation
- ---------------------------------------------------------------------------------
2 JUKEBOX Phillips 6000 series media (10 to a box)
- ---------------------------------------------------------------------------------
1 JUKEBOX Cygnet 1802-2 with Philips Drives and SCSI Robotics
- ---------------------------------------------------------------------------------
1 JUKEBOX COLD Feet
- ---------------------------------------------------------------------------------
1 SUN CPU SUN Ultra 3000 base, CD-ROM, Solaris license, Cooling
package, (2) 25OMHZ Cpu's 4mb Cache, (1) CPU/Memory
Board/SharedApp
- ---------------------------------------------------------------------------------
2 SUN CPU SUN Sbus I/0 Board
- ---------------------------------------------------------------------------------
2 SUN CPU SUN 256Mb RAM Kit
- ---------------------------------------------------------------------------------
2 SUN CPU SUN 7200 RPM 9.1Gb Internal Hard Drive
- ---------------------------------------------------------------------------------
2 SUN CPU Enterprise Power/Cooling Module 300W
- ---------------------------------------------------------------------------------
1 SUN CPU Second Peripheral Power Supply
- ---------------------------------------------------------------------------------
2 SUN CPU X1052A Fast Differential/Buffered E-Net Card (SCSI
Controller)
- ---------------------------------------------------------------------------------
2 SUN CPU X1062A fast Wide Differential Sbus Card (SCSI Controller)
- ---------------------------------------------------------------------------------
1 SUN CPU SUN 17" Color Monitor and TGX Card
- ---------------------------------------------------------------------------------
1 SUN CPU SUN DLT7000 35-7OGb External Tape Drive w/50-68 pin
cable
- ---------------------------------------------------------------------------------
1 IBM Netfiniity Rack Cabinet with Power Supply
- ---------------------------------------------------------------------------------
1 DISK SUB Data General Clarion 2900D Raid Array w/2 SPs, and 3 PS's
(20) Drive Chassis
- ---------------------------------------------------------------------------------
1 DISK SUB DG Clarion 64mb mirrored cache upgrade
- ---------------------------------------------------------------------------------
2 DISK SUB Solaris Interface Kit
- ---------------------------------------------------------------------------------
5 DISK SUB Data General 7200 RPM 18Gb Disk Drives
- ---------------------------------------------------------------------------------
1 UPS Exide Electronics Powerware Plus 12 10 Kva UPS for SUN
CPU, DISK SUB and JUKEBOX
- ---------------------------------------------------------------------------------
1 UPS Exide Power Distribution Module for Powerware Plus 12
W/(1) L5.30 and (3) 5-15 receptacles
- ---------------------------------------------------------------------------------
1 NDM NOM TCP-IP 2 Concurrent Sessions SUN
- ---------------------------------------------------------------------------------
3 PREPRO PC Config #1
- ---------------------------------------------------------------------------------
1 SUPPORT PC Config #1/software/modem
- ---------------------------------------------------------------------------------
2 CABLES 25' Differential SCSI Cables (M) HD68 Thumbscrews (M)
- ---------------------------------------------------------------------------------
2 CABLES Active Differential Terminators Min DB-50
=================================================================================
</TABLE>
<PAGE> 1
EXHIBIT j(2)
CONSENT OF COUNSEL
AIM INTERNATIONAL FUNDS, INC.
We hereby consent to the use of our name and to the reference to our
firm under the caption "Miscellaneous Information - Legal Matters" in the
Statement of Additional Information for AIM Asian Growth Fund, AIM European
Development Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM
Global Income Fund and AIM International Equity Fund, which is included in
Post-Effective Amendment No. 15 to the Registration Statement under the
Securities Act of 1933, as amended (No. 33-44611) and Amendment No. 17 to the
Registration Statement under the Investment Company Act of 1940, as amended (No.
811-6463) on Form N-1A of AIM International Funds, Inc.
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
December 23, 1998
<PAGE> 1
EXHIBIT (m)(1)(k)
THIRD
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(CLASS A AND CLASS C SHARES)
SECTION 1. AIM International Funds, Inc. (the "Fund") on behalf of the
series of its common stock set forth in Schedule A to this plan (the
"Portfolios"), may act as a distributor of the shares, other than the Class B
shares, of such Portfolios (hereinafter referred to as "Class A and Class C
Shares") of which the Fund is the issuer, pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"), according to the terms of this
Distribution Plan (the "Plan").
SECTION 2. The Fund may incur as a distributor of the Class A and
Class C Shares, expenses at the annual rates set forth on Schedule A hereto of
the average daily net assets of the Fund attributable to the Class A and Class
C Shares, subject to any limitations imposed from time to time by applicable
rules of the National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Section 2 may be used to finance any
activity which is primarily intended to result in the sale of the Class A and
Class C Shares, including, but not limited to, expenses of organizing and
conducting sales seminars, advertising programs, finders fees, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature, overhead, supplemental payments
to dealers and other institutions as asset-based sales charges. Amounts set
forth in Section 2 may also be used to finance payments of service fees under a
shareholder service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund has suspended or
otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by Distributors
of shareholder service arrangements with respect to the Class
A and Class C Shares. The maximum service fee paid to any
service provider shall be twenty-five one-hundredths of one
percent (0.25%) per annum of the average daily net assets of
the Fund attributable to the Class A and Class C Shares owned
by the customers of such service provider.
<PAGE> 2
(b) Pursuant to this program, Distributors may enter
into agreements substantially in the form attached hereto as
Exhibit A ("Service Agreements") with such broker-dealers
("Dealers") as may be selected from time to time by
Distributors for the provision of distribution-related
personal shareholder services in connection with the sale of
Class A and Class C Shares to the Dealers' clients and
customers ("Customers") who may from time to time directly or
beneficially own Class A and Class C Shares. The
distribution-related personal continuing shareholder services
to be rendered by Dealers under the Service Agreements may
include, but shall not be limited to, the following: (i)
distributing sales literature; (ii) answering routine
Customer inquiries concerning the Fund and the Class A and
Class C Shares; (iii) assisting Customers in changing
dividend options, account designations and addresses, and in
enrolling into any of several retirement plans offered in
connection with the purchase of Class A and Class C Shares;
(iv) assisting in the establishment and maintenance of
customer accounts and records, and in the processing of
purchase and redemption transactions; (v) investing dividends
and capital gains distributions automatically in Class A and
Class C Shares; and (vi) providing such other information and
services as the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit B ("Bank Agreements") with
selected banks acting in an agency capacity for their
customers ("Banks"). Banks acting in such capacity will
provide some or all of the shareholder services to their
customers as set forth in the Bank Agreements from time to
time.
(d) Distributors may also enter into Variable Group
Annuity Contractholder Service Agreements substantially in
the from attached hereto as Exhibit C ("Variable Contract
Agreements") with selected insurance companies ("Companies")
offering variable annuity contracts to employers as funding
vehicles for retirement plans qualified under Section 401(a)
of the Internal Revenue Code, where amounts contributed under
such plans are invested pursuant to such variable annuity
contracts in Shares of the Fund. The Companies receiving
payments under such Variable Contract Agreements will provide
specialized services to contractholders and plan
participants, as set forth in the Variable Contract
Agreements from time to time.
(e) Distributors may also enter into Agency Pricing
Agreements substantially in the form attached hereto as
Exhibit D ("Pricing Agreements") with selected retirement
plan service providers acting in an agency capacity for their
customers ("Retirement Plan Providers"). Retirement Plan
Providers acting in such capacity will provide some or all of
the shareholder services to their customers as set forth in
the Pricing Agreements from time to time.
(f) Distributors may also enter into Shareholder
Service Agreements substantially in the form attached hereto
as Exhibit E ("Bank Trust Department Agreements and Brokers
for Bank Trust Department Agreements") with selected bank
trust departments and brokers for bank trust departments.
Such bank trust departments and brokers for bank trust
departments will provide some or all of the shareholder
services to their customers as set forth in the Bank Trust
Department
-2-
<PAGE> 3
Agreements and Brokers for Bank Trust Department Agreements
from time to time.
SECTION 5. Any amendment to this Plan that requires the approval of
the shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall
become effective as to such Class upon the approval of such amendment by a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
such Class, PROVIDED that the Board of Directors of the Fund has approved such
amendment in accordance with the provisions of Section 6 of this Plan.
SECTION 6. This Plan, any amendment to this Plan and any agreements
related to this Plan shall become effective immediately upon the receipt by the
Fund of both (a) the affirmative vote of a majority of the Board of Directors
of the Fund, and (b) the affirmative vote of a majority of those directors of
the Fund who are not "interested persons" of the Fund (as defined in the 1940
Act) and have no direct or indirect financial interest in the operation of this
Plan or any agreements related to it (the "Dis-interested Directors"), cast in
person at a meeting called for the purpose of voting on this Plan or such
agreements. Notwithstanding the foregoing, no such amendment that requires the
approval of the shareholders of a Class of a Fund shall become effective as to
such Class until such amendment has been approved by the shareholders of such
Class in accordance with the provisions of Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan
shall continue in effect until June 30, 1998 and thereafter shall continue in
effect so long as such continuance is specifically approved, at least annually,
in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of Directors
and the Board of Directors shall review, at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
SECTION 9. This Plan may be terminated, with respect to the Class A
and Class C Shares of each Portfolio, at any time by vote of a majority of the
Dis-interested Directors, or by vote of a majority of the outstanding voting
securities of the Class A and Class C Shares of such Portfolios. If this Plan
is terminated, the obligation of the Fund to make payments pursuant to this
Plan will also cease and the Fund will not be required to make any payments
beyond the termination date even with respect to expenses incurred prior to the
termination date.
SECTION 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority
of the Dis-interested Directors or by a vote of the
outstanding voting securities of the Class A and Class C
Shares of each Portfolio, on not more than sixty (60) days'
written notice to any other party to the agreement; and
(b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
-3-
<PAGE> 4
AIM INTERNATIONAL FUNDS, INC.
(on behalf of its Class A and Class C Shares)
/s/ OFELIA M. MAYO /s/ ROBERT H. GRAHAM
Attest: ---------------------- BY: --------------------------------------
Assistant Secretary President
Effective as of September 10, 1994, as amended as of September 10, 1994.
Amended and restated for all Portfolios as of June 30, 1997.
Amended and restated for all Portfolios as of August 4, 1997.
Amended and restated for all Portfolios as of June 30, 1998.
-4-
<PAGE> 5
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM INTERNATIONAL FUNDS, INC.
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan for
each Portfolio as designated below, a Distribution Fee* determined by applying
the annual rate set forth below as to each Portfolio (or Class A or Class C
thereof) to the average daily net assets of the Portfolio (or Class A or Class
C thereof) for the plan year, computed in a manner used for the determination
of the offering price of shares of the Portfolio (or Class A or Class C).
<TABLE>
<CAPTION>
MINIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
- --------- ------ --- ---
(Class A Shares)
<S> <C> <C> <C>
AIM Asian Growth Fund 0.10% 0.25% 0.35%
AIM European Development Fund 0.10% 0.25% 0.35%
AIM International Equity Fund 0.05% 0.25% 0.30%
AIM Global Aggressive Growth Fund 0.25% 0.25% 0.50%
AIM Global Growth Fund 0.25% 0.25% 0.50%
AIM Global Income Fund 0.25% 0.25% 0.50%
MAXIMUM
ASSET
BASED MAXIMUM MAXIMUM
SALES SERVICE AGGREGATE
PORTFOLIO CHARGE FEE FEE
- --------- ------ --- ---
(Class C Shares)
AIM Asian Growth Fund 0.75% 0.25% 1.00%
AIM European Development Fund 0.75% 0.25% 1.00%
AIM International Equity Fund 0.75% 0.25% 1.00%
AIM Global Aggressive Growth Fund 0.75% 0.25% 1.00%
AIM Global Growth Fund 0.75% 0.25% 1.00%
AIM Global Income Fund 0.75% 0.25% 1.00%
</TABLE>
- ---------------
* The Distribution Fee is payable apart from the sales charge, if any,
as stated in the current prospectus for the applicable Class and the
applicable Portfolio.
-5-
<PAGE> 1
EXHIBIT (m)(2)
Exhibit A
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc. FOR SALE OF SHARES
OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940, by each of the
AIM-managed mutual funds (or designated classes of such funds) listed in
Schedule A, which may be amended from time to time by AIM Distributors, Inc.
("Distributors") to this Agreement (the "Funds"), under a Distribution Plan
(the "Plan") adopted pursuant to said Rule. This Agreement, being made between
Distributors, solely as agent for such Funds and the undersigned authorized
dealer, defines the services to be provided by the authorized dealer for which
it is to receive payments pursuant to the Plan adopted by each of the Funds.
The Plan and the Agreement have been approved by a majority of the directors of
each of the Funds, including a majority of the directors who are not interested
persons of such Funds, and who have no direct or indirect financial interest in
the operation of the Plan or related agreements (the "Dis-interested
Directors"), by votes cast in person at a meeting called for the purpose of
voting on the Plan. Such approval included a determination that in the exercise
of their reasonable business judgement and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit such Fund and its
shareholders.
1. To the extent that you provide distribution-related and continuing
personal shareholder services to customers who may, from time to time,
directly or beneficially own shares of the Funds, including but not
limited to, distributing sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing
dividend options, account designations and addresses, and in enrolling
into any of several special investment plans offered in connection
with the purchase of the Funds' shares, assisting in the establishment
and maintenance of customer accounts and records and in the processing
of purchase and redemption transactions, investing dividends and
capital gains distributions automatically in shares and providing such
other services as the Funds or the customer may reasonably request,
we, solely as agent for the Funds, shall pay you a fee periodically or
arrange for such fee to be paid to you.
2. The fee paid with respect to each Fund will be calculated at the end
of each payment period (as indicated in Schedule A) for each business
day of the Fund during such payment period at the annual rate set
forth in Schedule A as applied to the average net asset value of the
shares of such Fund purchased or acquired through exchange on or after
the Plan Calculation Date shown for such Fund on Schedule A. Fees
calculated in this manner shall be paid to you only if your firm is
the dealer of record at the close of business on the last business day
of the applicable payment period, for the account in which such shares
are held (the "Subject Shares"). In cases where Distributors has
advanced payment to you of the first year's fee for shares sold at net
asset value and subject to a contingent deferred sales charge, no
additional payments will be made to you during the first year the
Subject Shares are held.
3. The total of the fees calculated for all of the Funds listed on
Schedule A for any period with respect to which calculations are made
shall be paid to you within 45 days after the close of such period.
<PAGE> 2
4. We reserve the right to withhold payment with respect to the Subject
Shares purchased by you and redeemed or repurchased by the Fund or by
us as Agent within seven (7) business days after the date of our
confirmation of such purchase. We reserve the right at any time to
impose minimum fee payment requirements before any periodic payments
will be made to you hereunder.
5. This Agreement and Schedule A does not require any broker-dealer to
provide transfer agency and recordkeeping related services as nominee
for its customers.
6. You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us
with respect to the fees paid to you pursuant to this Agreement.
7. We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the
Plan by us and the purposes for which such expenditures were made.
8. Neither you nor any of your employees or agents are authorized to make
any representation concerning shares of the Funds except those
contained in the then current Prospectus or Statement of Additional
Information for the Funds, and you shall have no authority to act as
agent for the Funds or for Distributors.
9. We may enter into other similar Shareholder Service Agreements with
any other person without your consent.
10. This Agreement may be amended at any time without your consent by
Distributors mailing a copy of an amendment to you at address set
forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this
Agreement within thirty (30) days of your receipt of such amendment.
11. This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the
directors of such Fund who are Dis-interested Directors or by a vote
of a majority of the Fund's outstanding shares, on sixty (60) days'
written notice. It will be terminated by any act which terminates
either the Selected Dealer Agreement between your firm and us or the
Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment as that term is defined
in the 1940 Act.
12. The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by
reference. This Agreement shall become effective upon execution and
delivery hereof and shall continue in full force and effect as long as
the continuance of the Plan and this related Agreement are approved at
least annually by a vote of the directors, including a majority of the
Dis-interested Directors, cast in person at a meeting called for the
purpose of voting thereon. All communications to us should be sent to
the address of Distributors as shown at the bottom of this Agreement.
Any notice to you shall be duly given if mailed or telegraphed to you
at the address specified by you below.
13. You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association
<PAGE> 3
of Securities Dealers, Inc., and that you will continue to accept
payments under this Agreement only so long as you provide such
services.
14. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By:
------------------------ -------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By:
------------------------ -------------------------------------
Signature
-------------------------------------
Print Name Title
-------------------------------------
Dealer's Name
-------------------------------------
Address
-------------------------------------
City State Zip
-------------------------------------
Telephone
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 4
SCHEDULE "A" TO
SHAREHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -----------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund B Shares 0.25 March 3, 1998
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund B Shares 0.25 March 3, 1998
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund B Shares 0.25 March 3, 1998
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Aggressive Growth Fund B Shares 0.25 March 1, 1999
AIM Aggressive Growth Fund C Shares 1.00** March 1, 1999
AIM Asian Growth Fund A Shares 0.25 November 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 1997
AIM Global Aggressive Growth Fund A Shares 0.50** September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50** September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -----------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50** September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund II A Shares 0.25 October 1, 1998
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Large Cap Growth Fund A Shares 0.25 March 1, 1999
Aim Large Cap Growth Fund B Shares 0.25 March 1, 1999
Aim Large Cap Growth Fund C Shares 1.00** March 1, 1999
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Money Market Fund Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Select Growth Fund A Shares 0.25 July 1, 1992
AIM Select Growth Fund B Shares 0.25 September 1,1993
AIM Select Growth Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 June 29, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 July 13, 1998
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
<PAGE> 6
*Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
**Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------
<S> <C> <C>
AIM Basic Value Fund A Shares 0.25 May 29, 1998
AIM Basic Value Fund B Shares 0.25 May 29, 1998
AIM Developing Markets Fund A Shares 0.25 May 29, 1998
AIM Developing Markets Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Fund A Shares 0.40** May 29, 1998
AIM Emerging Markets Fund B Shares 0.25 May 29, 1998
AIM Europe Growth Fund A Shares 0.25 May 29, 1998
AIM Europe Growth Fund B Shares 0.25 May 29, 1998
AIM Global Consumer Products and
Services Fund A Shares 0.40** May 29, 1998
AIM Global Consumer Products and
Services Fund B Shares 0.25 May 29, 1998
AIM Global Financial Services Fund A Shares 0.40** May 29, 1998
AIM Global Financial Services Fund B Shares 0.25 May 29, 1998
AIM Global Government Income Fund A Shares 0.25 May 29, 1998
AIM Global Government Income Fund B Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund A Shares 0.25 May 29, 1998
AIM Global Growth & Income Fund B Shares 0.25 May 29, 1998
AIM Global Health Care Fund A Shares 0.40** May 29, 1998
AIM Global Health Care Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Debt Fund A Shares 0.25 May 29, 1998
AIM Emerging Markets Debt Fund B Shares 0.25 May 29, 1998
AIM Global Infrastructure Fund A Shares 0.40** May 29, 1998
AIM Global Infrastructure Fund B Shares 0.25 May 29, 1998
AIM Global Resources Fund A Shares 0.40** May 29, 1998
AIM Global Resources Fund B Shares 0.25 May 29, 1998
AIM Global Telecommunications Fund A Shares 0.40** May 29, 1998
AIM Global Telecommunications Fund B Shares 0.25 May 29, 1998
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM International Growth Fund A Shares 0.25 May 29, 1998
AIM International Growth Fund B Shares 0.25 May 29, 1998
AIM Japan Growth Fund A Shares 0.25 May 29, 1998
AIM Japan Growth Fund B Shares 0.25 May 29, 1998
AIM Latin American Growth Fund A Shares 0.40** May 29, 1998
AIM Latin American Growth Fund B Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund A Shares 0.25 May 29, 1998
AIM Mid Cap Equity Fund B Shares 0.25 May 29, 1998
AIM Global Trends Fund A Shares 0.40** May 29, 1998
AIM Global Trends Fund B Shares 0.25 May 29, 1998
AIM Global Trends Fund C Shares 1.00** May 29, 1998
AIM New Pacific Growth Fund A Shares 0.25 May 29, 1998
AIM New Pacific Growth Fund B Shares 0.25 May 29, 1998
AIM Small Cap Growth Fund A Shares 0.25 May 29, 1998
AIM Small Cap Growth Fund B Shares 0.25 May 29, 1998
AIM Strategic Income Fund A Shares 0.25 May 29, 1998
AIM Strategic Income Fund B Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund A Shares 0.25 May 29, 1998
AIM Worldwide Growth Fund B Shares 0.25 May 29, 1998
</TABLE>
*Frequency of Payments:
EFFECTIVE UNTIL JUNE 30, 1998: Class A and B share payments commence
immediately and are paid quarterly. Class C share payments commence after an
initial twelve month holding period and are paid quarterly.
**Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
EFFECTIVE JULY 1, 1998: B share payments, like C share payments, will begin
after an initial 12 month holding period and are paid quarterly. Where the
broker dealer or financial institution waives the 1% up-front commission on
Class C shares, payments commence immediately.
**Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
<PAGE> 1
EXHIBIT (m)(3)
Exhibit B
[LOGO APPEARS HERE] BANK SHAREHOLDER
SERVICE AGREEMENT
A I M Distributors, Inc.
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1. We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such
services to our clients may include, without limitation, some or all
of the following: answering shareholder inquires regarding the Shares
and the AIM Funds; performing subaccounting; establishing and
maintaining shareholder accounts and records; processing and bunching
customer purchase and redemption transactions; providing periodic
statements showing a shareholder's account balance and the integration
of such statements with those of other transactions and balances in
the shareholder's other accounts serviced by us; forwarding applicable
AIM Funds prospectuses, proxy statements, reports and notices to our
clients who are holders of Shares; and such other administrative
services as you reasonably may request, to the extent we are permitted
by applicable statute, rule or regulations to provide such services.
We represent that we shall accept fees hereunder only so long as we
continue to provide personal shareholder services to our clients.
2. Shares purchased by us as agents for our clients will be registered
(choose one) (in our name or in the name of our nominee) (in the names
of our clients). The client will be the beneficial owner of the Shares
purchased and held by us in accordance with the client's instructions
and the client may exercise all applicable rights of a holder of such
Shares. We agree to transmit to the AIM Funds' transfer agent in a
timely manner, all purchase orders and redemption requests of our
clients and to forward to each client any proxy statements, periodic
shareholder reports and other communications received from the Company
by us on behalf of our clients. The Company agrees to pay all
out-of-pocket expenses actually incurred by us in connection with the
transfer by us of such proxy statements and reports to our clients as
required by applicable law or regulation. We agree to transfer record
ownership of a client's Shares to the client promptly upon the request
of a client. In addition, record ownership will be promptly
transferred to the client in the event that the person or entity
ceases to be our client.
3. Within three (3) business days of placing a purchase order we agree to
send (i) a cashiers check to the Company, or (ii) a wire transfer to
the AIM Funds' transfer agent, in an amount equal to the amount of all
purchase orders placed by us on behalf of our clients and accepted by
the Company.
4. We agree to make available to the Company, upon the Company's request,
such information relating to our clients who are beneficial owners of
Shares and their transactions in such Shares as may be required by
applicable laws and regulations or as may be reasonably requested by
the
<PAGE> 2
Bank Shareholder Service Agreement Page 2
Company. The names of our customers shall remain our sole property and
shall not be used by the Company for any other purpose except as
needed for servicing and information mailings in the normal course of
business to holders of the Shares.
5. We shall provide such facilities and personnel (which may be all or
any part of the facilities currently used in our business, or all or
any personnel employed by us) as may be necessary or beneficial in
carrying out the purposes of this Agreement.
6. Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares
except those contained in the then current Prospectus applicable to
the Shares; and we shall have no authority to act as agent for the
Company or the AIM Funds. Neither the AIM Funds, A I M Advisors, Inc.
nor A I M Distributors, Inc. will be a party, nor will they be
represented as a party, to any agreement that we may enter into with
our clients.
7. In consideration of the services and facilities described herein, we
shall receive from the Company on behalf of the AIM Funds an annual
service fee, payable at such intervals as may be set forth in Schedule
A hereto, of a percentage of the aggregate average net asset value of
the Shares owned beneficially by our clients during each payment
period, as set forth in Schedule A hereto, which may be amended from
time to time by the Company. We understand that this Agreement and the
payment of such service fees has been authorized and approved by the
Boards of Directors/Trustees of the AIM Funds, and is subject to
limitations imposed by the National Association of Securities Dealers,
Inc. In cases where the Company has advanced payments to us of the
first year's fee for shares sold with a contingent deferred sales
charge, no payments will be made to us during the first year the
subject Shares are held.
8. The AIM Funds reserve the right, at their discretion and without
notice, to suspend the sale of any Shares or withdraw the sale of
Shares.
9. We understand that the Company reserves the right to amend this
Agreement or Schedule A hereto at any time without our consent by
mailing a copy of an amendment to us at the address set forth below.
Such amendment shall become effective on the date specified in such
amendment unless we elect to terminate this Agreement within thirty
(30) days of our receipt of such amendment.
10. This Agreement may be terminated at any time by the Company on not
less than 15 days' written notice to us at our principal place of
business. We, on 15 days' written notice addressed to the Company at
its principal place of business, may terminate this Agreement, said
termination to become effective on the date of mailing notice to
Company of such termination. The Company's failure to terminate for
any cause shall not constitute a waiver of the Company's right to
terminate at a later date for any such cause. This Agreement shall
terminate automatically in the event of its assignment, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the Investment Company Act of 1940, as amended.
<PAGE> 3
Bank Shareholder Service Agreement Page 3
11. All communications to the Company shall be sent to it at Eleven
Greenway Plaza, Suite 100, Houston, Texas, 77046-1173. Any notice to
us shall be duly given if mailed or telegraphed to us at this address
shown on this Agreement.
12. This Agreement shall become effective as of the date when it is
executed and dated below by the Company. This Agreement and all rights
and obligations of the parties hereunder shall be governed by and
construed under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date: By:X
------------------------------ ----------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By:X
------------------------------ ----------------------------------------
Signature
----------------------------------------
Print Name Title
----------------------------------------
Dealer's Name
----------------------------------------
Address
----------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 4
Bank Shareholder Service Agreement Page 4
<TABLE>
<CAPTION>
SCHEDULE "A" TO
SHAREHOLDER SERVICE AGREEMENT
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund B Shares 0.25 March 3, 1998
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund B Shares 0.25 March 3, 1998
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund B Shares 0.25 March 3, 1998
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund B Shares 0.25 March 3, 1998
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund B Shares 0.25 March 3, 1998
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Aggressive Growth Fund B Shares 0.25 March 1, 1999
AIM Aggressive Growth Fund C Shares 1.00** March 1, 1999
AIM Asian Growth Fund A Shares 0.25 November 1, 1997
AIM Asian Growth Fund B Shares 0.25 November 1, 1997
AIM Asian Growth Fund C Shares 1.00** November 1, 1997
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund B Shares 0.25 November 3, 1997
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM European Development Fund A Shares 0.25 November 1, 1997
AIM European Development Fund B Shares 0.25 November 1, 1997
AIM European Development Fund C Shares 1.00** November 1, 1997
AIM Global Aggressive Growth Fund A Shares 0.50** September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
</TABLE>
<PAGE> 5
Bank Shareholder Service Agreement Page 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM High Income Municipal Fund A Shares 0.25 December 22, 1997
AIM High Income Municipal Fund B Shares 0.25 December 22, 1997
AIM High Income Municipal Fund C Shares 1.00** December 22, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund II A Shares 0.25 October 1, 1998
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Fund 0.15 December 2, 1987
AIM Large Cap Growth Fund A Shares 0.25 March 1, 1999
AIM Large Cap Growth Fund B Shares 0.25 March 1, 1999
AIM Large Cap Growth Fund C Shares 1.00** March 1, 1999
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Money Market Fund Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Select Growth Fund A Shares 0.25 July 1, 1992
AIM Select Growth Fund B Shares 0.25 September 1,1993
AIM Select Growth Fund C Shares 1.00** August 4, 1997
AIM Small Cap Opportunities Fund A Shares 0.25 June 29, 1998
AIM Small Cap Opportunities Fund B Shares 0.25 July 13, 1998
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
</TABLE>
<PAGE> 6
Bank Shareholder Service Agreement Page 6
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
*Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
**Of this amount, 0.25% is paid as a shareholder servicing fee and the
remainder is paid as an asset-based sales charge, as those terms are defined
under the rules of the National Association of Securities Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- -------------------------------------------------------------------------------------
<S> <C> <C>
AIM Basic Value Fund A Shares 0.25 May 29, 1998
AIM Basic Value Fund B Shares 0.25 May 29, 1998
AIM Developing Markets Fund A Shares 0.25 May 29, 1998
AIM Developing Markets Fund B Shares 0.25 May 29, 1998
AIM Emerging Markets Fund A Shares 0.40** May 29, 1998
AIM Emerging Markets Fund B Shares 0.25 May 29, 1998
AIM Europe Growth Fund A Shares 0.25 May 29, 1998
AIM Europe Growth Fund B Shares 0.25 May 29, 1998
AIM Global Consumer Products and
Services Fund A Shares 0.40** May 29, 1998
AIM Global Consumer Products and
Services Fund B Shares 0.25 May 29, 1998
AIM Global Financial Services Fund A Shares 0.40** May 29, 1998
</TABLE>
<PAGE> 1
EXHIBIT (m)(4)(a)
EXHIBIT D
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the ____ of _______________,
19___, between _______________________________ (the "Plan Provider") and A I M
Distributors, Inc. (the "Distributor").
RECITAL
Plan Provider acts as a trustee and/or servicing agent for defined
contribution plans and/or deferred compensation plans (the "Plans") and invests
and reinvests such Plans' assets as specified by an investment advisor, sponsor
or administrative committee of the Plan (a "Plan Representative") generally
upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and
redemption of shares (the "Shares") of the funds listed on Exhibit A hereto
which may be amended from time to time by Distributor (the "Fund" or "Funds"),
registered investment companies distributed by Distributor, on behalf of the
Plans, through one or more accounts (not to exceed one per Plan) in each Fund
(individually an "Account" and collectively the "Accounts"), subject to the
terms and conditions of this Agreement. Distributor shall, on behalf of the
Funds, pay to Plan Provider a fee in accordance with Exhibit A hereto.
AGREEMENT
1. SERVICES
Plan Provider shall provide shareholder and administration services
for the Plans and/or their Participants, including, without
limitation: answering questions about the Funds; assisting in changing
dividend options, account designations and addresses; establishing and
maintaining shareholder accounts and records; and assisting in
processing purchase and redemption transactions (the "Services"). Plan
Provider shall comply with all applicable laws, rules and regulations,
including requirements regarding prospectus delivery and maintenance
and preservation of records. To the extent allowed by law, Plan
Provider shall provide Distributor with copies of all records that
Distributor may reasonably request. Distributor or its affiliate will
recognize each Plan as an unallocated account in each Fund, and will
not maintain separate accounts in each Fund for each Participant.
Except to the extent provided in Section 3, all Services performed by
Plan Provider shall be as an independent contractor and not as an
employee or agent of Distributor or any of the Funds. Plan Provider
and Plan Representatives, and not Distributor, shall take all
necessary action so that the transactions contemplated by this
Agreement shall not be "Prohibited Transactions" under section 406 of
the Employee Retirement Income Security Act of 1974, or section 4975
of the Internal Revenue Code.
2. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business
day that the New York Stock Exchange is open for business ("Business
Day"), with (I) net asset value information as of the close of trading
(currently 4:00 p.m. Eastern Time) on the New York Stock
<PAGE> 2
Exchange or as at such later times at which a Fund's net asset value
is calculated as specified in such Fund's prospectus ("Close of
Trading"), (ii) dividend and capital gains information as it becomes
available, and (iii) in the case of income Funds, the daily accrual or
interest rate factor (mil rate). The Funds shall use their best
efforts to provide such information to Plan Provider by 6:00 p.m.
Central Time on the same Business Day.
Distributor or its affiliate will provide Plan Provider (a) daily
confirmations of Account activity within five Business Days after each
day on which a purchase or redemption of Shares is effected for the
particular Account, (b) if requested by Plan Provider, quarterly
statements detailing activity in each Account within fifteen Business
Days after the end of each quarter, and (c) such other reports as may
be reasonably requested by Plan Provider.
3. ORDERS AND SETTLEMENT
If Plan Provider receives instructions in proper form from
Participants or Plan Representatives before the Close of Trading on a
Business Day, Plan Provider will process such instructions that same
evening. On the next Business Day, Plan Provider will transmit orders
for net purchases or redemptions of Shares to Distributor or its
designee by 9:00 a.m. Central Time and wire payment for net purchases
by 2:00 p.m. Central Time. Distributor or its affiliate will wire
payment for net redemptions on the Business Day following the day the
order is executed for the Accounts. In doing so, Plan Provider will be
considered the Funds' agent, and Shares will be purchased and redeemed
as of the Business Day on which Plan Provider receives the
instructions. Plan Provider will record time and date of receipt of
instructions and will, upon request, provide such instructions and
other records relating to the Services to Distributor's auditors. If
Plan Provider receives instructions in proper form after the Close of
Trading on a Business Day, Plan Provider will treat the instructions
as if received on the next Business Day.
4. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall limit representations concerning a
Fund or Shares to those contained in the then current prospectus of
such Fund, in current sales literature furnished by Distributor to
Plan Provider, in publicly available databases, such as those
databases created by Standard & Poor's and Morningstar, and in current
sales literature created by Plan Provider and submitted to and
approved in writing by Distributor prior to its use.
5. USE OF NAMES
Plan Provider and its affiliates will not, without the prior written
approval of Distributor, make public references to A I M Management
Group Inc. or any of its subsidiaries, or to the Funds. For purposes
of this provision, the public does not include Plan Providers'
representatives who are actively engaged in promoting the Funds. Any
brochure or other communication to the public that mentions the Funds
shall be submitted to Distributor for written approval prior to use.
Plan Provider shall provide copies of its regulatory filings that
include any reference to A I M Management Group Inc. or its
subsidiaries or the Funds to Distributor. If Plan Provider or its
affiliates should make unauthorized references or representations,
Plan Provider agrees to indemnify and hold harmless the Funds, A I M
Management Group Inc. and its subsidiaries from any claims, losses,
expenses or liability arising in any way out of or connected in any
way with such references or representations.
-2-
<PAGE> 3
6. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at
any time without any penalty by the vote of a majority of the
directors of such Fund who are "disinterested directors", as
that term is defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written
notice. It will be terminated by any act which terminates
either the Fund's Distribution Plan, or any related agreement
thereunder, and in any event, it shall terminate
automatically in the event of its assignment as that term is
defined in the 1940 Act.
(b) Either party may terminate this Agreement upon ninety (90)
days' prior written notice to the other party at the address
specified below.
7. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless the
Distributor, its affiliates, the Funds, the Funds' investment
advisors, and each of their directors, officers, employees,
agents and each person, if any, who controls them within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), (the "Distributor Indemnitees") against
any losses, claims, damages, liabilities or expenses to which
a Distributor Indemnitee may become subject insofar as those
losses, claims, damages, liabilities or expenses or actions
in respect thereof, arise out of or are based upon (I) Plan
Provider's negligence or willful misconduct in performing the
Services, (ii) any breach by Plan Provider of any material
provision of this Agreement, or (iii) any breach by Plan
Provider of a representation, warranty or covenant made in
this Agreement; and Plan Provider will reimburse the
Distributor Indemnitee for any legal or other expenses
reasonably incurred, as incurred, by them in connection with
investigating or defending such loss, claim or action. This
indemnity agreement will be in addition to any liability
which Plan Provider may otherwise have.
(b) Distributor agrees to indemnify and hold harmless Plan
Provider and its affiliates, and each of its directors,
officers, employees, agents and each person, if any, who
controls Plan Provider within the meaning of the Securities
Act (the "Plan Provider Indemnitees") against any losses,
claims, damages, liabilities or expenses to which a Plan
Provider Indemnitee may become subject insofar as such
losses, claims, damages, liabilities or expenses (or actions
in respect thereof) arise out of or are based upon (I) any
untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or Prospectus of
a Fund, or the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make statements therein not misleading, (ii) any
breach by Distributor of any material provision of this
Agreement, (iii) Distributor's negligence or willful
misconduct in carrying out its duties and responsibilities
under this Agreement, or (iv) any breach by Distributor of a
representation, warranty or covenant made in this Agreement;
and Distributor will reimburse the Plan Provider Indemnitees
for any legal or other expenses reasonably incurred, as
incurred, by them, in connection with investigating or
defending any such loss, claim or action. This indemnity
agreement will be in addition to any liability which
Distributor may otherwise have.
-3-
<PAGE> 4
(c) If any third party threatens to commence or commences any
action for which one party (the "Indemnifying Party") may be
required to indemnify another person hereunder (the
"Indemnified Party"), the Indemnified Party shall promptly
give notice thereof to the Indemnifying Party. The
Indemnifying Party shall be entitled, at its own expense and
without limiting its obligations to indemnify the Indemnified
Party, to assume control of the defense of such action with
counsel selected by the Indemnifying Party which counsel
shall be reasonably satisfactory to the Indemnified Party. If
the Indemnifying Party assumes the control of the defense,
the Indemnified Party may participate in the defense of such
claim at its own expense. Without the prior written consent
of the Indemnified Party, which consent shall not be withheld
unreasonably, the Indemnifying Party may not settle or
compromise the liability of the Indemnified Party in such
action or consent to or permit the entry of any judgment in
respect thereof unless in connection with such settlement,
compromise or consent each Indemnified Party receives from
such claimant an unconditional release from all liability in
respect of such claim.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas applicable to agreements fully
executed and to be performed therein.
9. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party represents that it is free to enter into this Agreement and
that by doing so it will not breach or otherwise impair any other
agreement or understanding with any other person, corporation or other
entity. Each party represents that it has full power and authority
under applicable law, and has taken all action necessary to enter into
and perform this Agreement and the person executing this Agreement on
its behalf is duly authorized and empowered to execute and deliver
this Agreement. Additionally, each party represents that this
Agreement, when executed and delivered, shall constitute its valid,
legal and binding obligation, enforceable in accordance with its
terms.
Plan Provider further represents, warrants, and covenants that:
(a) it is registered as a transfer agent pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), or is not required to be registered as such;
(b) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives; and
(c) it is registered as a broker-dealer under the 1934 Act or any
applicable state securities laws, or, including as a result
of entering into and performing the services set forth in
this Agreement, is not required to be registered as such.
Distributor further represents, warrants and covenants, that:
(a) it is registered as a broker-dealer under the 1934 Act and
any applicable state securities laws; and
-4-
<PAGE> 5
(b) the Funds' advisors are registered as investment advisors
under the Investment Advisers Act of 1940, the Funds are
registered as investment companies under the 1940 Act and
Fund Shares are registered under the Securities Act.
10. MODIFICATION
This Agreement and Exhibit A may be amended at any time by Distributor
without Plan Provider's consent by Distributor mailing a copy of an
amendment to Plan Provider at the address set forth below. Such
amendment shall become effective thirty (30) days from the date of
mailing unless this Agreement is terminated by the Plan Provider
within such thirty (30) days.
11. ASSIGNMENT
This Agreement shall not be assigned by a party hereto, without the
prior written consent of the other parties hereto, except that a party
may assign this Agreement to an affiliate having the same ultimate
ownership as the assigning party without such consent.
12. SURVIVAL
The provisions of Sections 1, 5 and 7 shall survive termination of
this Agreement.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their duly
authorized officers as of the date first above written.
---------------------------------------
(PLAN PROVIDER)
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address:
-------------------------------
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
By:
------------------------------------
Print Name:
----------------------------
Title:
--------------------------------
11 Greenway Plaza
Suite 100
Houston, Texas 77210
-6-
<PAGE> 7
EXHIBIT A
For the term of this Agreement, Distributor, or its affiliates, shall
pay Plan Provider the following amounts for each of the following Funds with
respect to the average daily net asset value of the Class A Shares of the
Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---- ----------
<S> <C>
AIM Advisor Funds, Inc. (Class A Shares Only)
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A Shares Only)
AIM Aggressive Growth Fund .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Large Cap Growth Fund .25%
AIM Funds Group (Class A Shares Only)
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Select Growth Fund .25%
AIM Value Fund .25%
AIM Growth Series (Class A Shares Only)
AIM Basic Value Fund .25%
AIM Europe Growth Fund .25%
AIM International Growth Fund .25%
AIM Japan Growth Fund .25%
AIM Mid Cap Equity Fund .25%
AIM New Pacific Growth Fund .25%
AIM Small Cap Growth Fund .25%
AIM Worldwide Growth Fund .25%
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
AIM International Funds, Inc. (Class A Shares Only)
<S> <C>
AIM Asian Growth Fund .25%
AIM European Development Fund .25%
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Funds (Class A Shares Only)
AIM Developing Markets Fund .25%
AIM Emerging Markets Fund .25%
AIM Emerging Markets Debt Fund .25%
AIM Global Consumer Products and Services Fund .25%
AIM Global Financial Services Fund .25%
AIM Global Government Income Fund .25%
AIM Global Growth & Income Fund .25%
AIM Global Health Care Fund .25%
AIM Global Infrastructure Fund .25%
AIM Global Resources Fund .25%
AIM Global Telecommunications Fund .25%
AIM Latin American Growth Fund .25%
AIM Strategic Income Fund .25%
AIM Investment Securities Funds (Class A Shares Only)
AIM High Yield Fund II .25%
AIM Limited Maturity Treasury Fund .15%
AIM Series Trust (Class A Shares Only)
AIM Global Trends Fund .25%
AIM Special Opportunities Funds (Class A Shares Only)
AIM Small Cap Opportunities Fund .25%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan Provider. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made to Plan Provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
<PAGE> 1
EXHIBIT (m)(5)
EXHIBIT E
[LOGO APPEARS HERE] A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc. (BANK TRUST DEPARTMENTS)
__________, 19__
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the applicable
Fund, in the exercise of their reasonable business judgement and in light of
their fiduciary duties, that there is a reasonable likelihood that the Plan will
benefit the Fund and the holders of its Shares. The terms and conditions of this
Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we shall
accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 2
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on
behalf of the Funds, agrees to pay all out-of-pocket expenses actually
incurred by us in connection with the transfer by us of such proxy
statements and reports to our clients as required under applicable laws
or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause shall
not constitute a waiver of AIM Distributors's right to terminate at a
later date for any such cause.
<PAGE> 3
Shareholder Service Agreement Page 3
(Bank Trust Departments)
This Agreement may be terminated with respect to any Fund at any time by
the vote of a majority of the directors or trustees of such Fund who are
disinterested directors or by a vote of a majority of the Fund's
outstanding shares, on not less than 60 days' written notice to us at
our principal place of business. This Agreement will be terminated by
any act which terminates the Agreement for Purchase of Shares of The AIM
Family of Funds--Registered Trademark-- between us and AIM Distributors
or a Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment by us, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM
Family of Funds --Registered Trademark-- through Bank Trust
Departments constitute the entire agreement between us and AIM
Distributors and supersede all prior oral or written agreements between
the parties hereto. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall constitute
the same instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------
(Firm Name)
-----------------------------------
(Address)
-----------------------------------
City/State/Zip/County
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Dated:
-----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
Dated:
----------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund
AIM Large Cap Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Select Growth Fund
AIM Value Fund
AIM Growth Series
AIM Basic Value Fund
AIM Europe Growth Fund
AIM International Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
AIM Worldwide Growth Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
</TABLE>
<PAGE> 6
Shareholder Service Agreement Page 6
(Bank Trust Departments)
AIM Investment Funds
AIM Developing Markets Fund
AIM Emerging Markets Fund
AIM Emerging Markets Debt Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Government Income Fund
AIM Global Growth & Income Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM High Yield Fund II
AIM Series Trust
AIM Global Trends Fund
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
<PAGE> 7
[LOGO APPEARS HERE] A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc. (BROKERS FOR BANK TRUST DEPARTMENTS)
__________, 19__
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto,
which may be amended from time to time by AIM Distributors (the "Funds"), for
the servicing of our clients who are shareholders of, and the administration of
accounts in, the Funds. We understand that this Shareholder Service Agreement
(the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") by each of the Funds, under a Distribution
Plan (the "Plan") adopted pursuant to said Rule, and is subject to applicable
rules of the National Association of Securities Dealers, Inc. ("NASD"). This
Agreement defines the services to be provided by us for which we are to receive
payments pursuant to the Plan. The Plan and the Agreement have been approved by
a majority of the directors or trustees of the applicable Fund, including a
majority of directors or trustees who are not interested persons of the
applicable Fund, and who have no direct or indirect financial interest in the
operation of the Plan or related agreements, by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination by the directors or trustees of the applicable Fund, in the
exercise of their reasonable business judgement and in light of their fiduciary
duties, that there is a reasonable likelihood that the Plan will benefit the
Fund and the holders of its Shares. The terms and conditions of this Agreement
shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we shall
accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 8
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on behalf
of the Funds, agrees to pay all out-of-pocket expenses actually incurred
by us in connection with the transfer by us of such proxy statements and
reports to our clients as required under applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause shall
not constitute a waiver of AIM Distributors's right to terminate at a
later date for any such cause. This Agreement may be terminated with
respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates the Selected
Dealer Agreement between us and AIM Distributors or a Fund's
Distribution Plan, and in any event, shall terminate automatically in
the event of its assignment by us, the term "assignment" for this
purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (I) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors from
any obligations either may have under any other agreements between us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 10
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------
(Firm Name)
-----------------------------------
(Address)
-----------------------------------
City/State/Zip/County
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Dated:
-----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
Dated:
----------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 11
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund
AIM Large Cap Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Select Growth Fund
AIM Value Fund
AIM Growth Series
AIM Basic Value Fund
AIM Europe Growth Fund
AIM International Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
AIM Worldwide Growth Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
</TABLE>
<PAGE> 12
Shareholder Service Agreement Page 6
(Brokers for Bank Trust Departments)
AIM Investment Funds
AIM Developing Markets Fund
AIM Emerging Markets Fund
AIM Emerging Markets Debt Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Government Income Fund
AIM Global Growth & Income Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications Fund
AIM Latin American Growth Fund
AIM Strategic Income Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM High Yield Fund II
AIM Series Trust
AIM Global Trends Fund
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
<PAGE> 1
EXHIBIT (m)(6)
EXHIBIT C
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
This Variable Group Annuity Contractholder Service Agreement (the
"Agreement") has been adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") under a Distribution Plan adopted pursuant
to said Rule. This Agreement, being made between A I M Distributors, Inc.
("Distributors") and the authorized insurance company, sets forth the terms for
the provision of specialized services to holders of Group Annuity Contracts
(the "Contracts") issued by insurance company separate accounts to employers
for their pension, stock bonus or profit-sharing plans qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Plans"), where
amounts contributed under such plans are invested pursuant to the Contracts in
shares of one or more of the series portfolios of the AIM - managed mutual
funds (or designated classes of such funds) (the "Fund(s)") listed in Appendix
A, attached hereto, which may be amended from time to time by Distributors.
Distributors' role in these arrangements will be solely as agent for the Funds.
1. To the extent you provide specialized services to holders of
Contracts who have selected the Fund(s) for purposes of their Group
Annuity Contracts ("Contractholders") you will receive payment pursuant to
the distribution plan adopted by each of the Funds. Such services to Group
Contractholders may include, without limitation, some or all of the
following: answering inquiries regarding the Fund(s); performing
sub-accounting for Contractholders; establishing and maintaining
Contractholder accounts and records; processing and bunching purchase and
redemption transactions; providing periodic statements of Contract account
balances; forwarding such reports and notices to Contractholders relative
to the Fund(s) as we deem necessary; generally, facilitating
communications with Contractholders concerning investments in the Fund(s)
on behalf of Plan participants; and performing such other administrative
services as we deem to be necessary or desirable, to the extent permitted
by applicable statute, rule or regulation. You represent that you will
accept a fee hereunder only so long as you continue to provide personal
services to Contractholders.
2. Shares of the Fund(s) purchased by you will be registered in your
name and you may exercise all applicable rights of a holder of such
Shares. You agree to transmit to the Funds, in a timely manner, all
purchase orders and redemption requests and to forward to each of your
Contractholders as you deem necessary, periodic shareholder reports and
other communications received from the Funds.
3. You agree to wire to the Fund(s)' custodian bank, within three (3)
business days of the placing of a purchase order, federal funds in an
amount equal to the amount of all purchase orders placed by you on behalf
of your Contractholders and accepted by the Funds (net of any redemption
orders placed by you on behalf of your Contractholders).
C-1
<PAGE> 2
4. You shall provide such facilities and personnel (which may be all
or any part of the facilities currently used in your business, or all or
any personnel employed by you) as may be necessary or beneficial in
carrying out the purposes of this Agreement.
5. Except as may be provided in a separate written agreement between
Distributors and you, neither you nor any of your employees or agents are
authorized to assist in the distribution of any shares of the Fund(s) to
the public or to make any representations to Contractholders concerning
the Fund(s) except those contained in the then current prospectus
applicable to the Fund(s). Neither the Funds, A I M Advisors, Inc.
("Advisors"), Distributors nor any of their affiliates will be a party,
nor will they be represented as a party, to any Group Annuity Contract
agreement between you and the Contractholders nor shall the Funds,
Advisors, Distributors or any of their affiliates participate, directly or
indirectly, in any compensation that you may receive from Contractholders
and their Plans' participants.
6. In consideration of the services and facilities described herein,
you shall receive an annual fee, payable quarterly, as set forth in
Appendix A, of the aggregate average net asset value of shares of the
Fund(s) owned by you during each quarterly period for the benefit of
Contractholders' Plans' participants. You understand that this Agreement
and the payment of such distribution fees have been authorized and
approved by the Boards of Directors/Trustees of the Fund(s). You further
understand that this Agreement and the fees payable hereunder are subject
to limitations imposed by applicable rules of the National Association of
Securities Dealers, Inc.
7. The Funds reserve the right, at their discretion and without
notice, to suspend the sale of their shares or to withdraw the sale of
their shares.
8. This Agreement may be amended at any time without your consent by
mailing a copy of an amendment to you at the address set forth below. Such
amendment shall become effective on the date set forth in such amendment
unless you terminate this Agreement as set forth below within thirty (30)
days of your receipt of such amendment.
9. This Agreement may be terminated at any time by us on not less than
60 days' written notice to you at your principal place of business. You
may terminate this Agreement on 60 days' written notice addressed to us at
our principal place of business. We may also terminate this Agreement for
cause on violation by you of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to you of
such termination. Our failure to terminate for any cause shall not
constitute a waiver of our right to terminate at a later date for any such
cause.
This Agreement may be terminated with respect to any Fund at any
time without payment of any penalty by the vote of a majority of the
directors/trustees of such Fund who are Disinterested Directors/Trustees,
as defined in the 1940 Act, or by a vote of a majority of the Fund's
outstanding shares, on sixty (60) days' written notice. It will be
terminated by any act which terminates either the Fund's Distribution
Agreement with us, the Selected Dealer Agreement between your firm and us
or the Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment as that term is defined in
the 1940 Act.
C-2
<PAGE> 3
10. All communications to us shall be sent to 11 Greenway Plaza,
Suite 100, Houston, Texas 77046. Any notice to you shall be duly given if
mailed, telegraphed or sent by facsimile to you at the address shown on
this Agreement.
11. This Agreement shall become effective as of the date when it is
executed and dated below by us. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
Date: By:
---------------------------- -------------------------------
Signature
-------------------------------
Print Name
The undersigned agrees to abide by the foregoing terms and conditions.
Date:
---------------------------- --------------------------------
(Firm Name)
--------------------------------
(Address)
--------------------------------
(City) / (State) / (County)
By:
-----------------------------
Name:
---------------------------
Title:
---------------------------
C-3
<PAGE> 4
APPENDIX A
TO
VARIABLE GROUP ANNUITY CONTRACTHOLDER SERVICE AGREEMENT
<TABLE>
<CAPTION>
FUND FEE RATE*
- ---- --------
<S> <C>
AIM Advisor Funds, Inc. (Class A and Class C Shares)
AIM Advisor Flex Fund .25%
AIM Advisor International Value Fund .25%
AIM Advisor Large Cap Value Fund .25%
AIM Advisor MultiFlex Fund .25%
AIM Advisor Real Estate Fund .25%
AIM Equity Funds, Inc. (Class A and Class C Shares)
AIM Aggressive Growth Fund .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Large Cap Growth Fund .25%
AIM Funds Group (Class A and Class C Shares)
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Select Growth Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc. (Class A and Class C Shares)
AIM Asian Growth Fund .25%
AIM European Development Fund .25%
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds (Class A Shares Only)
AIM Limited Maturity Treasury Fund .15%
AIM High Yield Fund II .25%
AIM Special Opportunities Funds (Class A Shares Only)
AIM Small Cap Opportunities Fund .25%
</TABLE>
- ---------------
* Frequency of Payments: Quarterly.
C-4
