<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
AIM International Funds, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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<PAGE> 2
AIM NEW PACIFIC GROWTH FUND
A PORTFOLIO OF AIM GROWTH SERIES
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
April 25, 2000
Dear Shareholder:
Enclosed is a combined proxy statement and prospectus seeking your approval of a
proposed combination of AIM New Pacific Growth Fund with AIM Asian Growth Fund.
AIM New Pacific Growth Fund ("New Pacific") is an investment portfolio of AIM
Growth Series, a Delaware business trust. AIM Asian Growth Fund ("Asian Growth")
is an investment portfolio of AIM International Funds, Inc., a Maryland
corporation.
The investment objectives of New Pacific and Asian Growth are identical and the
investment policies of New Pacific are similar to the investment policies of
Asian Growth. A I M Advisors, Inc. serves as the investment adviser to New
Pacific and Asian Growth. As discussed in the accompanying document, Asian
Growth has out performed New Pacific since Asian Growth commenced operations on
November 3, 1997, and Asian Growth's ratio of expenses to net assets, under its
contractual arrangements, will be lower than New Pacific's after the
reorganization. The accompanying document describes the proposed transaction and
compares the investment policies, operating expenses and performance history of
New Pacific and Asian Growth.
Shareholders of New Pacific are being asked to approve an Agreement and Plan of
Reorganization by and among AIM Growth Series, AIM International Funds, Inc. and
A I M Advisors, Inc., that will govern the reorganization of New Pacific into
Asian Growth. After careful consideration, the Board of Trustees of AIM Growth
Series has unanimously approved the proposal and recommends that you read the
enclosed materials carefully and then vote FOR the proposal.
If you attend the meeting, you may vote your shares in person. If you expect to
attend the meeting in person, or have questions, please notify AIM Growth Series
by calling 1-800-952-3502. If you do not expect to attend the meeting, please
fill in, date, sign and return the proxy card in the enclosed envelope which
requires no postage if mailed in the United States.
Your vote is important. Please take a moment now to sign and return your proxy
card in the enclosed postage paid return envelope. If we do not hear from you
after a reasonable amount of time you may receive a telephone call from our
proxy solicitor, Shareholder Communications Corporation, reminding you to vote
your shares. You may also vote your shares on the Internet at the funds' website
at http://www.aimfunds.com by following instructions that appear on the enclosed
proxy insert.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
<PAGE> 3
AIM NEW PACIFIC GROWTH FUND
A PORTFOLIO OF
AIM GROWTH SERIES
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 31, 2000
TO THE SHAREHOLDERS OF NEW PACIFIC:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of AIM New
Pacific Growth Fund ("New Pacific"), an investment portfolio of AIM Growth
Series ("AGS"), will be held at 11 Greenway Plaza, Suite 100, Houston, TX
77046-1173 on May 31, 2000, at 3:00 P.M., Central time, for the following
purposes:
1. To approve an Agreement and Plan of Reorganization (the "Agreement") by
and among AGS, acting on behalf of New Pacific, AIM International Funds, Inc.
("AIF"), acting on behalf of AIM Asian Growth Fund ("Asian Growth") and A I M
Advisors, Inc. The Agreement provides for the combination of New Pacific with
Asian Growth (the "Reorganization"). Pursuant to the Agreement, all of the
assets of New Pacific will be transferred to Asian Growth. Asian Growth will
assume all of the liabilities of New Pacific, and AIF will issue Class A shares
of Asian Growth to New Pacific's Class A shareholders, Class B shares of Asian
Growth to New Pacific's Class B shareholders, and Class C shares of Asian Growth
to New Pacific's Class C shareholders. The value of each New Pacific
shareholder's account with Asian Growth immediately after the Reorganization
will be the same as the value of such shareholder's account with New Pacific
immediately prior to the Reorganization. The Reorganization has been structured
as a tax-free transaction. No initial sales charge will be imposed in connection
with the Reorganization.
2. To transact any other business, not currently contemplated, that may
properly come before the Special Meeting, in the discretion of the proxies or
their substitutes.
Shareholders of record as of the close of business on April 3, 2000, are
entitled to notice of, and to vote at, the Special Meeting or any adjournment
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY, WHICH IS BEING SOLICITED BY THE MANAGEMENT OF
AGS. YOU MAY ALSO VOTE YOUR SHARES THROUGH A WEB SITE ESTABLISHED FOR THAT
PURPOSE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY INSERT. YOUR VOTE IS
IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM AT THE SPECIAL MEETING. PROXIES
MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY THE SUBSEQUENT EXECUTION
AND SUBMISSION OF A REVISED PROXY, BY GIVING WRITTEN NOTICE OF REVOCATION TO AGS
AT ANY TIME BEFORE THE PROXY IS EXERCISED OR BY VOTING IN PERSON AT THE SPECIAL
MEETING.
/s/ SAMUEL D. SIRKO
Samuel D. Sirko
Vice President and Secretary
April 25, 2000
<PAGE> 4
<TABLE>
<S> <C>
AIM NEW PACIFIC GROWTH FUND AIM ASIAN GROWTH FUND
A PORTFOLIO OF A PORTFOLIO OF
AIM GROWTH SERIES AIM INTERNATIONAL FUNDS, INC.
11 GREENWAY PLAZA, 11 GREENWAY PLAZA
SUITE 100 SUITE 100
HOUSTON, TEXAS 77046-1173 HOUSTON, TEXAS 77046-1173
TOLL FREE: (800) 454-0327 TOLL FREE: (800) 454-0327
</TABLE>
COMBINED PROXY STATEMENT AND PROSPECTUS
DATED: APRIL 25, 2000
This document is being furnished in connection with a special meeting of
Shareholders of AIM New Pacific Growth Fund ("New Pacific"), an investment
portfolio of AIM Growth Series ("AGS"), a Delaware business trust, to be held on
May 31, 2000 (the "Special Meeting"). At the Special Meeting, the shareholders
of New Pacific are being asked to consider and approve an Agreement and Plan of
Reorganization (the "Agreement") by and among AGS, acting on behalf of New
Pacific, AIM International Funds, Inc. ("AIF"), a Maryland corporation, acting
on behalf of AIM Asian Growth Fund ("Asian Growth"), and A I M Advisors, Inc.
("AIM Advisors"). The Agreement provides for the combination of New Pacific with
Asian Growth (the "Reorganization"). THE BOARD OF TRUSTEES OF AGS HAS
UNANIMOUSLY APPROVED THE AGREEMENT AND REORGANIZATION AS BEING IN THE BEST
INTEREST OF THE SHAREHOLDERS OF NEW PACIFIC.
Pursuant to the Agreement, all of the assets of New Pacific will be
transferred to Asian Growth, Asian Growth will assume all of the liabilities of
New Pacific, and AIF will issue Class A shares of Asian Growth to New Pacific's
Class A shareholders, Class B shares of Asian Growth to New Pacific's Class B
shareholders, and Class C shares of Asian Growth to New Pacific's Class C
shareholders. The value of each New Pacific shareholder's account with Asian
Growth immediately after the Reorganization will be the same as the value of
such shareholder's account with New Pacific immediately prior to the
Reorganization. The Reorganization has been structured as a tax-free
transaction. No initial sales charge will be imposed in connection with the
Reorganization.
Asian Growth is a series portfolio of AIF, an open-end, series management
investment company. The investment objective of Asian Growth is identical to the
investment objective of New Pacific. Asian Growth seeks to achieve long-term
growth of capital. New Pacific also seeks long-term growth of Capital. See
"Comparison of Investment Objectives and Policies." The investment policies of
Asian Growth are similar to those of New Pacific.
This Combined Proxy Statement and Prospectus ("Proxy Statement/Prospectus")
sets forth the information that a shareholder of New Pacific should know before
voting on the Agreement. It should be read and retained for future reference.
The current Prospectus of New Pacific, dated May 3, 1999, as supplemented
February 11, 2000 and March 22, 2000 (the "New Pacific Prospectus"), together
with the related Statement of Additional Information also dated May 3, 1999, as
supplemented June 30, 1999, August 5, 1999, October 1, 1999, January 3, 2000,
January 24, 2000 and February 11, 2000, are on file with the Securities and
Exchange Commission (the "SEC") and are incorporated by reference herein. The
Prospectus of Asian Growth dated February 28, 2000, as supplemented March 31,
2000 (the "Asian Growth Prospectus"), and the related Statement of Additional
Information also dated February 28, 2000, have been filed with the SEC and are
incorporated by reference herein. A copy of the Asian Growth Prospectus is
attached as Appendix II to this Proxy Statement/Prospectus. Such documents are
available without charge by writing to A I M Fund Services, Inc., P.O. Box 4739,
Houston, Texas 77210-4739 or by calling (800) 347-4246. The SEC maintains a Web
site at http://www.sec.gov that contains the prospectuses and statements of
additional information described above, material incorporated by reference, and
other information about AGS and AIF. Additional information about New Pacific
and Asian Growth may also be obtained on the Web at http://www.aimfunds.com.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 5
[AIM LOGO APPEARS HERE]
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
SYNOPSIS.................................................... 1
The Reorganization........................................ 1
Background and Reasons for the Reorganization............. 2
Comparison of Asian Growth and New Pacific................ 2
RISK FACTORS................................................ 5
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES............ 6
Investment Objectives of Asian Growth and New Pacific..... 6
Investment Policies of Asian Growth....................... 6
Investment Policies of New Pacific........................ 6
Portfolio Management...................................... 7
Management Discussion and Analysis of Performance......... 7
FINANCIAL HIGHLIGHTS........................................ 8
Asian Growth.............................................. 8
ADDITIONAL INFORMATION ABOUT THE AGREEMENT.................. 11
Terms of the Reorganization............................... 11
The Reorganization........................................ 11
Board Considerations...................................... 11
Other Terms............................................... 12
Federal Tax Consequences.................................. 13
Accounting Treatment...................................... 15
RIGHTS OF SHAREHOLDERS...................................... 15
Rights of Shareholders Under Maryland Law and Delaware Law
if the Redomestication is Not Approved................. 15
Rights of Shareholders under Declarations of Trust of AGS
and AIMF if the Redomestication is Approved............ 18
OWNERSHIP OF ASIAN GROWTH AND NEW PACIFIC SHARES............ 19
Significant Holders....................................... 19
Ownership of Officers and Directors/Trustees.............. 20
CAPITALIZATION.............................................. 21
LEGAL MATTERS............................................... 21
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION................................................ 21
ADDITIONAL INFORMATION ABOUT ASIAN GROWTH AND NEW PACIFIC... 22
APPENDIX I....................Agreement and Plan of Reorganization
APPENDIX II.............................Prospectus of Asian Growth
APPENDIX III.....Asian Growth Discussion & Analysis of Performance
</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,
Invest with Discipline, La Familia AIM de Fondos, La Familia AIM de Fondos and
Design, Invierta con Disciplina, AIM Funds, AIM Funds and Design and AIM
Investor are registered service marks and AIM Bank Connection and AIM Internet
Connect are service marks of A I M Management Group Inc.
i
<PAGE> 6
INTRODUCTION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of AGS from the shareholders of
New Pacific for use at the Special Meeting of Shareholders to be held at 11
Greenway Plaza, Suite 100, Houston, TX 77046 on May 31, 2000, at 3:00 P.M.,
Central time (such meetings and any adjournments thereof are referred to as the
"Special Meeting").
All properly executed and unrevoked proxies received in time for the
Special Meeting will be voted in accordance with the instructions contained
therein. If no instructions are given, shares represented by proxies will be
voted FOR the proposal to approve the Agreement and in accordance with
management's recommendation on other matters. The presence in person or by proxy
of one-third of the outstanding shares of beneficial interest in New Pacific at
the Special Meeting will constitute a quorum ("Quorum"). Approval of the
Agreement by New Pacific requires the affirmative vote of a majority of the
shares cast by shareholders of New Pacific. Abstentions and broker non-votes
will be counted as shares present at the Special Meeting for quorum purposes,
but will not be considered votes cast at the Special Meeting. Broker non-votes
arise from a proxy returned by a broker holding shares for a customer which
indicates that the broker has not been authorized by the customer to vote on a
proposal. Any person giving a proxy has the power to revoke it at any time prior
to its exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of AGS. In addition, although mere attendance at the
Special Meeting will not revoke a proxy, a shareholder present at the Special
Meeting may withdraw his proxy and vote in person. Shareholders may also
transact any other business not currently contemplated that may properly come
before the Special Meeting in the discretion of the proxies or their
substitutes.
Shareholders of record as of the close of business on April 3, 2000 (the
"Record Date"), are entitled to vote at the Special Meeting. On the Record Date,
there were 17,605,426.147 shares of New Pacific outstanding. Each share is
entitled to one vote for each full share held, and a fractional vote for a
fractional share held.
AGS has engaged the services of Shareholder Communications Corporation
("SCC") to assist it in the solicitation of proxies for the Special Meeting. AGS
expects to solicit proxies principally by mail, but AGS or SCC may also solicit
proxies by telephone, facsimile or personal interview. AGS's officers will not
receive any additional or special compensation for any such solicitation. The
cost of shareholder solicitation is anticipated to be approximately $28,500. New
Pacific and Asian Growth will bear their own costs and expenses incurred in
connection with the Reorganization.
AGS intends to mail this Proxy Statement/Prospectus and the accompanying
proxy on or about April 25, 2000.
SYNOPSIS
THE REORGANIZATION
The Reorganization will result in the combination of New Pacific with Asian
Growth. New Pacific is a portfolio of AGS, a Delaware business trust. Asian
Growth is a portfolio of AIF, a Maryland corporation.
If shareholders of New Pacific approve the Agreement and other closing
conditions are satisfied, all of the assets of New Pacific will be transferred
to Asian Growth, Asian Growth will assume all of the liabilities of New Pacific,
and AIF will issue Class A shares of Asian Growth to New Pacific's Class A
shareholders, Class B shares of Asian Growth to New Pacific's Class B
shareholders and Class C shares of Asian Growth to New Pacific's Class C
shareholders. The shares of Asian Growth issued in the Reorganization will have
an aggregate net asset value equal to the value of New Pacific's net assets
transferred to Asian Growth. Shareholders will not pay any initial sales charge
for shares of Asian Growth received in connection with the Reorganization. The
value of each shareholder's account with Asian Growth immediately after the
Reorganization will be the same as the value of such shareholder's account with
New Pacific immediately prior to the Reorganization. A copy of the Agreement is
attached as Appendix I to this Proxy Statement/ Prospectus. See "Additional
Information About the Agreement" below.
1
<PAGE> 7
New Pacific will receive an opinion of Ballard Spahr Andrews & Ingersoll,
LLP, to the effect that the Reorganization will constitute a tax-free
reorganization for Federal income tax purposes. Thus, shareholders will not have
to pay Federal income taxes as a result of the Reorganization. See "Additional
Information About the Agreement -- Federal Tax Consequences" below.
BACKGROUND AND REASONS FOR THE REORGANIZATION
The Board of Trustees of AGS, including the independent trustees, has
determined that the reorganization of New Pacific into Asian Growth is in the
best interests of New Pacific and its shareholders and that the interests of the
shareholders of New Pacific will not be diluted as a result of the
Reorganization.
In making its determination, the Board of Trustees noted that the two funds
have the same investment objective, and follow similar policies to achieve that
objective. The assets of the combined two funds should provide AIM Advisors with
a more stable base for investment management.
The Board of Trustees also noted that Asian Growth has outperformed New
Pacific, providing a better total return to shareholders. Although the total
operating expenses of Asian Growth, under its contractual arrangements expressed
as a percentage of assets, are slightly higher for its Class B and Class C
shares than those of New Pacific, the combined assets of the two funds will
create economies of scale so that after the Reorganization, and under
contractual arrangements, Asian Growth's expense ratios will be lower for all
Classes of shares than those of New Pacific. Although past performance does not
guarantee future results, the combination of better performance and lower
expenses should make Asian Growth a better investment for New Pacific
shareholders.
COMPARISON OF ASIAN GROWTH AND NEW PACIFIC
Investment Objective and Policies
The investment objective of Asian Growth is identical to the investment
objective of New Pacific and the investment policies of Asian Growth are similar
to the investment policies of New Pacific.
Asian Growth seeks to provide long-term growth of capital by investing,
normally, at least 65% of its assets in marketable equity securities issued by
Asian companies (except Japanese companies) including companies with market
capitalizations of less than $1 billion. New Pacific seeks to provide long-term
growth of capital by investing, normally, at least 65% of its total assets in
equity securities of issuers domiciled in twelve countries, other than Japan,
located in the Pacific region, including developing countries.
Investment Advisory Services
AIM Advisors serves as investment adviser to New Pacific. AIM Advisors also
serves as investment adviser to Asian Growth. INVESCO Global Asset Management
Limited ("IGAM") serves as sub-adviser and INVESCO Asia Limited ("IAL") serves
as sub-sub-adviser to Asian Growth. The sub-advisory agreement and the
sub-sub-advisory agreement for Asian Growth will terminate on May 22, 2000. The
portfolio management team of Asian Growth will not change.
2
<PAGE> 8
Performance
Average annual total returns for the periods indicated for Class A shares
of Asian Growth and New Pacific, including sales charges, are shown below. Past
performance cannot guarantee comparable future results.
<TABLE>
<CAPTION>
NEW PACIFIC ASIAN GROWTH
CLASS A CLASS A
SHARES SHARES
----------- ------------
<S> <C> <C>
1 Year Ended December 31, 1999.............................. 37.48% 58.70%
3 Years Ended December 31, 1999............................. (14.73)% N/A
5 Years Ended December 31, 1999............................. (4.37)% N/A
Since Inception*............................................ 9.55% 11.14%
</TABLE>
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* Inception dates for Asian Growth and New Pacific are November 3, 1997 and
January 19, 1977, respectively
Expenses
A comparison of annual operating expenses as a percentage of net assets
("Expense Ratio"), based on the fiscal year ended December 31, 1999 for the
Class A, Class B and Class C shares of New Pacific and for the fiscal year ended
October 31, 1999 for the Class A, Class B and Class C shares of Asian Growth are
shown below. Pro forma estimated Expense Ratios of Asian Growth giving effect to
the Reorganization are also provided.
<TABLE>
<CAPTION>
AIM NEW PACIFIC AIM ASIAN GROWTH FUND
GROWTH FUND AIM ASIAN GROWTH FUND PRO FORMA ESTIMATED
--------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on
purchase of shares (as a percentage
of offering price)................. 5.50% none none 5.50% none none 5.50% none none
Deferred Sales Load (as a percentage
of original purchase price or
redemption proceeds, as
applicable)........................ None(1) 5.00% 1.00% none(1) 5.00% 1.00% None(1) 5.00% 1.00%
ANNUAL OPERATING EXPENSES
(AS A % OF NET ASSETS)
Management fees...................... 0.98% 0.98% 0.98% 0.95% 0.95% 0.95% 0.95% 0.95% 0.95%
Distribution and/or service (12b-1)
fees............................... 0.35% 1.00% 1.00% 0.35% 1.00% 1.00% 0.35% 1.00% 1.00%
Other expenses....................... 0.90% 0.90% 0.90% 1.42% 1.64% 1.64% 0.96% 1.00% 1.00%
Interest expense..................... 0.06% 0.06% 0.06% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total other expenses................. 0.96% 0.96% 0.96% 1.42% 1.64% 1.64% 0.96% 1.00% 1.00%
Total fund operating expenses........ 2.29% 2.94% 2.94% 2.72% 3.59% 3.59% 2.26% 2.95% 2.95%
----- ----- ----- ----- ----- ----- ----- ----- -----
Fee waiver(2)........................ (0.23)% (0.23)% (0.23)% (0.80)% (0.80)% (0.80)% (0.34)% (0.34)% (0.34)%
----- ----- ----- ----- ----- ----- ----- ----- -----
Net expenses......................... 2.06% 2.71% 2.71% 1.92% 2.79% 2.79% 1.92% 2.61% 2.61%
===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
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(1) If you buy $1,000,000 or more of Class A shares and redeem those shares
within 18 months of purchase, you may pay a 1% contingent deferred sales
charge at the time of redemption.
(2) AIM Advisors has contractually agreed to limit total fund operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary items)
on Class A, Class B and Class C shares of New Pacific to 2.00%, 2.75% and
2.75% respectively. AIM Advisors and its affiliates have contractually
agreed to waive fees and reimburse expenses, until June 30, 2001, for Asian
Growth (i) Class A shares to the extent necessary to limit total operating
expenses to 1.92%; and (ii) Class B and Class C shares by the same basis
point amounts necessary to limit Class A shares total operating expenses to
1.92% (e.g., if AIM waives/reimburses 0.10% of Class A fees/expenses, AIM
will also waive/reimburse 0.10% of Class B and Class C fees/expenses).
3
<PAGE> 9
Hypothetical Example of Effect of Expenses
An investor would have directly or indirectly paid the following expenses
on a $10,000 investment under the existing and estimated fees and expenses
stated above, assuming a 5% annual return. To the extent fees are waived, the
expense will be lower.
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(3)
---- ------ ------ --------
<S> <C> <C> <C> <C>
AIM NEW PACIFIC GROWTH FUND
Class A shares(1)...................................... $769 $1,226 $1,708 $3,031
Class B shares:
Assuming complete redemption at end of
period(2)...................................... $797 $1,210 $1,748 $3,109
Assuming no redemption............................ $297 $ 910 $1,548 $3,109
Class C shares:
Assuming complete redemption at end of
period(2)...................................... $397 $ 910 $1,548 $3,261
Assuming no redemption............................ $297 $ 910 $1,548 $3,261
AIM ASIAN GROWTH FUND
Class A shares(1)...................................... $810 $1,348 $1,910 $3,433
Class B shares:
Assuming complete redemption at end of
period(2)...................................... $862 $1,400 $2,059 $3,662
Assuming no redemption............................ $362 $1,100 $1,859 $3,662
Class C shares:
Assuming complete redemption at end of
period(2)...................................... $462 $1,100 $1,859 $3,854
Assuming no redemption............................ $362 $1,100 $1,859 $3,854
COMBINED FUND
Class A shares(1)...................................... $767 $1,217 $1,693 $3,002
Class B shares:
Assuming complete redemption at end of
period(2)...................................... $798 $1,213 $1,752 $3,109
Assuming no redemption............................ $298 $ 913 $1,552 $3,109
Class C shares:
Assuming complete redemption at end of
period(2)...................................... $398 $ 913 $1,552 $3,271
Assuming no redemption............................ $298 $ 913 $1,552 $3,271
</TABLE>
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(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable CDSC.
(3) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which the purchase
was made.
Sales Charges
No sales charges are applicable to shares of Asian Growth received in
connection with the Reorganization.
4
<PAGE> 10
Asian Growth Class A shares, which will be issued to New Pacific Class A
shareholders pursuant to the Agreement, are sold at net asset value plus an
initial sales charge of 5.50%. Asian Growth Class B Shares are offered at net
asset value, without an initial sales charge, and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six
years from the date such shares were purchased. Asian Growth Class C Shares are
offered at net asset value, without an initial sales charge, and are subject to
maximum contingent deferred sales charge of 1% on certain redemptions made
within one year from the date such shares were purchased.
Asian Growth pays a fee in the amount of 0.35% of the average daily net
assets of Class A shares to A I M Distributors, Inc. ("AIM Distributors") for
distribution services. Asian Growth pays AIM Distributors fees at an annual rate
of 1.00% of the average daily net assets attributable to the Class B shares and
Class C shares for distribution services. For more information, see the
discussion under the heading "Shareholder Information-Distribution and Service
(12b-1) Fees" in the Asian Growth Prospectus attached as Appendix II to this
Proxy Statement/Prospectus.
The Class A shares of New Pacific are sold at net asset value plus an
initial sales charge of 5.50%. New Pacific Class B shares are offered at net
asset value without an initial sales charge and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six
years from the date such shares were purchased. New Pacific Class C shares are
offered at net asset value, without an initial sales charge, and are subject to
a maximum contingent deferred sales charge of 1% on certain redemptions made
within one year from the date such shares were purchased.
New Pacific pays a fee in the amount of 0.35% of average daily net assets
of the Class A shares to AIM Distributors for distribution services. New Pacific
pays AIM Distributors at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares and Class C shares for distribution services.
Distribution; Purchase, Exchange and Redemption
Shares of Asian Growth and New Pacific are both distributed by AIM
Distributors. Purchase and redemption procedures are the same for Asian Growth
and New Pacific. Shares of Asian Growth and New Pacific may be exchanged for
shares of other funds within The AIM Family of Funds--Registered Trademark-- of
the same class.
RISK FACTORS
Asian Growth and New Pacific are subject to substantially similar
investment risks. The principal investment risks for Asian Growth are described
below.
Asian Growth invests primarily in equity securities. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. This is
especially true with respect to equity securities of small and micro-cap
companies (i.e. companies with market capitalizations of less than $1 billion),
whose prices may go up and down more than the prices of equity securities of
larger, more established companies. Also, since equity securities of small and
micro-cap companies may not be traded as often as equity securities of larger,
more established companies, it may be difficult or impossible for the fund to
sell securities at a desired price. Asian Growth invests in securities of
foreign companies, which generally involves greater risks than investing in
securities of domestic companies. The prices of foreign securities may be
further affected by other factors, including:
Currency Exchange Rates. The dollar value of Asian Growth's foreign
investments will be affected by changes in the exchange rates between the dollar
and the currencies in which those investments are traded.
Political and Economic Conditions. The value of Asian Growth'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.
5
<PAGE> 11
Regulations. Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
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 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.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES OF ASIAN GROWTH AND NEW PACIFIC
The investment objective of Asian Growth is long-term growth of capital.
The investment objective of New Pacific is long-term growth of capital.
INVESTMENT POLICIES OF ASIAN GROWTH
Asian Growth seeks to meet its investment objective by investing, normally,
at least 65% 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 (1) organized under the laws of a country in Asia and having a
principal office in a country in Asia; (2) that derive 50% or more of their
total revenues from business in Asia; or (3) whose equity securities are traded
principally on the stock exchange, or in an over-the-counter market, in Asia.
Asian Growth 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 35% of its total assets in securities of non-Asian
companies. The fund may also invest up to 35% 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.
Asian Growth 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
cycles.
The portfolio managers focus on companies that have experienced
above-average long-term growth in earnings and have strong prospects for future
growth. In selecting countries in which Asian Growth will invest, the 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
portfolio managers consider whether to sell a particular security when any of
those factors materially changes.
INVESTMENT POLICIES OF NEW PACIFIC
New Pacific seeks to meet its investment objective by investing, normally,
at least 65% of its total assets in equity securities of issuers domiciled in
twelve countries, other than Japan, located in the Pacific region, including
developing countries, i.e., those that are in the initial stages of their
industrial cycles. These countries are designated as the Fund's primary
investment area, and the list of countries may be revised with the approval of
the Fund's Board of Trustees. New Pacific typically considers a company to be
domiciled in a particular country if it (1) is organized under the laws of a
particular country or has a principal office in a particular country; or (2)
derives 50% or more of its total revenues from business in that country,
provided
6
<PAGE> 12
that, in the view of the portfolio managers, the value of the issuers'
securities tend to reflect such country's development to a greater extent than
developments elsewhere.
New Pacific may invest up to 35% of its total assets in equity securities
of issuers domiciled outside of its primary investment area, including
developing countries. The Fund may also invest up to 35% of its total assets in
U.S. and foreign investment-grade debt securities, or securities deemed by the
portfolio managers to be of comparable quality. The Fund may invest in
securities of issuers located in developing countries, i.e., those that are in
the initial stages of their industrial cycle.
In selecting investments, New Pacific's portfolio managers seek to identify
those countries and industries where political and economic factors, including
currency movements, are likely to produce above-average growth rates. The
portfolio managers then balance the potential benefits with the risks of
investing in those countries and industries. The portfolio managers allocate
investments among fixed-income securities based on their views as to the best
values then available in the marketplace. The portfolio managers consider
whether to sell a particular security when any of those factors materially
changes.
PORTFOLIO MANAGEMENT
Shuxin Cao, A. Dale Griffin, III and Barret K. Sides are primarily
responsible for the day to day management of Asian Growth. Each of Messrs. Cao,
Griffin and Sides is an officer of A I M Capital Management, Inc. ("AIM
Capital"), an indirect wholly owned subsidiary of A I M Management Group Inc.
("AIM"). Mr. Cao has been responsible for Asian Growth since 1999 and has been
associated with AIM Advisors and/or its affiliates since 1997. Prior to 1997,
Mr. Cao was an international equity analyst for Boatmen's Trust Company. Mr.
Griffin has been responsible for Asian Growth since its inception in 1997 and
has been associated with AIM Advisors and/or its affiliates since 1989. Mr.
Sides has been responsible for Asian Growth since its inception in 1997 and has
been associated with AIM Advisors and/or its affiliates since 1990.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PERFORMANCE
A discussion of the performance of Asian Growth for the fiscal year ended
October 31, 1999, is set forth in Appendix III to this Proxy
Statement/Prospectus.
7
<PAGE> 13
FINANCIAL HIGHLIGHTS
ASIAN GROWTH
Shown below are financial highlights for a Class A share, Class B share and
Class C share of Asian Growth outstanding during the year ended October 31, 1999
and the period November 3, 1997 (inception date), through October 31, 1998. This
information has been audited by AIF's independent accountants whose unqualified
report on the financial statements of Asian Growth are included in its annual
report to shareholders for the fiscal year ended October 31, 1999. Asian
Growth's annual report to shareholders dated October 31, 1999, is available
without charge upon request made to AIF at the address or telephone number
appearing on the cover page of this Proxy Statement/Prospectus.
AIM ASIAN GROWTH FUND CLASS A SHARES
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED PERIOD NOVEMBER 3, 1997
OCTOBER 31, THROUGH
1999(a) OCTOBER 31, 1998
----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period....................... $ 7.69 $ 10.00
------- -------
Income from investment operations:
Net investment income (loss)............................. (0.03) 0.05
Net gains (losses) on securities (both realized and
unrealized)........................................... 3.14 (2.36)
------- -------
Total from investment operations................. 3.11 (2.31)
------- -------
Less distributions:
Dividends from net investment income..................... (0.04) --
------- -------
Net asset value, end of period................... $ 10.76 $ 7.69
======= =======
Total return(b)............................................ 40.66% (23.10)%
Ratios/supplemental data:
Net assets, end of period (000's omitted)................ $25,420 $ 7,716
Ratio of expenses to average net assets(c)............... 1.92%(d) 1.92%(e)
Ratio of net investment income (loss) to average net
assets(f)............................................. (0.50)%(d) 0.70%(e)
Portfolio turnover rate.................................. 142%(g) 79%
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(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
2.72% and 4.88% (annualized) for Class A for 1999-1998.
(d) Ratios are based on average net assets of $17,430,236.
(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 (1.30)% and (2.27)% (annualized) for Class A for
1999-1998.
(g) AIM Advisors has engaged in active trading of securities held by Asian
Growth during the year ended October 31, 1999. Frequent trading of fund
securities increases the expenses of the fund as a consequence of trading
costs and can result in distributions of gains to shareholders that are
subject to tax.
8
<PAGE> 14
AIM ASIAN GROWTH FUND CLASS B SHARES
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED NOVEMBER 3, 1997
OCTOBER 31, THROUGH
1999(a) OCTOBER 31, 1998
----------- ----------------
<S> <C> <C>
Net asset value, beginning of period........................ $ 7.63 $ 10.00
------- -------
Income from investment operations:
Net investment income (loss).............................. (0.13) (0.01)
Net gains (losses) on securities (both realized and
unrealized)............................................ 3.16 (2.36)
------- -------
Total from investment operations.................. 3.03 (2.37)
------- -------
Less distributions:
Dividends from net investment income...................... (0.01) --
------- -------
Net asset value, end of period.................... $ 10.65 $ 7.63
======= =======
Total return(b)............................................. 39.76% (23.70)%
Ratios/supplemental data:
Net assets, end of period (000's omitted)................. $12,070 $ 3,030
Ratio of expenses to average net assets(c)................ 2.79%(d) 2.80%(e)
Ratio of net investment income (loss) to average net
assets(f).............................................. (1.37)%(d) (0.18)%(e)
Portfolio turnover rate................................... 142%(g) 79%
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(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
3.59% and 5.75% (annualized) for Class B for 1999-1998.
(d) Ratios are based on average net assets of $6,408,688.
(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 (2.17)% and (3.15)% (annualized) for Class B for
1999-1998.
(g) AIM Advisors has engaged in active trading of securities held by Asian
Growth during the year ended October 31, 1999. Frequent trading of fund
securities increases the expenses of the fund as a consequence of trading
costs and can result in distributions of gains to shareholders that are
subject to tax.
9
<PAGE> 15
AIM ASIAN GROWTH FUND CLASS C SHARES
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED NOVEMBER 3, 1997
OCTOBER 31, THROUGH
1999(a) OCTOBER 31, 1998
----------- ----------------
<S> <C> <C>
Net asset value, beginning of period........................ $ 7.61 $ 10.00
------ -------
Income from investment operations:
Net investment income (loss).............................. (0.13) (0.01)
Net gains (losses) on securities (both realized and
unrealized)............................................ 3.16 (2.38)
------ -------
Total from investment operations.................. 3.03 (2.39)
Less distributions:
Dividends from net investment income...................... (0.01) --
------ -------
Net asset value, end of period.................... $10.63 $ 7.61
====== =======
Total return(b)............................................. 39.86% (23.90)%
Ratios/supplemental data:
Net assets, end of period (000's omitted)................. $5,008 $ 686
Ratio of expenses to average net assets(c)................ 2.79%(d) 2.80%(e)
Ratio of net investment income (loss) to average net
assets(f).............................................. (1.37)%(d) (0.18)%(e)
Portfolio turnover rate................................... 142%(g) 79%
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(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
3.59% and 5.75% (annualized) for Class C for 1999-1998.
(d) Ratios are based on average net assets of $2,061,860.
(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 (2.17)% and (3.15)% (annualized) for Class C for
1999-1998.
(g) AIM Advisors has engaged in active trading of securities held by Asian
Growth during the year ended October 31, 1999. Frequent trading of fund
securities increases the expenses of the fund as a consequence of trading
costs and can result in distributions of gains to shareholders that are
subject to tax.
10
<PAGE> 16
ADDITIONAL INFORMATION ABOUT THE AGREEMENT
TERMS OF THE REORGANIZATION
The terms and conditions under which the Reorganization may be consummated
are set forth in the Agreement. Significant provisions of the Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Agreement, a copy of which is attached as Appendix I to this
Proxy Statement/Prospectus.
THE REORGANIZATION
Asian Growth will acquire all of the assets of New Pacific in exchange for
shares of Asian Growth and the assumption by Asian Growth of the liabilities of
New Pacific. Consummation of the Reorganization (the "Closing") is expected to
occur on June 12, 2000, at 8:00 a.m. Eastern Time (the "Effective Time") on the
basis of values calculated as of the close of regular trading on the NYSE on
June 9, 2000.
At the Effective Time, all of the assets of New Pacific shall be delivered
to the Custodian for the account of Asian Growth in exchange for the assumption
by Asian Growth of all of the liabilities of any kind of New Pacific and
delivery by AIF directly to (i) New Pacific Class A shareholders of a number of
Asian Growth Class A shares (including, if applicable, fractional shares rounded
to the nearest thousandth) and to (ii) New Pacific Class B shareholders of a
number of Asian Growth Class B shares (including, if applicable, fractional
shares rounded to the nearest thousandth) and to (iii) New Pacific Class C
shareholders of a number of Asian Growth Class C shares (including, if
applicable, fractional shares rounded to the nearest thousandth), having an
aggregate net asset value equal to the net value of the assets of New Pacific
transferred.
BOARD CONSIDERATIONS
The Board of Trustees of AGS has determined that the Reorganization of New
Pacific is in the best interests of the shareholders of New Pacific and
recommended approval of the Agreement by the shareholders of New Pacific at the
Special Meeting. A summary of the information that was presented to, and
considered by, the Board of Trustees in making its determination is provided
below.
At a meeting of the Board of Trustees held on March 22, 2000, AIM Advisors
proposed that the Board of Trustees approve the Reorganization of New Pacific
into Asian Growth. The Trustees received from AIM Advisors written materials
that contained information concerning New Pacific and Asian Growth, including
comparative total return and fee and expense information, a comparison of the
investment objectives of New Pacific and Asian Growth and pro forma expense
ratios of Asian Growth. AIM Advisors also provided the trustees with written
materials concerning the structure of the proposed Reorganization and the
Federal tax consequences of the Reorganization.
In considering the Reorganization, the Board of Trustees noted that New
Pacific and Asian Growth have identical investment objectives and similar
investment policies and restrictions. Both funds seek to provide long-term
growth of capital. Asian Growth seeks to achieve that objective by investing 65%
of its assets in marketable equity securities issued by Asian companies (other
than Japanese companies). New Pacific seeks to achieve its objective by
investing at least 65% of its assets in equity securities of issuers domiciled
in twelve countries located in the Pacific region, other than Japan.
11
<PAGE> 17
The Board of Trustees also considered the performance of New Pacific in
relation to the performance of Asian Growth noting that Asian Growth has
provided a higher return to its shareholders. As of December 31, 1999, the
Lipper Inc. rankings for Asian Growth and New Pacific were as follows:
LIPPER RANK (PERCENTILE)(1)
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Asian Growth........................................ 58% N/A N/A N/A
New Pacific......................................... 92% 92% 94% 100%
</TABLE>
- ---------------
(1) Under the Lipper ranking system, the lower the percentile rank, the better
the performance.
The Board considered the expenses incurred by the two funds. The total
operating expenses of New Pacific under its contractual arrangements, expressed
as a percentage of average daily net assets, are slightly lower for its Class B
and Class C shares than the total operating expenses of Asian Growth for its
Class B and Class C shares under its contractual arrangements. However, the
combined assets of the two funds will create economies of scale so that after
the Reorganization Asian Growth's expense ratios, under its contractual
arrangements, will be lower than those of New Pacific. The Board also noted that
AIM Advisors and its affiliates have contractually committed to waive fees and
reimburse expenses, until June 30, 2001, for Asian Growth (i) Class A shares to
the extent necessary to limit total operating expenses to 1.92%; and (ii) Class
B and Class C shares by the same basis point amounts necessary to limit Class A
Shares total operating expenses to 1.92% (e.g., if AIM waives/reimburses 0.10%
of Class A fees/expenses, AIM will also waive/reimburse 0.10% of Class B and
Class C fees/expenses).
AIM Advisors noted that Asian Growth's better performance and lower expense
ratio, under its contractual arrangements, should make Asian Growth a better
investment for shareholders than New Pacific.
AIM Advisors also noted that the combined assets of the two funds should
provide a more stable base for management because daily purchases and
redemptions of shares should have a less significant impact on the size of the
combined fund.
The Reorganization may result in reduced revenues for AIM Advisors, since
AIM Advisors receives slightly lower management fees on the assets presently
held by Asian Growth. However, AIM Advisors could also benefit in the future if
the assets of the combined fund grow faster than the assets of the individual
funds would have grown in the absence of the Reorganization. AIM Advisors noted
that the operating expenses of New Pacific already exceed the 2.00% operating
expense cap contractually agreed to by AIM Advisors and, therefore, any expenses
incurred by New Pacific in connection with the Reorganization will, in effect,
be borne by AIM Advisors.
In addition, the Board of Trustees noted that no initial sales or other
charges would be imposed on any of the shares of Asian Growth issued to the
shareholders of New Pacific in connection with the Reorganization. Finally, the
Board of Trustees reviewed the principal terms of the Agreement. The Board of
Trustees noted that New Pacific would be provided with an opinion of counsel
that the Reorganization would be tax-free as to New Pacific and its
shareholders.
Based on the foregoing, and the information presented to them, the Board of
Trustees determined that the Reorganization will not dilute the interests of the
shareholders of New Pacific and is in the best interest of the New Pacific
Shareholders in view of the better performance and lower operating expenses of
Asian Growth. Therefore, the Board of Trustees recommended the approval of the
Reorganization by the shareholders of New Pacific.
OTHER TERMS
The Agreement may be amended without shareholder approval by mutual
agreement of AGS and AIF. If any amendment is made to the Agreement which would
have a material adverse effect on shareholders, such change will be submitted to
the affected shareholders for their approval.
12
<PAGE> 18
Each of AGS and AIF has made representations and warranties in the
Agreement that are customary in matters such as the Reorganization. The
obligations of AGS and AIF pursuant to the Agreement with respect to New Pacific
or Asian Growth are subject to various conditions, including the following:
- the assets of New Pacific shall constitute at least 90% of the fair
market value of the net assets and at least 70% of the fair market value
of the gross assets held by New Pacific immediately prior to the
Reorganization;
- AIF's Registration Statement on Form N-14 under the Securities Act of
1933 (the "1933 Act") shall have been filed with the SEC and such
Registration Statement shall have become effective, and no stop-order
suspending the effectiveness of the Registration Statement shall have
been issued, and no proceeding for that purpose shall have been initiated
or threatened by the SEC (and not withdrawn or terminated);
- the shareholders of New Pacific shall have approved the Agreement; and
- AGS and AIF shall have received an opinion from Ballard Spahr Andrews &
Ingersoll, LLP, that the Reorganization will not result in the
recognition of gain or loss for Federal income tax purposes for New
Pacific, Asian Growth or their shareholders.
New Pacific and Asian Growth have agreed to bear their own expenses in
connection with the Reorganization. However, because AIM Advisors has
contractually agreed to waive fees and reimburse expenses in excess of 1.92%
until June 30, 2001 and because the expenses of both New Pacific and Asian
Growth currently exceed 1.92%, any expenses incurred in connection with the
reorganization will, effectively, be borne by AIM Advisors.
The Board of Trustees of AGS may waive without shareholder approval any
default by AIF or any failure by AIF to satisfy any of the conditions to AGS's
obligations as long as such a waiver will not have a material adverse effect on
the benefits intended under the Agreement for the shareholders of New Pacific.
The Agreement may be terminated and the Reorganization may be abandoned by
either AGS or AIF at any time by mutual agreement of AGS and AIF, or by either
party in the event that New Pacific shareholders do not approve the Agreement or
if the Closing does not occur on or before December 31, 2000.
FEDERAL TAX CONSEQUENCES
The following is a general summary of the material Federal income tax
consequences of the Reorganization and is based upon the current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the existing
Treasury regulations thereunder, current administrative rulings of the Internal
Revenue Service ("IRS") and judicial decisions, all of which are subject to
change. The principal Federal income tax consequences that are expected to
result from the Reorganization, under currently applicable law, are as follows:
- the Reorganization will qualify as a "reorganization" within the meaning
of Section 368(a) of the Code;
- no gain or loss will be recognized by New Pacific upon the transfer of
its assets to Asian Growth;
- no gain or loss will be recognized by any shareholder of New Pacific upon
the exchange of shares of New Pacific solely for shares of Asian Growth;
- the tax basis of the shares of Asian Growth to be received by a
shareholder of New Pacific will be the same as the tax basis of the
shares of New Pacific surrendered in exchange therefor;
- the holding period of the shares of Asian Growth to be received by a
shareholder of New Pacific will include the holding period for which such
shareholder held the shares of New Pacific exchanged therefor, provided
that such shares of New Pacific are capital assets in the hands of such
shareholder as of the Closing;
13
<PAGE> 19
- no gain or loss will be recognized by Asian Growth on the receipt of
assets of New Pacific in exchange for shares of Asian Growth and Asian
Growth's assumption of New Pacific's liabilities;
- the tax basis of the assets of New Pacific in the hands of Asian Growth
will be the same as the tax basis of such assets in the hands of New
Pacific immediately prior to the Reorganization; and
- the holding period of the assets of New Pacific to be received by Asian
Growth will include the holding period of such assets in the hands of New
Pacific immediately prior to the Reorganization.
As a condition to Closing, Ballard Spahr Andrews & Ingersoll, LLP will
render a favorable opinion to AGS and AIF as to the foregoing Federal income tax
consequences of the Reorganization, which opinion will be conditioned upon the
accuracy, as of the date of Closing, of certain representations of AGS and AIF
upon which Ballard Spahr Andrews & Ingersoll, LLP will rely in rendering its
opinion, which representations include, but are not limited to, the following
(taking into account for purposes thereof any events that are part of the plan
of reorganization):
- there is no plan or intention by the shareholders of New Pacific to
redeem a number of shares of Asian Growth received in the Reorganization
that would reduce New Pacific shareholders' ownership of Asian Growth
shares to a number of shares having a value, as of the Closing Date, of
less than 50% of the value of all of the formerly outstanding shares of
New Pacific as of the Closing Date;
- following the Reorganization, Asian Growth will continue the historic
business of New Pacific (for this purpose "historic business" shall mean
the business most recently conducted by New Pacific which was not entered
into in connection with the Reorganization) or use a significant portion
of New Pacific's historic business assets in its business;
- at the direction of New Pacific, Asian Growth will issue directly to each
New Pacific shareholder pro rata the shares of Asian Growth that New
Pacific constructively receives in the Reorganization and New Pacific
will distribute its other properties (if any) to its shareholders on, or
as promptly as practicable after, the Closing;
- Asian Growth has no plan or intention to reacquire any of its shares
issued in the Reorganization, except to the extent that Asian Growth is
required by the Investment Company Act of 1940 (the "1940 Act") to redeem
any of its shares presented for redemption;
- Asian Growth does not plan or intend to sell or otherwise dispose of any
of the assets of New Pacific acquired in the Reorganization, except for
dispositions made in the ordinary course of its business or dispositions
necessary to maintain its status as a "regulated investment company"
("RIC") under the Code;
- Asian Growth, New Pacific and the shareholders of New Pacific will pay
their respective expenses, if any, incurred in connection with the
Reorganization;
- Asian Growth will acquire at least 90 percent of the fair market value of
the net assets, and at least 70% of the fair market value of the gross
assets, held by New Pacific immediately before the Reorganization,
including for this purpose any amounts used by New Pacific to pay its
reorganization expenses and all redemptions and distributions made by New
Pacific immediately before the Reorganization (other than redemptions
pursuant to a demand of a shareholder in the ordinary course of New
Pacific's business as an open-end diversified management investment
company under the 1940 Act and regular, normal dividends not in excess of
the requirements of Section 852 of the Code); and
- Asian Growth and New Pacific have each elected to be taxed as a RIC under
Section 851 of the Code and will each have qualified for the special
Federal tax treatment afforded RICs under the Code for all taxable
periods (including the last short taxable period of New Pacific ending on
the Closing and the taxable year of Asian Growth that includes the
Closing).
THE FOREGOING DESCRIPTION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATION IS MADE WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUM-
14
<PAGE> 20
STANCES OF ANY SHAREHOLDER OF NEW PACIFIC. NEW PACIFIC SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM OF THE
REORGANIZATION, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
The Reorganization will be accounted for on a tax-free combined basis.
Accordingly, the book cost basis to Asian Growth of the assets of New Pacific
will be the same as the book cost basis of such assets to New Pacific.
RIGHTS OF SHAREHOLDERS
Currently, the Board of Directors of AIF is soliciting proxies from its
shareholders to vote on various proposals, including approving a change in its
domicile (the "Redomestication") pursuant to an Agreement and Plan of
Reorganization, under which AIF, which is currently a Maryland corporation, will
reorganize as a Delaware business trust and change its name to AIM International
Mutual Funds (AIMF). These proposals are expected to be approved by AIF
shareholders at a special meeting of shareholders to be held on May 3, 2000. If
the Redomestication is not approved, AIF will continue as a Maryland
corporation. The following discussion provides information with respect to the
differences in the rights of shareholders under Maryland law and Delaware law in
the event that the Redomestication is not approved, and information regarding
the differences between the rights of shareholders under the Agreement and
Declaration of Trust of AGS and the Agreement and Declaration of Trust of AIMF
assuming the Redomestication is approved.
RIGHTS OF SHAREHOLDERS UNDER MARYLAND LAW AND DELAWARE LAW IF THE
REDOMESTICATION IS NOT APPROVED
General
Currently, AIF is a Maryland corporation and AGS is a Delaware business
trust. There is much that is similar between the two forms of organization. For
example, the responsibilities, powers and fiduciary duties of the trustees of
the AGS are substantially the same as those of the directors of AIF.
There are, however, certain differences between the two forms of
organization. The operations of AIF, as a Maryland corporation, are governed by
its Articles of Incorporation, and amendments and supplements thereto, and
applicable Maryland law. The operations of AGS, as a Delaware business trust,
are governed by its Agreement and Declaration of Trust, as amended (the
"Declaration of Trust") and Delaware law.
Liability of Shareholders
The Delaware Business Trust Act provides that shareholders of a Delaware
business trust shall be entitled to the same limitations of liability extended
to shareholders of private for-profit corporations. There is, however, a remote
possibility that, under certain circumstances, shareholders of a Delaware
business trust might be held personally liable for the trust's obligations to
the extent the courts of another state that does not recognize such limited
liability were to apply the laws of such state to a controversy involving such
obligations. The AGS Declaration of Trust provides that shareholders of the
Acquired Funds shall not be subject to any personal liability for acts or
obligations of the Acquired Funds and that every written agreement, obligation
or other undertaking made or issued by the Acquired Funds shall contain a
provision to the effect that shareholders are not personally liable thereunder.
In addition, the Declaration of Trust provides for indemnification out of the
Acquired Funds' property for any shareholder held personally liable solely by
reason of his or her being or having been a shareholder. Therefore, the risk of
any shareholder incurring financial loss beyond his investment due to
shareholder liability is limited to circumstances in which the Acquired Funds
themselves are unable to meet their obligations and the express disclaimer of
shareholder liabilities is determined not to be effective. Given the nature of
the assets and operations of the Acquired Funds, the possibility of the Acquired
Funds being unable to meet their obligations is considered remote, and
15
<PAGE> 21
even if a claim were brought against the Funds and a court determined that
shareholders were personally liable, it would likely not impose a material
obligation on a shareholder.
Shareholders of a Maryland corporation generally do not have personal
liability for the corporation's obligations, except that a shareholder may be
liable to the extent that he receives any distribution which exceeds the amount
which he could properly receive under Maryland law or where such liability is
necessary to prevent fraud.
Election of Directors/Trustees; Terms
The shareholders of AGS have elected the trustees of AGS. Such trustees
serve for the life of AGS, subject to the earlier death, incapacitation,
resignation, retirement or removal (see below). Shareholders may elect
successors to such trustees only at annual or special meetings of shareholders.
The shareholders of AIF have elected the directors of AIF. Each director
serves until a successor is elected, subject to earlier death, incapacitation,
resignation, retirement or removal (see below). Shareholders may elect
successors to such directors only at annual or special meetings of shareholders.
Removal of Trustees/Directors
A trustee of AGS may be removed at any time by vote of at least two-thirds
of the trustees or by vote of two-thirds of the outstanding shares of AGS. The
Declaration of Trust provides that vacancies may be filled by appointment by the
remaining trustees.
A director of AIF may be removed by the affirmative vote of a majority of
the Board of Directors, a committee of the Board of Directors appointed for such
purpose, or the holders of a majority of the outstanding shares of AIF.
Meetings of Shareholders
AGS is not required to hold annual meetings of shareholders unless required
by the 1940 Act and does not intend to do so. The By-Laws of AGS provide that a
majority of the Trustees may call special meetings of shareholders and the
Trustees shall call a special meeting of the shareholders upon written request
of the holders of not less than 10% of the Acquired Funds' shares. Special
meetings may be called for the purpose of electing trustees or for any other
action requiring shareholder approval, or for any matter deemed by the trustees
to be necessary or desirable.
AIF is not required to hold annual meetings of shareholders and does not
intend to do so unless required by the 1940 Act. AIF's Bylaws provide that a
special meeting of shareholders may be called by the President, Secretary, a
majority of the Board of Directors or holders of shares entitled to cast at
least 10% of the votes entitled to be cast at the special meeting. Requests for
special meetings must, among other things, state the purpose of such meeting and
the matters to be voted upon. No special meeting may be called to consider any
matter previously voted upon at a special meeting called by the shareholders
during the preceding twelve months, unless requested by a majority of all shares
entitled to vote at such meeting.
Liability of Directors/Trustees and Officers; Indemnification
Delaware law provides that trustees of a business trust shall not be liable
to the business trust or its shareholders for acting in good faith reliance on
the provisions of its governing instrument and that the trustee's liabilities
may be expanded or restricted by such instrument. Under the AGS Declaration of
Trust, the trustees and officers of AGS are not liable for any act or omission
or any conduct whatsoever in their capacity as trustees, except for liability to
the trust or shareholders due to willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of trustee. Delaware law allows a business trust to indemnify and hold
harmless any trustee or other person against any and all claims and demands. The
AGS Declaration of Trust require the indemnification of its trustees and
officers to the fullest extent permitted by Delaware law, except with respect to
any matter in which it has been
16
<PAGE> 22
determined that such director or officer acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of his or her duties.
Maryland law permits a corporation to eliminate liability of its directors
and officers to the corporation or its stockholders, except for liability
arising from receipt of an improper benefit or profit and from active and
deliberate dishonesty. AIF's Articles of Incorporation eliminate director and
officer liability to the fullest extent permitted under Maryland law. Under
Maryland law, indemnification of a corporation's directors and officers is
mandatory if a director or officer has been successful on the merits or
otherwise in the defense of certain proceedings. Maryland law permits
indemnification for other matters unless it is established that the act or
omission giving rise to the proceeding was committed in bad faith, a result of
active and deliberate dishonesty, or one in which a director or officer actually
received an improper benefit.
Termination
AGS or any series or class of shares of beneficial interest in AGS may be
terminated by (1) a majority shareholder vote of AGS or the affected series or
class, respectively, or (2) if there are fewer than 100 shareholders of record
of AGS or of such terminating series or class, the trustees pursuant to written
notice to the shares of AGS or the affected series or class.
Maryland law provides that AIF may be dissolved by the vote of a majority
of the Board of Directors and two-thirds of the shares entitled to vote on the
dissolution.
Voting Rights of Shareholders
The AGS Declaration of Trust grants shareholders power to vote only with
respect to the following: (i) election of trustees; (ii) removal of trustees,
(iii) approval of investment advisory contracts, as required by the 1940 Act;
(iv) termination of AGS or a series of class of its shares of beneficial
interest, (v) amendment of the Declaration of Trust, (vi) sale of all or
substantially all of the assets of AGS or one of its investment portfolios,
(vii) merger or consolidation of AGS or any of its investment portfolios, with
certain exceptions, and (viii) approval of such additional matters as may be
required by law or as the trustees, in their sole discretion, shall determine.
Shareholders of a Maryland corporation such as AIF are entitled to vote on,
among other things, those matters which effect fundamental changes in the
corporate structure (such as a merger, consolidation or sale of substantially
all of the assets of the corporation) as provided by Maryland corporation law.
Dissenters' Rights
Neither Delaware law nor the Declaration of Trust confers upon AGS
shareholders appraisal or dissenters' rights.
Under Maryland law, AIF's shareholders may not demand the fair value of
their shares from the successor company in a transaction involving the transfer
of the Acquiring Funds' assets, and are bound by the terms of the transaction.
Amendments to Organization Documents
Consistent with Delaware law, the Board of Trustees of AGS may, without
shareholder approval, amend the Declaration of Trust at any time, except that no
amendment may be made which repeals the limitations of personal liability of any
shareholder, which reduces the amount payable in respect of the shares of AGS
upon liquidation of AGS or which diminishes or eliminates any voting rights
pertaining to the shares of AGS, without approval of the majority of the shares
of AGS. The trustees shall have the power to alter, amend or repeal the Bylaws
of AGS or adopt new Bylaws at any time.
Consistent with Maryland law, AIF reserves the right to amend, alter,
change or repeal any provision contained in their Articles of Incorporation in
the manner now or hereafter prescribed by statute, including any amendment that
alters the contract rights, as expressly set forth in the Articles of
Incorporation, of any
17
<PAGE> 23
outstanding stock, and all rights conferred on shareholders are granted subject
to this reservation. The Board of Directors of AIF may approve amendments to the
Articles of Incorporation to classify or reclassify unissued shares of a class
of stock without shareholder approval. Other amendments to the AIF Articles of
Incorporation may be adopted if approved by a vote of a majority of the shares
at any meeting at which a quorum is present. The AIF Bylaws provide that the
Bylaws may be amended at any regular meeting or special meeting of the
stockholders provided that notice of such amendment is contained in the notice
of the special meeting. Except as to any particular Bylaw which is specified as
not subject to amendment by the Board of Directors, the Bylaws may be also
amended by the affirmative vote of a majority of the Board of Directors at any
regular or special meetings of the Board.
RIGHTS OF SHAREHOLDERS UNDER DECLARATIONS OF TRUST OF AGS AND AIMF IF THE
REDOMESTICATION IS APPROVED
Generally, there will be no material differences between the rights of
shareholders under the Agreement and Declaration of Trust of AGS and the rights
of shareholders under the proposed Agreement and Declaration of Trust of AIMF.
However, under the Agreement and Declaration of Trust of AIMF, Class B shares,
other than those purchased through reinvestment dividends and distributions will
be subject to automatic conversion to Class A shares eight years following the
calendar month in which the purchase was made.
Class B shares purchased through the reinvestment of dividends and
distributions paid in respect of Class B shares will be considered held in a
separate sub-account, and will automatically convert to Class A shares in the
same proportion as any Class B shares (other than those in the sub-account)
convert to Class A shares unless Asian Growth implements any amendment to its
Plan of Distribution adopted pursuant to Rule 12b-1 under the 1940 Act. In that
case, if the Trustees determine that the amendment would materially increase the
charges that may be borne by the Class A shareholders under the 12b-1 plan, the
Class B shares will stop converting to the Class A shares unless the Class B
shares, voting separately, approve the amendment.
18
<PAGE> 24
OWNERSHIP OF NEW PACIFIC AND ASIAN GROWTH SHARES
SIGNIFICANT HOLDERS
Listed below is the name, address and percent ownership of each person who
as of April 3, 2000, to the knowledge of AGS, owned beneficially 5% or more of
any class of the outstanding shares of New Pacific:
NEW PACIFIC
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
RECORD BENEFICIALLY
-------- ------------
<S> <C> <C>
Class A Shares
Merrill Lynch Pierce Fenner & Smith....................... 5.37% -0-%*
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class B Shares
Merrill Lynch Pierce Fenner & Smith....................... 5.87% -0-%*
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C Shares
Merrill Lynch Pierce Fenner & Smith....................... 34.86% -0-%*
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Donaldson Lufkin Jenrette Securities Corporation Inc. .... 17.41% -0-%*
P.O. Box 2052
Jersey City, NJ 07303-9998
Daniel W. Figert.......................................... -0- 6.90%
Barbara D. Figert
JT Ten WROS
Unit 17104
2300 South Rock Creek Pkwy.
Superior, CO 80027
</TABLE>
- ---------------
* AGS has no knowledge as to whether all or any portion of the shares owned of
record are also owned beneficially.
19
<PAGE> 25
Listed below is the name, address and percent ownership of each person who
as of April 3, 2000 to the knowledge of AIF, owned beneficially 5% or more of
the outstanding shares of Asian Growth:
ASIAN GROWTH
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
RECORD BENEFICIALLY
-------- ------------
<S> <C> <C>
Class A Shares
Merrill Lynch Pierce Fenner & Smith....................... 8.47% -0-%*
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class B Shares
Merrill Lynch Pierce Fenner & Smith....................... 7.94% -0-%*
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Class C Shares
Merrill Lynch Pierce Fenner & Smith....................... 19.94% -0-%*
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246
Robert A. Merkel & Margaret M. Merkel..................... -0- 5.68%
TTEES Robert A. Merkel & Margaret M. Merkel
Trust DTD 05/27/94
5118 S. 288th Pl.
Auburn, WA 98001
</TABLE>
- ---------------
* AIF has no knowledge as to whether all or any portion of the shares owned of
record are also owned beneficially.
OWNERSHIP OF OFFICERS AND DIRECTORS/TRUSTEES
To the best of the knowledge of AIF, the beneficial ownership of shares of
Asian Growth by officers and directors of AIF as a group constituted 3.74% of
the outstanding Class A shares and less than 1% of the outstanding Class B and
Class C shares of such fund as of April 3, 2000. To the best of the knowledge of
AGS, the beneficial ownership of shares of New Pacific by officers or trustees
of AGS as a group constituted less than 1% of the outstanding Class A, Class B
and Class C shares of such fund as of April 3, 2000.
20
<PAGE> 26
CAPITALIZATION
The following table sets forth as of October 31, 1999, (i) the
capitalization of New Pacific Class A, Class B and Class C shares, (ii) the
capitalization of Asian Growth Class A, Class B and Class C Shares, and (iii)
the pro forma capitalization of Asian Growth Class A, Class B, and Class C
shares as adjusted to give effect to the transactions contemplated by the
Agreement.
ASIAN GROWTH AND NEW PACIFIC
<TABLE>
<CAPTION>
NEW PACIFIC PRO FORMA ASIAN GROWTH
NEW PACIFIC CLASS A ASIAN GROWTH CLASS A
CLASS A SHARES SHARES(1) CLASS A SHARES SHARES AS ADJUSTED
-------------- -------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
Net Assets................... $86,707,102 $1,018,627 $25,419,567 $113,145,296
Shares Outstanding........... 14,024,150 164,762 2,361,340 10,510,835
Net Asset Value Per Share.... $ 6.18 $ 6.19 $ 10.76 $ 10.76
</TABLE>
- ---------------
(1) Effective February 11, 2000, New Pacific discontinued sales of Advisor Class
shares and converted them into Class A shares.
<TABLE>
<CAPTION>
PRO FORMA ASIAN GROWTH
NEW PACIFIC ASIAN GROWTH CLASS B
CLASS B SHARES CLASS B SHARES SHARES AS ADJUSTED
-------------- -------------- ----------------------
<S> <C> <C> <C>
Net Assets................................... $34,091,431 $12,069,543 $46,160,974
Shares Outstanding........................... 5,707,119 1,133,253 4,332,455
Net Asset Value Per Share.................... $ 5.97 $ 10.65 $ 10.65
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA ASIAN GROWTH
NEW PACIFIC ASIAN GROWTH CLASS C
CLASS C SHARES CLASS C SHARES SHARES AS ADJUSTED
-------------- -------------- ----------------------
<S> <C> <C> <C>
Net Assets................................... $1,400,575 $5,007,989 $6,408,564
Shares Outstanding........................... 234,674 471,104 602,901
Net Asset Value Per Share.................... $ 5.97 $ 10.63 $ 10.63
</TABLE>
LEGAL MATTERS
Certain legal matters concerning AIF and its participation in the
Reorganization, the issuance of shares of Asian Growth in connection with the
Reorganization and the tax consequences of the Reorganization will be passed
upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, 51st Floor,
Philadelphia, PA 19103-7599. Certain legal matters concerning AGS and its
participation in the Reorganization will be passed upon by Kirkpatrick &
Lockhart, LLP 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036-1800.
INFORMATION FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not contain all the information set forth in the registration
statements and the exhibits relating thereto and annual reports which AGS and
AIF have filed with the SEC pursuant to the requirements of the 1933 Act and the
1940 Act, to which reference is hereby made. The SEC file number for AGS's
registration statement containing the Prospectus and Statement of Additional
Information relating to New Pacific is Registration No. 811-2699. Such
Prospectus and Statement of Additional Information are incorporated herein by
reference. The SEC file number for AIF's registration statement containing the
Prospectus and Statement of Additional Information relating to Asian Growth is
Registration No. 811-6463. Such Prospectus and Statement of Additional
Information are incorporated herein by reference.
21
<PAGE> 27
AIF and AGS are subject to the informational requirements of the 1940 Act
and in accordance therewith file reports and other information with the SEC.
Reports, proxy statements, registration statements and other information filed
by AGS and AIF (including the Registration Statement of AIF relating to Asian
Growth on Form N-14 of which this Proxy Statement/Prospectus is a part and which
is hereby incorporated by reference) may be inspected without charge and copied
at the public reference facilities maintained by the SEC at Room 1014, Judiciary
Plaza, 450 Fifth Street, NW, Washington, DC 20549, and at the following regional
offices of the SEC: 7 World Trade Center, New York, New York 10048; and 500 West
Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such material may
also be obtained from the Public Reference Section of the SEC at 450 Fifth
Street, NW, Washington, DC 20549, at the prescribed rates. The SEC maintains a
Web site at http://www.sec.gov that contains information regarding AIF, AGS and
other registrants that file electronically with the SEC.
ADDITIONAL INFORMATION ABOUT ASIAN GROWTH AND
NEW PACIFIC
Currently, the Board of Directors of AIF is soliciting proxies from its
shareholders to vote on various proposals, including changing Asian Growth's
fundamental investment restrictions and changing Asian Growth's fundamental
investment objective so that it is non-fundamental. These proposals are expected
to be approved by AIF shareholders at a special meeting of shareholders to be
held on May 3, 2000, and this Proxy Statement/Prospectus has been prepared
assuming such approval. If these proposals are not approved, AIF will provide
you with additional information.
For more information with respect to AIF and Asian Growth concerning the
following topics, please refer to the Asian Growth Prospectus as indicated: (i)
see "Investment Objectives and Strategies" and "Fund Management" for further
information regarding AIF and Asian Growth; (ii) see "Investment Objectives and
Strategies," "Fund Management," and "Other Information" for further information
regarding management of AIF and Asian Growth; (iii) see "Fund Management" and
"Other Information" for further information regarding the shares of AIF and
Asian Growth; (iv) see "Fund Management," "Other Information," and "Shareholder
Information" for further information regarding the purchase, redemption and
repurchase of shares of AIF and Asian Growth.
For more information with respect to AGS and New Pacific concerning the
following topics, please refer to New Pacific Prospectus as indicated: (i) see
"Investment Objectives and Strategies" and "Fund Management" for further
information regarding AGS and New Pacific; (ii) see discussion in "Investment
Objectives and Strategies," "Fund Management," and "Other Information" for
further information regarding management of AGS and New Pacific; (iii) see "Fund
Management" and "Other Information" for further information regarding the shares
of AGS and New Pacific; (iv) see "Fund Management," "Other Information," and
"Shareholder Information" for further information regarding the purchase,
redemption and repurchase of AGS and New Pacific.
22
<PAGE> 28
APPENDIX I
AGREEMENT
AND
PLAN OF REORGANIZATION
FOR
AIM NEW PACIFIC GROWTH FUND
A SEPARATE PORTFOLIO OF
AIM GROWTH SERIES
MARCH 22, 2000
<PAGE> 29
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS....................................... I-1
Section 1.1 Definitions................................... I-1
ARTICLE 2 TRANSFER OF ASSETS................................ I-3
Section 2.1 Reorganizations............................... I-3
Section 2.2 Computation of Net Asset Value................ I-4
Section 2.3 Valuation..................................... I-4
Section 2.4 Delivery...................................... I-4
Section 2.5 Termination of Series......................... I-4
Section 2.6 Issuance of Asian Pacific Shares.............. I-4
Section 2.7 Investment Securities......................... I-5
Section 2.8 Liabilities................................... I-5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF AIM GROWTH...... I-5
Section 3.1 Organization; Authority....................... I-5
Section 3.2 Registration and Regulation of AIM Growth..... I-5
Section 3.3 Financial Statements.......................... I-5
Section 3.4 No Material Adverse Changes; Contingent
Liabilities............................................ I-6
Section 3.5 New Pacific Shares; Liabilities; Business
Operations............................................. I-6
Section 3.6 Accountants................................... I-6
Section 3.7 Binding Obligation............................ I-6
Section 3.8 No Breaches or Defaults....................... I-7
Section 3.9 Authorizations or Consents.................... I-7
Section 3.10 Permits...................................... I-7
Section 3.11 No Actions, Suits or Proceedings............. I-7
Section 3.12 Contracts.................................... I-7
Section 3.13 Properties and Assets........................ I-8
Section 3.14 Taxes........................................ I-8
Section 3.15 Benefit and Employment Obligations........... I-8
Section 3.16 Brokers...................................... I-8
Section 3.17 Voting Requirements.......................... I-8
Section 3.18 State Takeover Statutes...................... I-9
Section 3.19 Books and Records............................ I-9
Section 3.20 Prospectus and Statement of Additional
Information............................................ I-9
Section 3.21 No Distribution.............................. I-9
Section 3.22 Liabilities of New Pacific................... I-9
Section 3.23 Value of Shares.............................. I-9
Section 3.24 shareholder Expenses......................... I-9
Section 3.25 Intercompany Indebtedness.................... I-9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AIM
INTERNATIONAL............................................. I-9
Section 4.1 Organization; Authority....................... I-9
Section 4.2 Registration and Regulation of AIM
International.......................................... I-9
Section 4.3 Financial Statements.......................... I-10
Section 4.4 No Material Adverse Changes; Contingent
Liabilities............................................ I-10
Section 4.5 Registration of Asian Growth Class A Shares,
Asian Growth Class B Shares and Asian Growth Class C
Shares................................................. I-10
Section 4.6 Accountants................................... I-11
Section 4.7 Binding Obligation............................ I-11
Section 4.8 No Breaches or Defaults....................... I-11
Section 4.9 Authorizations or Consents.................... I-11
Section 4.10 Permits...................................... I-11
</TABLE>
i
<PAGE> 30
<TABLE>
<S> <C>
Section 4.11 No Actions, Suits or Proceedings............. I-11
Section 4.12 Taxes........................................ I-12
Section 4.13 Brokers...................................... I-12
Section 4.14 Representations Concerning the
Reorganization......................................... I-12
Section 4.15 Prospectus and Statement of Additional
Information............................................ I-13
Section 4.16 Value of Shares.............................. I-13
Section 4.17 Intercompany Indebtedness; Consideration..... I-13
ARTICLE 5 COVENANTS......................................... I-13
Section 5.1 Conduct of Business........................... I-13
Section 5.2 Announcements................................. I-14
Section 5.3 Expenses...................................... I-14
Section 5.4 Further Assurances............................ I-14
Section 5.5 Notice of Events.............................. I-14
Section 5.6 Access to Information......................... I-14
Section 5.7 Consents, Approvals and Filings............... I-15
Section 5.8 Submission of Agreement to Shareholders....... I-15
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION........ I-15
Section 6.1 Conditions Precedent of AIM International..... I-15
Section 6.2 Mutual Conditions............................. I-16
Section 6.3 Conditions Precedent of AIM Growth............ I-16
ARTICLE 7 TERMINATION OF AGREEMENT.......................... I-17
Section 7.1 Termination................................... I-17
Section 7.2 Survival After Termination.................... I-17
ARTICLE 8 MISCELLANEOUS..................................... I-17
Section 8.1 Survival of Representations and Warranties.... I-17
Section 8.2 Governing Law................................. I-17
Section 8.3 Binding Effect, Persons Benefiting, No
Assignment............................................. I-18
Section 8.4 Obligations of AIM International and AIM
Growth................................................. I-18
Section 8.5 Amendments.................................... I-18
Section 8.6 Enforcement................................... I-18
Section 8.7 Interpretation................................ I-18
Section 8.8 Counterparts.................................. I-18
Section 8.9 Entire Agreement; Schedules................... I-18
Section 8.10 Notices...................................... I-19
Section 8.11 Representations by AIM Advisors.............. I-19
Schedule 6.1(d) Opinion of Counsel to AIM International
Funds, Inc. .............................................. I-21
Schedule 6.2(f) Tax Opinions................................ I-22
Schedule 6.3(d) Opinion of Counsel to AIM Growth Series..... I-23
</TABLE>
ii
<PAGE> 31
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of March 22, 2000 (this
"Agreement"), by and among AIM Growth Series, a Delaware business trust ("AIM
Growth"), acting on behalf of AIM New Pacific Growth Fund ("New Pacific"), a
separate series of AIM Growth, AIM International Funds, Inc., a Maryland
corporation ("AIM International"), acting on behalf of AIM Asian Growth Fund
("Asian Growth"), a separate series of AIM International, and A I M Advisors,
Inc. ("AIM Advisors"), a Delaware corporation.
WITNESSETH
WHEREAS, AIM Growth is an investment company registered with the Securities
and Exchange Commission (the "SEC") under the Investment Company Act (as defined
below) that offers separate series of its shares representing interests in its
investment portfolios, including New Pacific, for sale to the public; and
WHEREAS, AIM International is an investment company registered with the SEC
under the Investment Company Act that offers separate series of its shares
representing interests in investment portfolios, including Asian Growth, for
sale to the public; and
WHEREAS, AIM Advisors provides investment advisory services to both AIM
Growth and AIM International; and
WHEREAS, New Pacific desires to provide for its reorganization through the
transfer of all of its assets to Asian Growth in exchange for the assumption by
Asian Growth of all of the liabilities of New Pacific and the issuance by AIM
International of shares of Asian Growth in the manner set forth in this
Agreement; and
WHEREAS, this Agreement is intended to be and is adopted by the parties
hereto as a Plan of Reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, AIM Growth, AIM
International and AIM Advisors agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. For all purposes in this Agreement, the following
terms shall have the respective meanings set forth in this Section 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined):
"Advisers Act" means the Investment Advisers Act of 1940, as amended,
and all rules and regulations of the SEC adopted pursuant thereto.
"Affiliated Person" means an affiliated person as defined in Section
2(a)(3) of the Investment Company Act.
"Agreement" means this Agreement and Plan of Reorganization, together
with all schedules and exhibits attached hereto and all amendments hereto
and thereof.
"AIM Growth" means AIM Growth Series, a Delaware business trust.
"AIM Growth Registration Statement" means the registration statement
on Form N-1A of AIM Growth, as amended, 1940 Act Registration No. 811-2699.
"AIM International" means AIM International Funds, Inc., a Delaware
business trust.
"AIM International Registration Statement" means the registration
statement on Form N-1A of AIM International, as amended, 1940 Act
Registration No.811-6463.
I-1
<PAGE> 32
"Asian Growth" means AIM Asian Growth Fund, a separate series of AIM
International.
"Asian Growth Class A Shares" means Class A Shares of the capital
stock of Asian Growth issued by AIM International.
"Asian Growth Class B Shares" means Class B Shares of the capital
stock of Asian Growth issued by AIM International.
"Asian Growth Class C Shares" means Class C Shares of the capital
stock of Asian Growth issued by AIM International.
"Asian Growth Financial Statements" shall have the meaning set forth
in Section 4.3 of this Agreement.
"Asian Growth Shares" means shares of the capital stock of AIM
International issued pursuant to Section 2.6 of this Agreement.
"Benefit Plan" means any material "employee benefit plan" (as defined
in Section 3(3) of ERISA) and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, vacation, retirement, profit sharing, welfare plans or other
plan, arrangement or understanding maintained or contributed to by AIM
Growth on behalf of New Pacific, or otherwise providing benefits to any
current or former employee, officer or trustee of AIM Growth.
"Closing" means the transfer of the assets of New Pacific to Asian
Growth, the assumption of all of New Pacific's liabilities by Asian Growth
and the issuance of Asian Growth Shares directly to New Pacific
Shareholders as described in Section 2.1 of this Agreement.
"Closing Date" means June 12, 2000 or such other date as the parties
may mutually determine.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations adopted pursuant thereto.
"Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of Asian Growth and New Pacific.
"Effective Time" means 8:00 a.m. Eastern Time on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations adopted pursuant thereto. "
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations adopted pursuant thereto.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including the
SEC) or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the National Association of
Securities Dealers, Inc., the Commodity Futures Trading Commission, the
National Futures Association, the Investment Management Regulatory
Organization Limited and the Office of Fair Trading).
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted pursuant thereto.
"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a change in
the condition (financial or otherwise), properties, assets or prospects of
an entity having an adverse monetary effect in an amount equal to or
greater than $50,000.
"New Pacific" means AIM New Pacific Growth Fund, a separate series of
AIM Growth.
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"New Pacific Financial Statements" shall have the meaning set forth in
Section 3.3 of this Agreement.
"New Pacific Shareholders" means the holders of record as of the
Effective Time of the issued and outstanding shares of beneficial interest
in New Pacific.
"New Pacific Shareholders Meeting" means a meeting of the shareholders
of New Pacific convened in accordance with applicable law and the Agreement
and Declaration of Trust of AIM Growth to consider and vote upon the
approval of this Agreement and the Reorganization of New Pacific
contemplated by this Agreement.
"New Pacific Shares" means the issued and outstanding shares of
beneficial interest in New Pacific.
"Person" means an individual or a corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"Reorganization" means the acquisition of the assets of New Pacific by
Asian Growth in consideration of the assumption by Asian Growth of all of
the liabilities of New Pacific and the issuance by AIM International of
Asian Growth Shares directly to New Pacific Shareholders as described in
this Agreement, and the termination of New Pacific's status as designated
series of shares of AIM Growth.
"Required Shareholder Vote" shall have the meaning set forth in
Section 3.17 of this Agreement.
"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted pursuant thereto.
"Tax" means any tax or similar governmental charge, impost or levy
(including income taxes (including alternative minimum tax and estimated
tax), franchise taxes, transfer taxes or fees, sales taxes, use taxes,
gross receipts taxes, value added taxes, employment taxes, excise taxes, ad
valorem taxes, property taxes, withholding taxes, payroll taxes, minimum
taxes, or windfall profit taxes), together with any related penalties,
fines, additions to tax or interest, imposed by the United States or any
state, county, local or foreign government or subdivision or agency
thereof.
"Valuation Date" shall have the meaning set forth in Section 2.3 of
this Agreement.
ARTICLE 2
TRANSFER OF ASSETS
SECTION 2.1 Reorganizations. (a) Reorganization of New Pacific. At the
Effective Time, all of the assets of New Pacific shall be delivered to the
Custodian for the account of Asian Growth in exchange for the assumption by
Asian Growth of all of the liabilities of any kind of New Pacific and delivery
by AIM International directly to (i) the holders of record as of the Effective
Time of the issued and outstanding Class A shares of New Pacific of a number of
Asian Growth Class A shares (including, if applicable, fractional shares rounded
to the nearest thousandth), to (ii) the holders of record as of the Effective
Time of the issued and outstanding Class B shares of New Pacific of a number of
Asian Growth Class B shares (including, if applicable, fractional shares rounded
to the nearest thousandth), and to (iii) the holders of record as of the
Effective Time of the issued and outstanding Class C shares of New Pacific of a
number of Asian Growth Class C shares (including, if applicable, fractional
shares rounded to the nearest thousandth), having an aggregate net asset value
equal to the net value of the assets of New Pacific so transferred, assigned and
delivered, all determined and adjusted as provided in Section 2.2 below. Upon
delivery of such assets, AIM Asian Growth Fund will receive good and marketable
title to such assets free and clear of all Liens.
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SECTION 2.2 Computation of Net Asset Value. (a) The net asset value of
Asian Growth Shares, and the net value of the assets of New Pacific, shall, in
each case, be determined as of the close of regular trading on the NYSE on the
Valuation Date.
(b) The net asset value of Asian Growth Shares shall be computed in
accordance with the policies and procedures of Asian Growth as described in the
AIM International Registration Statement.
(c) The net value of the assets of New Pacific to be transferred to Asian
Growth pursuant to this Agreement shall be computed in accordance with the
policies and procedures of New Pacific as described in the AIM Growth
Registration Statement.
(d) All computations of value regarding the net assets of New Pacific and
the net asset value of Asian Growth Shares to be issued pursuant to this
Agreement shall be made by agreement of AIM Growth and AIM International. The
parties agree to use commercially reasonable efforts to resolve any material
pricing differences between the prices of portfolio securities determined in
accordance with their respective pricing policies and procedures.
SECTION 2.3 Valuation Date. The assets of New Pacific and the net asset
value per share of Asian Growth Shares shall be valued as of the close of
regular trading on the NYSE on the business day next preceding the Closing Date
(the "Valuation Date"). The share transfer books of New Pacific will be
permanently closed as of the close of business on the Closing Date and only
requests for the redemption of shares of New Pacific received in proper form
prior to the close of regular trading on the NYSE on the Valuation Date shall be
accepted by New Pacific. Redemption requests thereafter received by New Pacific
shall be deemed to be redemption requests for Asian Growth Class A Shares, Asian
Growth Class B Shares or Asian Growth Class C Shares, as applicable (assuming
that the transactions contemplated by this Agreement have been consummated), to
be distributed to New Pacific Shareholders under this Agreement.
SECTION 2.4 Delivery. (a) Assets held by New Pacific shall be delivered by
AIM Growth to the Custodian on the Closing Date. No later than three (3)
business days preceding the Closing Date, AIM Growth shall instruct the
Custodian to transfer such assets to the account of Asian Growth. The assets so
delivered shall be duly endorsed in proper form for transfer in such condition
as to constitute a good delivery thereof, in accordance with the custom of
brokers, and shall be accompanied by all necessary state stock transfer stamps,
if any, or a check for the appropriate purchase price thereof. Cash held by New
Pacific shall be delivered on the Closing Date and shall be in the form of
currency or wire transfer in Federal funds, payable to the order of the account
of Asian Growth at the Custodian.
(b) If, on the Closing Date, New Pacific is unable to make delivery in the
manner contemplated by Section 2.4(a) of securities held by New Pacific for the
reason that any of such securities purchased prior to the Closing Date have not
yet been delivered to New Pacific or its broker, then AIM International shall
waive the delivery requirements of Section 2.4(a) with respect to said
undelivered securities if New Pacific has delivered to the Custodian by or on
the Closing Date, and with respect to said undelivered securities, executed
copies of an agreement of assignment and escrow and due bills executed on behalf
of said broker or brokers, together with such other documents as may be required
by AIM International or the Custodian, including brokers' confirmation slips.
SECTION 2.5 Termination of Series. As soon as reasonably practicable after
the Closing Date, the status of New Pacific as a designated series of shares of
AIM Growth shall be terminated; provided, however, that the termination of the
status of New Pacific as a series of shares of AIM Growth shall not be required
if the Reorganization shall not have been consummated.
SECTION 2.6 Issuance of Asian Growth Shares. At the Effective Time, New
Pacific Shareholders of record as of the close of regular trading on the NYSE on
the Valuation Date holding New Pacific Class A shares shall be issued that
number of full and fractional Class A shares of Asian Growth having a net asset
value equal to the net asset value of New Pacific Class A shares held by New
Pacific Shareholders on the Valuation Date, New Pacific Shareholders of record
as of the Valuation Date holding New Pacific Class B shares shall be issued that
number of full and fractional Class B shares of Asian Growth having a net asset
value equal to the net asset value of New Pacific Class B Shares held by New
Pacific Shareholders on the
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Valuation Date, and New Pacific Shareholders of record as of the Valuation Date
holding New Pacific Class C shares shall be issued that number of full and
fractional Class C shares of Asian Growth having a net asset value equal to the
net asset value of New Pacific Class C shares held by New Pacific Shareholders
on the Valuation Date. All issued and outstanding shares of beneficial interest
in New Pacific shall thereupon be canceled on the books of AIM Growth. AIM
Growth shall provide instructions to the transfer agent of AIM International
with respect to Asian Growth Class A Shares, Asian Growth Class B Shares and
Asian Growth Class C Shares to be issued to New Pacific Shareholders. AIM
International shall have no obligation to inquire as to the validity, propriety
or correctness of any such instruction, but shall, in each case, assume that
such instruction is valid, proper and correct. AIM International shall record on
its books the ownership of Asian Growth Class A, Asian Growth Class B and Asian
Growth Class C Shares by New Pacific Shareholders and shall forward a
confirmation of such ownership to New Pacific Shareholders. No redemption or
repurchase of such shares credited to former New Pacific Shareholders in respect
of New Pacific shares represented by unsurrendered shares certificates shall be
permitted until such certificates have been surrendered to AIM International for
cancellation, or if such certificates are lost or misplaced, until lost
certificate affidavits have been executed and delivered to AIM International.
SECTION 2.7 Investment Securities. On or prior to the Valuation Date, AIM
Growth shall deliver a list setting forth the securities New Pacific then owns
together with the respective Federal income tax bases thereof. AIM Growth shall
provide to AIM International on or before the Valuation Date, detailed tax basis
accounting records for each security to be transferred to it pursuant to this
Agreement. Such records shall be prepared in accordance with the requirements
for specific identification tax lot accounting and clearly reflect the bases
used for determination of gain and loss realized on the sale of any security
transferred to Asian Growth hereunder. Such records shall be made available by
AIM Growth prior to the Valuation Date for inspection by the Treasurer (or his
or her designee) or the auditors of AIM International upon reasonable request.
SECTION 2.8 Liabilities. New Pacific shall use reasonable best efforts to
discharge all of its known liabilities, so far as may be possible, prior to the
Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AIM GROWTH
AIM Growth, on behalf of New Pacific, represents and warrants to AIM
International that:
SECTION 3.1 Organization; Authority. AIM Growth is duly organized, validly
existing and in good standing under the Delaware Business Trust Act, with all
requisite trust power and authority to enter into this Agreement and perform its
obligations hereunder.
SECTION 3.2 Registration and Regulation of AIM Growth. AIM Growth is duly
registered with the SEC as an investment company under the Investment Company
Act and all New Pacific Shares which have been or are being offered for sale
have been duly registered under the Securities Act and have been duly
registered, qualified or are exempt from registration or qualification under the
securities laws of each state or other jurisdiction in which such shares have
been or are being offered for sale, and no action has been taken by AIM Growth
to revoke or rescind any such registration or qualification. New Pacific is in
compliance in all material respects with all applicable laws, rules and
regulations, including, without limitation, the Investment Company Act, the
Securities Act, the Exchange Act and all applicable state securities laws. New
Pacific is in compliance in all material respects with the investment policies
and restrictions applicable to it set forth in the AIM Growth Registration
Statement currently in effect. The value of the net assets of New Pacific is
determined using portfolio valuation methods that comply in all material
respects with the requirements of the Investment Company Act and the policies of
New Pacific and all purchases and redemptions of New Pacific Shares have been
effected at the net asset value per share calculated in such manner.
SECTION 3.3 Financial Statements. The books of account and related records
of New Pacific fairly reflect in reasonable detail its assets, liabilities and
transactions in accordance with generally accepted
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accounting principles applied on a consistent basis. The audited financial
statements for the fiscal year ended December 31, 1999, of New Pacific
previously delivered to AIM International (the "New Pacific Financial
Statements") present fairly in all material respects the financial position of
New Pacific as at the dates indicated and the results of operations and changes
in net assets for the periods then ended in accordance with generally accepted
accounting principles applied on a consistent basis for the periods then ended.
SECTION 3.4 No Material Adverse Changes; Contingent Liabilities. Since
December 31, 1999 no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of New Pacific
or the status of New Pacific as a regulated investment company under the Code,
other than changes resulting from any change in general conditions in the
financial or securities markets or the performance of any investments made by
New Pacific or occurring in the ordinary course of business of New Pacific or
AIM Growth. There are no contingent liabilities of New Pacific not disclosed in
the New Pacific Financial Statements which are required to be disclosed in
accordance with generally accepted accounting principles.
SECTION 3.5 New Pacific Shares; Liabilities; Business Operations. (a) New
Pacific Shares have been duly authorized and validly issued and are fully paid
and non-assessable.
(b) During the five-year period ending on the date of the Reorganization,
neither New Pacific nor any person related to New Pacific (as defined in section
1.368-1(e)(3) of the Treasury Regulations without regard to section
1.368-1(e)(3)(i)(A)) will have directly or through any transaction, agreement,
or arrangement with any other person, (i) acquired shares of New Pacific for
consideration other than shares of New Pacific, except for shares redeemed in
the ordinary course of New Pacific's business as an open-end investment company
as required by the Investment Company Act, or (ii) made distributions with
respect to New Pacific's Shares, except for (a) distributions necessary to
satisfy the requirements of sections 852 and 4982 of the Code for qualification
as a regulated investment company and avoidance of excise tax liability and (b)
additional distributions, to the extent such additional distributions do not
exceed 50 percent of the value (without giving effect to such distributions) of
the proprietary interest in New Pacific on the Effective Date.
(c) At the time of its Reorganization, New Pacific shall not have
outstanding any warrants, options, convertible securities or any other type of
right pursuant to which any Person could acquire New Pacific Shares, except for
the right of investors to acquire New Pacific Shares at net asset value in the
normal course of its business as a series of an open-end management investment
company operating under the Investment Company Act.
(d) From the date it commenced operations and ending on the Closing Date,
New Pacific will have conducted its historic business within the meaning of
Section 1.368-1(d)(2) of the Income Tax Regulations under the Code in a
substantially unchanged manner. In anticipation of its Reorganization, New
Pacific will not dispose of assets that, in the aggregate, will result in less
than fifty percent (50%) of its historic business assets (within the meaning of
Section 1.368-1(d) of those regulations) being transferred to Asian Growth.
(e) AIM Growth does not have, and has not had during the six (6) months
prior to the date of this Agreement, any employees, and shall not hire any
employees from and after the date of this Agreement through the Closing Date.
SECTION 3.6 Accountants. PricewaterhouseCoopers LLP, which has reported
upon the New Pacific Financial Statements for the period ended December 31,
1999, are independent public accountants as required by the Securities Act and
the Exchange Act.
SECTION 3.7 Binding Obligation. This Agreement has been duly authorized,
executed and delivered by AIM Growth on behalf of New Pacific and, assuming this
Agreement has been duly executed and delivered by AIM International and approved
by New Pacific Shareholders, constitutes the legal, valid and binding obligation
of AIM Growth enforceable against AIM Growth in accordance with its terms from
and with respect to the revenues and assets of New Pacific, except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting creditors rights generally, or by
general equity principles (whether applied in a court of law or a court of
equity and including limitations on the availability of specific performance or
other equitable remedies).
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SECTION 3.8 No Breaches or Defaults. The execution and delivery of this
Agreement by AIM Growth on behalf of New Pacific and performance by AIM Growth
of its obligations hereunder has been duly authorized by all necessary trust
action on the part of AIM Growth, other than New Pacific Shareholders approval,
and (i) do not, and on the Closing Date will not, result in any violation of the
Agreement and Declaration of Trust or by-laws of AIM Growth and (ii) do not, and
on the Closing Date will not, result in a breach of any of the terms or
provisions of, or constitute (with or without the giving of notice or the lapse
of time or both) a default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation or imposition of any Lien upon any
property or assets of New Pacific (except for such breaches or defaults or Liens
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect) under (A) any indenture, mortgage or loan agreement
or any other material agreement or instrument to which AIM Growth is a party or
by which it may be bound and which relates to the assets of New Pacific or to
which any property of New Pacific may be subject; (B) any Permit (as defined
below); or (C) any existing applicable law, rule, regulation, judgment, order or
decree of any Governmental Authority having jurisdiction over AIM Growth or any
property of New Pacific. AIM Growth is not under the jurisdiction of a court in
a proceeding under Title 11 of the United States Code or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
SECTION 3.9 Authorizations or Consents. Other than those which shall have
been obtained or made on or prior to the Closing Date and those that must be
made after the Closing Date to comply with Section 2.5 of this Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made by AIM Growth
in connection with the due execution and delivery by AIM Growth of this
Agreement and the consummation by AIM Growth of the transactions contemplated
hereby.
SECTION 3.10 Permits. AIM Growth has in full force and effect all
approvals, consents, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights of Governmental Authorities (collectively,
"Permits") necessary for it to conduct its business as presently conducted as it
relates to New Pacific, and there has occurred no default under any Permit,
except for the absence of Permits and for defaults under Permits the absence or
default of which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. To the knowledge of AIM Growth there
are no proceedings relating to the suspension, revocation or modification of any
Permit, except for such that would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 3.11 No Actions, Suits or Proceedings. (a) There is no pending
action, litigation or proceeding, nor, to the knowledge of AIM Growth, has any
litigation been overtly threatened in writing or, if probable of assertion,
orally, against AIM Growth before any Governmental Authority which questions the
validity or legality of this Agreement or of the actions contemplated hereby or
which seeks to prevent the consummation of the transactions contemplated hereby,
including the Reorganization.
(b) There are no judicial, administrative or arbitration actions, suits, or
proceedings instituted or pending or, to the knowledge of AIM Growth, threatened
in writing or, if probable of assertion, orally, against AIM Growth affecting
any property, asset, interest or right of New Pacific, that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
with respect to New Pacific. There are not in existence on the date hereof any
plea agreements, judgments, injunctions, consents, decrees, exceptions or orders
that were entered by, filed with or issued by Governmental Authority relating to
AIM Growth's conduct of the business of New Pacific affecting in any significant
respect the conduct of such business. AIM Growth is not, and has not been to the
knowledge of AIM Growth, the target of any investigation by the SEC or any state
securities administrator with respect to its conduct of the business of New
Pacific.
SECTION 3.12 Contracts. AIM Growth is not in default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party and which involves or affects the assets of New Pacific,
by which the assets, business, or operations of New Pacific may be bound or
affected, or under which it or the assets, business or operations of New Pacific
receives benefits, and which default could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, and,
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to the knowledge of AIM Growth there has not occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
SECTION 3.13 Properties and Assets. New Pacific has good and marketable
title to all properties and assets reflected in the New Pacific Financial
Statements as owned by it, free and clear of all Liens, except as described in
New Pacific Financial Statements.
SECTION 3.14 Taxes. (a) New Pacific has elected to be treated as a
regulated investment company under Subchapter M of the Code and is a separate
corporation within the meaning of Section 851(g)(1) of the Code. New Pacific has
qualified as a regulated investment company for each taxable year since
inception that has ended prior to the Closing Date and will have satisfied the
requirements of Part I of Subchapter M of the Code to maintain such
qualification for the period beginning on the first day of its current taxable
year and ending on the Closing Date. New Pacific has no earnings and profits
accumulated in any taxable year in which the provisions of Subchapter M of the
Code did not apply to it. In order to (i) insure continued qualification of New
Pacific as a "regulated investment company" for tax purposes and (ii) eliminate
any tax liability of New Pacific arising by reason of undistributed investment
company taxable income or net capital gain, AIM Growth will declare prior to the
Valuation Date to the shareholders of New Pacific a dividend or dividends that,
together with all previous such dividends, shall have the effect of distributing
(A) all of New Pacific's investment company taxable income (determined without
regard to any deductions for dividends paid) for the taxable year ended December
31, 1999 and for the short taxable year beginning on January 1, 2000 and ending
on the Closing Date and (B) all of New Pacific's net capital gain recognized in
its taxable year ended December 31, 1999 and in such short taxable year (after
reduction for any capital loss carryover).
(b) New Pacific has timely filed all Returns required to be filed by it and
all Taxes with respect thereto have been paid, except where the failure so to
file or so to pay, would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Adequate provision has been made
in the New Pacific Financial Statements for all Taxes in respect of all periods
ended on or before the date of such financial statements, except where the
failure to make such provisions would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. No deficiencies for any
Taxes have been proposed, assessed or asserted in writing by any taxing
authority against New Pacific, and no deficiency has been proposed, assessed or
asserted, in writing, where such deficiency would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No waivers
of the time to assess any such Taxes are outstanding nor are any written
requests for such waivers pending and no Returns of New Pacific are currently
being or have been audited with respect to income taxes or other Taxes by any
Federal, state, local or foreign Tax authority.
(c) To the best knowledge of AIM Growth, the fiscal year of New Pacific has
not been changed for tax purposes since the date on which it commenced
operations.
SECTION 3.15 Benefit and Employment Obligations. On or prior to the
Closing Date, New Pacific will have no obligation to provide any post-retirement
or post-employment benefit to any Person, including but not limited to under any
Benefit Plan, and have no obligation to provide unfunded deferred compensation
or other unfunded or self-funded benefits to any Person.
SECTION 3.16 Brokers. No broker, finder or similar intermediary has acted
for or on behalf of AIM Growth in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with AIM Growth or any action taken by it.
SECTION 3.17 Voting Requirements. The vote of a majority of each class of
shares of New Pacific cast at a meeting at which a quorum is present (the
"Required Shareholder Vote") is the only vote of the holders of any class or
series of shares of beneficial interest in New Pacific necessary to approve this
Agreement and the Reorganization of New Pacific contemplated by this Agreement.
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SECTION 3.18 State Takeover Statutes. No state takeover statute or similar
statute or regulation applies or purports to apply to the Reorganizations, this
Agreement or any of the transactions contemplated by this Agreement.
SECTION 3.19 Books and Records. The books and records of AIM Growth
relating to New Pacific, reflecting, among other things, the purchase and sale
of New Pacific Shares, the number of issued and outstanding shares owned by New
Pacific Shareholder and the state or other jurisdiction in which such shares
were offered and sold, are complete and accurate in all material respects.
SECTION 3.20 Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for New Pacific as of
the date on which they were issued did not contain, and as supplemented by any
supplement thereto dated prior to or on the Closing Date do not contain, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
SECTION 3.21 No Distribution. Asian Growth Shares are not being acquired
for the purpose of any distribution thereof, other than in accordance with the
terms of this Agreement.
SECTION 3.22 Liabilities of New Pacific. The liabilities of New Pacific
that are to be assumed by Asian Growth in connection with the Reorganization, or
to which the assets of New Pacific to be transferred in the Reorganizations are
subject, were incurred by New Pacific in the ordinary course of its business.
The fair market value of the assets of New Pacific to be transferred to Asian
Growth in the Reorganization will equal or exceed the sum of the liabilities to
be assumed by Asian Growth plus the amount of liabilities, if any, to which such
transferred assets will be subject. The total adjusted basis of the assets
transferred to Asian Growth will equal or exceed the sum of the liabilities to
be assumed by Asian Growth plus the amount of liabilities to which the
transferred assets are subject.
SECTION 3.23 Value of Shares. The fair market value of Asian Growth Class
A Shares received by New Pacific Shareholders in the Reorganization will be
approximately equal to the fair market value of New Pacific Class A shares
constructively surrendered in exchange therefor, the fair market value of Asian
Growth Class B Shares received by New Pacific Shareholders in the Reorganization
will be approximately equal to the fair market value of New Pacific Class B
shares constructively surrendered in exchange therefor, and the fair market
value of Asian Growth Class C Shares received by New Pacific Shareholders in the
Reorganization will be approximately equal to the fair market value of New
Pacific Class C shares constructively surrendered in exchange therefor.
SECTION 3.24 Shareholder Expenses. New Pacific Shareholders will pay their
own expenses, if any, incurred in connection with the Reorganization.
SECTION 3.25 Intercompany Indebtedness. There is no intercompany
indebtedness between AIM Growth and AIM International that was issued or
acquired, or will be settled, at a discount.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AIM INTERNATIONAL
AIM International, on behalf of Asian Growth, represents and warrants to
AIM Growth as follows:
SECTION 4.1 Organization; Authority. AIM International is duly organized,
validly existing and in good standing under the Maryland General Corporation
Law, with all requisite trust power and authority to enter into this Agreement
and perform its obligations hereunder.
SECTION 4.2 Registration and Regulation of AIM International. AIM
International is duly registered with the SEC as an investment company under the
Investment Company Act. Asian Growth is in compliance in all material respects
with all applicable laws, rules and regulations, including, without limitation,
the Investment Company Act, the Securities Act, the Exchange Act and all
applicable state securities laws. Asian Growth is in compliance in all material
respects with the applicable investment policies and restrictions set forth in
the AIM International Registration Statement. The value of the net assets of
Asian Growth is
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determined using portfolio valuation methods that comply in all material
respects with the requirements of the Investment Company Act and the policies of
Asian Growth and all purchases and redemptions of Asian Growth Shares have been
effected at the net asset value per share calculated in such manner.
SECTION 4.3 Financial Statements. The books of account and related records
of Asian Growth fairly reflect in reasonable detail its assets, liabilities and
transactions in accordance with generally accepted accounting principles applied
on a consistent basis. The audited financial statements for the fiscal year
ended October 31, 1999, of Asian Growth previously delivered to AIM Growth (the
"Asian Growth Financial Statements") present fairly in all material respects the
financial position of Asian Growth as at the dates indicated and the results of
operations and changes in net assets for the periods then ended in accordance
with generally accepted accounting principles applied on a consistent basis for
the periods then ended.
SECTION 4.4 No Material Adverse Changes; Contingent Liabilities. Since
October 31, 1999, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of Asian
Growth or the status of Asian Growth as a regulated investment company under the
Code, other than changes resulting from any change in general conditions in the
financial or securities markets or the performance of any investments made by
Asian Growth or occurring in the ordinary course of business of Asian Growth or
AIM International. There are no contingent liabilities of Asian Growth not
disclosed in the Asian Growth Financial Statements which are required to be
disclosed in accordance with generally accepted accounting principles.
SECTION 4.5 Registration of Asian Growth Class A Shares, Asian Growth
Class B Shares and Asian Growth Class C Shares. (a) The capital stock of AIM
International is divided into six portfolios, including Asian Growth. Asian
Growth currently has three classes of shares, Class A shares, Class B shares and
Class C shares. Under its Charter, AIM International is authorized to issue
forty million (40,000,000) Class A shares, forty million (40,000,000) Class B
shares and forty million (40,000,000) Class C shares of Asian Growth.
(b) Asian Growth Shares to be issued pursuant to Section 2.6 shall on the
Closing Date be duly registered under the Securities Act by a Registration
Statement on Form N-14 of AIM International then in effect.
(c) Asian Growth Shares to be issued pursuant to Section 2.6 are duly
authorized and on the Closing Date will be validly issued and fully paid and
non-assessable and will conform to the description thereof contained in the
Registration Statement on Form N-14 then in effect. At the time of its
Reorganization, Asian Growth shall not have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any Person
could acquire Asian Growth Class A, Asian Growth Class B or Asian Growth Class C
shares that, if exercised or converted, would affect the New Pacific
Shareholders' acquisition or retention of control of Asian Growth as defined in
Section 368(a)(2)(H)(i) of the Code, except for the right of investors to
acquire Asian Growth Class A Shares, Asian Growth Class B Shares or Asian Growth
Class C Shares at net asset value in the normal course of its business as a
series of an open-end management investment company operating under the
Investment Company Act.
(d) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus") which forms a part of AIM International's Registration
Statement on Form N-14 shall be furnished to New Pacific Shareholders entitled
to vote at the New Pacific Shareholders Meeting. The Combined Proxy Statement/
Prospectus and related Statement of Additional Information of Asian Growth, when
they become effective, shall conform to the applicable requirements of the
Securities Act and the Investment Company Act and shall not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading, provided,
however, that no representation or warranty is made with respect to written
information provided by AIM Growth for inclusion in the Combined Proxy
Statement/Prospectus.
(e) The shares of Asian Growth which have been or are being offered for
sale (other than the Asian Growth Shares to be issued in connection with the
Reorganizations) have been duly registered under the Securities Act by the AIM
International Registration Statement and have been duly registered, qualified or
are
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exempt from registration or qualification under the securities laws of each
state or other jurisdiction in which such shares have been or are being offered
for sale, and no action has been taken by AIM International to revoke or rescind
any such registration or qualification.
SECTION 4.6 Accountants. KPMG LLP, which has reported upon the Asian
Growth Financial Statements for the period ended October 31, 1999, are
independent public accountants as required by the Securities Act and the
Exchange Act.
SECTION 4.7 Binding Obligation. This Agreement has been duly authorized,
executed and delivered by AIM International on behalf of Asian Growth and,
assuming this Agreement has been duly executed and delivered by AIM Growth,
constitutes the legal, valid and binding obligation of AIM International,
enforceable against AIM International in accordance with its terms from and with
respect to the revenues and assets of Asian Growth, except as the enforceability
hereof may be limited by bankruptcy, insolvency, reorganization or similar laws
relating to or affecting creditors' rights generally, or by general equity
principles (whether applied in a court or law or a court of equity and including
limitations on the availability of specific performance or other equitable
remedies).
SECTION 4.8 No Breaches or Defaults. The execution and delivery of this
Agreement by AIM International on behalf of Asian Growth and performance by AIM
International of its obligations hereunder have been duly authorized by all
necessary corporate action on the part of AIM International and (i) do not, and
on the Closing Date will not, result in any violation of the Charter or by-laws
of AIM International and (ii) do not, and on the Closing Date will not, result
in a breach of any of the terms or provisions of, or constitute (with or without
the giving of notice or the lapse of time or both) a default under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation or imposition of
any Lien upon any property or assets of Asian Growth (except for such breaches
or defaults or Liens that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect) under (A) any indenture,
mortgage or loan agreement or any other material agreement or instrument to
which AIM International is a party or by which it may be bound and which relates
to the assets of Asian Growth or to which any properties of Asian Growth may be
subject; (B) any Permit; or (C) any existing applicable law, rule, regulation,
judgment, order or decree of any Governmental Authority having jurisdiction over
AIM International or any property of Asian Growth. AIM International is not
under the jurisdiction of a court in a proceeding under Title 11 of the United
States Code or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
SECTION 4.9 Authorizations or Consents. Other than those which shall have
been obtained or made on or prior to the Closing Date, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority will be required to be obtained or made by AIM International in
connection with the due execution and delivery by AIM International of this
Agreement and the consummation by AIM International of the transactions
contemplated hereby.
SECTION 4.10 Permits. AIM International has in full force and effect all
Permits necessary for it to conduct its business as presently conducted as it
relates to Asian Growth, and there has occurred no default under any Permit,
except for the absence of Permits and for defaults under Permits the absence or
default of which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. To the knowledge of AIM International
there are no proceedings relating to the suspension, revocation or modification
of any Permit, except for such that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 4.11 No Actions, Suits or Proceedings. (a) There is no pending
action, suit or proceeding, nor, to the knowledge of AIM International, has any
litigation been overtly threatened in writing or, if probable of assertion,
orally, against AIM International before any Governmental Authority which
questions the validity or legality of this Agreement or of the transactions
contemplated hereby, or which seeks to prevent the consummation of the
transactions contemplated hereby, including the Reorganization.
(b) There are no judicial, administrative or arbitration actions, suits, or
proceedings instituted or pending or, to the knowledge of AIM International,
threatened in writing or, if probable of assertion, orally, against
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AIM International, affecting any property, asset, interest or right of Asian
Growth, that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to Asian Growth. There are not
in existence on the date hereof any plea agreements, judgments, injunctions,
consents, decrees, exceptions or orders that were entered by, filed with or
issued by any Governmental Authority relating to AIM International's conduct of
the business of Asian Growth affecting in any significant respect the conduct of
such business. AIM International is not, and has not been, to the knowledge of
AIM International, the target of any investigation by the SEC or any state
securities administrator with respect to its conduct of the business of Asian
Growth.
SECTION 4.12 Taxes. (a) Asian Growth has elected to be treated as a
regulated investment company under Subchapter M of the Code and is a separate
corporation within the meaning of Section 851(g)(1) of the Code. Asian Growth
has qualified as a regulated investment company for each taxable year since
inception that has ended prior to the Closing Date and will satisfy the
requirements of Part I of Subchapter M of the Code to maintain such
qualification for its current taxable year. Asian Growth has no earnings or
profits accumulated in any taxable year in which the provisions of Subchapter M
of the Code did not apply to it.
(b) Asian Growth has timely filed all Returns required to be filed by it
and all Taxes with respect thereto have been paid, except where the failure so
to file or so to pay, would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Adequate provision has been made
in the Asian Growth Financial Statements for all Taxes in respect of all periods
ending on or before the date of such financial statements, except where the
failure to make such provisions would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. No deficiencies for any
Taxes have been proposed, assessed or asserted in writing by any taxing
authority against Asian Growth, and no deficiency has been proposed, assessed or
asserted, in writing, where such deficiency would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No waivers
of the time to assess any such Taxes are outstanding nor are any written
requests for such waivers pending and no Return of Asian Growth is currently
being or has been audited with respect to income taxes or other Taxes by any
Federal, state, local or foreign Tax authority.
(c) The fiscal year of Asian Growth has not been changed for tax purposes
since the date on which it commenced operations.
SECTION 4.13 Brokers. No broker, finder or similar intermediary has acted
for or on behalf of AIM International in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with AIM International or any action taken by it.
SECTION 4.14 Representations Concerning the Reorganization. (a) AIM
International has no plan or intention to reacquire any Asian Growth Shares
issued in the Reorganization, except to the extent that Asian Growth is required
by the Investment Company Act to redeem any of its shares presented for
redemption at net asset value in the ordinary course of its business as an
open-end, management investment company.
(b) Asian Growth has no plan or intention to sell or otherwise dispose of
any of the assets of New Pacific acquired in the Reorganization, other than in
the ordinary course of its business and to the extent necessary to maintain its
status as a "regulated investment company" under the Code.
(c) Following the Reorganization, Asian Growth will continue an "historic
business" (within the meaning of Section 1.368-1(d) of the Income Tax
Regulations under the Code) of New Pacific or use a significant portion of New
Pacific's historic business assets in a business.
(d) Following the Reorganization, the New Pacific Shareholders will be in
control of Asian Growth within the meaning of Section 368(a)(2)(H)(i) of the
Code.
(e) Prior to or in the Reorganization, neither Asian Growth nor any person
related to Asian Growth (for purposes of this paragraph as defined in section
1.368-1(e)(3) of the Treasury Regulations) will have acquired directly or
through any transaction, agreement or arrangement with any other person, shares
of New Pacific
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with consideration other than shares of Asian Growth. There is no plan or
intention by Asian Growth or any person related to Asian Growth to acquire or
redeem any of the Asian Growth Shares issued in the Reorganization either
directly or through any transaction, agreement, or arrangement with any other
person, other than redemptions in the ordinary course of Asian Growth's business
as an open-end investment company as required by the Investment Company Act.
SECTION 4.15 Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for Asian Growth as
of the date on which it was issued does not contain, and as supplemented by any
supplement thereto dated prior to or on the Closing Date does not contain, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
SECTION 4.16 Value of Shares. The fair market value of Asian Growth Class
A Shares received by New Pacific Shareholders in each Reorganization will be
approximately equal to the fair market value of New Pacific Class A shares
constructively surrendered in exchange therefor, the fair market value of Asian
Growth Class B Shares received by New Pacific Shareholders in each
Reorganization will be approximately equal to the fair market value of New
Pacific Class B shares constructively surrendered therefor, and the fair market
value of Asian Growth Class C Shares received by New Pacific Shareholders in
each Reorganization will be approximately equal to the fair market value of New
Pacific Class C shares constructively surrendered therefor.
SECTION 4.17 Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between AIM Growth and AIM International that was
issued or acquired, or will be settled, at a discount. No consideration other
than Asian Growth Shares (and Asian Growth's assumption of New Pacific's
liabilities, including for this purpose all liabilities to which the assets of
New Pacific are subject) will be issued in exchange for the assets of New
Pacific acquired by Asian Growth in connection with the Reorganization. The fair
market value of the assets of New Pacific transferred to Asian Growth in the
Reorganization will equal or exceed the sum of the liabilities assumed by Asian
Growth, plus the amount of liabilities, if any, to which such transferred assets
are subject.
ARTICLE 5
COVENANTS
SECTION 5.1 Conduct of Business. (a) From the date of this Agreement up to
and including the Closing Date (or, if earlier, the date upon which this
Agreement is terminated pursuant to Article 7), AIM Growth shall conduct the
business of New Pacific only in the ordinary course and substantially in
accordance with past practices, and shall use its reasonable best efforts to
preserve intact its business organization and material assets and maintain the
rights, franchises and business and customer relations necessary to conduct the
business of New Pacific in the ordinary course in all material respects. Without
limiting the generality of the foregoing, AIM Growth shall not do any of the
following with respect to New Pacific without the prior written consent of AIM
International, which consent shall not be unreasonably withheld:
(i) split, combine or reclassify any of its shares of beneficial
interest or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for its shares of beneficial
interest;
(ii) amend its Agreement and Declaration of Trust or by-laws;
(iii) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or series or division thereof or
any assets that are material, individually or in the aggregate, to New
Pacific taken as a whole, except purchases of assets in the ordinary course
of business consistent with past practice;
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(iv) sell, lease or otherwise dispose of any of its material
properties or assets, or mortgage or otherwise encumber or subject to any
Lien any of its material properties or assets, other than in the ordinary
course of business;
(v) incur any indebtedness for borrowed money or guarantee any
indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of New Pacific,
guarantee any debt securities of another Person, enter into any "keep well"
or other agreement to maintain any financial statement condition of another
Person, or enter into any arrangement having the economic effect of any of
the foregoing;
(vi) settle or compromise any material income tax liability or make
any material tax election;
(vii) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the ordinary course of business;
(viii) change its method of accounting, except as required by changes
in generally accepted accounting principles as concurred in by its
independent auditors, or change its fiscal year;
(ix) make or agree to make any material severance, termination,
indemnification or similar payments except pursuant to existing agreements;
or
(x) adopt any Benefit Plan.
(b) From the date of this Agreement up to and including the Closing Date
(or, if earlier, the date upon which this Agreement is terminated pursuant to
Article 7), AIM International shall conduct the business of Asian Growth only in
the ordinary course and substantially in accordance with past practices, and
shall use its reasonable best efforts to preserve intact its business
organization and material assets and maintain the rights, franchises and
business relations necessary to conduct the business operations of Asian Growth
in the ordinary course in all material respects.
SECTION 5.2 Announcements. AIM Growth and AIM International shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement and the transactions contemplated by
this Agreement, and neither AIM Growth nor AIM International shall issue any
such press release or make any public statement without the prior written
approval of the other party to this Agreement, such approval not to be
unreasonably withheld, except as may be required by law.
SECTION 5.3 Expenses. New Pacific and Asian Growth shall each,
respectively, bear the expenses it incurs in connection with this Agreement and
a Reorganization and other transactions contemplated hereby.
SECTION 5.4 Further Assurances. Each of the parties hereto shall execute
such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the Reorganizations, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the Reorganizations.
SECTION 5.5 Notice of Events. AIM International shall give prompt notice
to AIM Growth, and AIM Growth shall give prompt notice to AIM International, of
(a) the occurrence or non-occurrence of any event which to the knowledge of AIM
International or to the knowledge of AIM Growth, the occurrence or non-
occurrence of which would be likely to result in any of the conditions specified
in (i) in the case of AIM Growth, Sections 6.1 and 6.2 or (ii) in the case of
AIM International, Sections 6.2 and 6.3, not being satisfied so as to permit the
consummation of the Reorganizations and (b) any material failure on its part, or
on the part of the other party hereto of which it has knowledge, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.5 shall not limit or otherwise affect the remedies available
hereunder to any party.
SECTION 5.6 Access to Information. (a) AIM Growth will, during regular
business hours and on reasonable prior notice, allow AIM International and its
authorized representatives reasonable access to the
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books and records of AIM Growth pertaining to the assets of New Pacific and to
officers of AIM Growth knowledgeable thereof; provided, however, that any such
access shall not significantly interfere with the business or operations of AIM
Growth.
(b) AIM International will, during regular business hours and on reasonable
prior notice, allow AIM Growth and its authorized representatives reasonable
access to the books and records of AIM International pertaining to the assets of
Asian Growth and to officers of AIM International knowledgeable thereof;
provided, however, that any such access shall not significantly interfere with
the business or operations of AIM International.
SECTION 5.7 Consents, Approvals and Filings. Each of AIM Growth and AIM
International shall make all necessary filings, as soon as reasonably
practicable, including, without limitation, those required under the Securities
Act, the Exchange Act, the Investment Company Act and the Advisers Act, in order
to facilitate prompt consummation of the Reorganizations and the other
transactions contemplated by this Agreement. In addition, each of AIM Growth and
AIM International shall use its reasonable best efforts, and shall cooperate
fully with each other (i) to comply as promptly as reasonably practicable with
all requirements of Governmental Authorities applicable to the Reorganizations
and the other transactions contemplated herein and (ii) to obtain as promptly as
reasonably practicable all necessary permits, orders or other consents of
Governmental Authorities and consents of all third parties necessary for the
consummation of the Reorganizations and the other transactions contemplated
herein. Each of AIM Growth and AIM International shall use reasonable efforts to
provide such information and communications to Governmental Authorities as such
Governmental Authorities may request.
SECTION 5.8 Submission of Agreement to Shareholders. AIM Growth shall take
all action necessary in accordance with applicable law and its Agreement and
Declaration of Trust and by-laws to convene the New Pacific Shareholders
Meeting. AIM Growth shall, through its Board of Trustees, recommend to New
Pacific Shareholders approval of this Agreement and the transactions
contemplated by this Agreement. AIM Growth shall use its reasonable best efforts
to hold a New Pacific Shareholders Meeting as soon as practicable after the date
hereof.
ARTICLE 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
SECTION 6.1 Conditions Precedent of AIM International. The obligation of
AIM International to consummate the Reorganization is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions, any one or more of which may be waived in writing by AIM
International.
(a) The representations and warranties of AIM Growth on behalf of New
Pacific participating in the Reorganization set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date with the same effect as though all such representations
and warranties had been made as of the Closing Date.
(b) AIM Growth shall have complied with and satisfied in all material
respects all agreements and conditions relating to New Pacific participating in
the Reorganization set forth herein on its part to be performed or satisfied at
or prior to the Closing Date.
(c) AIM International shall have received at the Closing Date (i) a
certificate, dated as of the Closing Date, from an officer of AIM Growth, in
such individual's capacity as an officer of AIM Growth and not as an individual,
to the effect that the conditions specified in Section 6.1(a) and (b) have been
satisfied and (ii) a certificate, dated as of the Closing Date, from the
Secretary or Assistant Secretary of AIM Growth certifying as to the accuracy and
completeness of the attached Agreement and Declaration of Trust and by-laws of
AIM Growth, and resolutions, consents and authorizations of or regarding AIM
Growth with respect to the execution and delivery of this Agreement and the
transactions contemplated hereby.
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(d) AIM International shall have received the signed opinion of Kirkpatrick
& Lockhart LLP, counsel to AIM Growth, or other counsel reasonably acceptable to
AIM International, in form and substance reasonably acceptable to counsel for
AIM International, as to the matters set forth in Schedule 6.1(d).
(e) The dividend or dividends described in the last sentence of Section
3.14(a) shall have been declared.
SECTION 6.2 Mutual Conditions. The obligations of AIM Growth and AIM
International to consummate a Reorganization are subject to the satisfaction, at
or prior to the Closing Date, of all of the following further conditions, any
one or more may be waived in writing by AIM Growth and AIM International, but
only if and to the extent that such waiver is mutual.
(a) All filings required to be made prior to the Closing Date with, and all
consents, approvals, permits and authorizations required to be obtained on or
prior to the Closing Date from Governmental Authorities in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein by AIM Growth and AIM International shall have
been made or obtained, as the case may be; provided, however, that such
consents, approvals, permits and authorizations may be subject to conditions
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
(b) This Agreement, the Reorganization of New Pacific and related matters
shall have been approved and adopted at the New Pacific Shareholders Meeting by
the shareholders of New Pacific on the record date by the Required Shareholder
Vote.
(c) The assets of New Pacific to be acquired by Asian Growth shall
constitute at least 90% of the fair market value of the net assets and at least
70% of the fair market value of the gross assets held by New Pacific immediately
prior to the Reorganization. For purposes of this Section 6.2(c), assets used by
New Pacific to pay the expenses it incurs in connection with this Agreement and
the Reorganization and to effect all shareholder redemptions and distributions
(other than regular, normal dividends and regular, normal redemptions pursuant
to the Investment Company Act, and not in excess of the requirements of Section
852 of the Code, occurring in the ordinary course of New Pacific's business as a
series of an open-end management investment company) after the date of this
Agreement shall be included as assets of New Pacific held immediately prior to
the Reorganization.
(d) No temporary restraining order, preliminary or permanent injunction or
other order issued by any Governmental Authority preventing the consummation of
the Reorganization on the Closing Date shall be in effect; provided, however,
that the party or parties invoking this condition shall use reasonable efforts
to have any such order or injunction vacated.
(e) The Registration Statement on Form N-14 filed by AIM International with
respect to Asian Growth Shares to be issued to New Pacific Shareholders in
connection with the Reorganization shall have become effective under the
Securities Act and no stop order suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the Securities Act.
(f) AIM Growth and AIM International shall have received on or before the
Closing Date an opinion of Ballard Spahr Andrews & Ingersoll, LLP in form and
substance reasonably acceptable to AIM Growth and AIM International, as to the
matters set forth on Schedule 6.2(f).
(g) The dividend or dividends described in the last sentence of Section
3.14(a) shall have been declared.
SECTION 6.3 Conditions Precedent of AIM Growth. The obligation of AIM
Growth to consummate a Reorganization is subject to the satisfaction, at or
prior to the Closing Date, of all of the following conditions, any one or more
of which may be waived in writing by AIM Growth.
(a) The representations and warranties of AIM International on behalf of
Asian Growth participating in the Reorganization set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date with the same effect as though all such
representations and warranties had been made as of the Closing Date.
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(b) AIM International shall have complied with and satisfied in all
material respects all agreements and conditions relating to Asian Growth
participating in the Reorganization set forth herein on its part to be performed
or satisfied at or prior to the Closing Date.
(c) AIM Growth shall have received on the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of AIM International, in such
individual's capacity as an officer of AIM International and not as an
individual, to the effect that the conditions specified in Sections 6.3(a) and
(b) have been satisfied and (ii) a certificate, dated as of the Closing Date,
from the Secretary or Assistant Secretary of AIM International certifying as to
the accuracy and completeness of the attached Charter and by-laws, as amended,
of AIM International and resolutions, consents and authorizations of or
regarding AIM International with respect to the execution and delivery of this
Agreement and the transactions contemplated hereby.
(d) AIM Growth shall have received the signed opinion of Ballard Spahr
Andrews & Ingersoll, LLP, counsel to AIM International, or other counsel
reasonably acceptable to AIM Growth, in form and substance reasonably acceptable
to counsel for AIM International, as to the matters set forth on Schedule
6.3(d).
ARTICLE 7
TERMINATION OF AGREEMENT
SECTION 7.1 Termination. (a) This Agreement may be terminated in whole or
with respect to a Reorganization described herein on or prior to the Closing
Date as follows:
(i) by mutual written consent of AIM Growth and AIM International; or
(ii) at the election of AIM Growth or AIM International:
(A) if the Closing Date shall not be on or before September 1,
2000, or such later date as the parties hereto may agree upon, unless
the failure to consummate the Reorganization is the result of a willful
and material breach of this Agreement by the party seeking to terminate
this Agreement;
(B) if, upon a vote at New Pacific Shareholders Meeting or any
adjournment thereof, the Required Shareholder Vote shall not have been
obtained as contemplated by Section 5.8; or
(C) if any Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Reorganization and such order,
decree, ruling or other action shall have become final and
nonappealable.
(b) The termination of this Agreement shall be effectuated by the delivery
by the terminating party to the other party of a written notice of such
termination.
SECTION 7.2 Survival After Termination. If this Agreement is terminated in
accordance with Section 7.1 hereof and the Reorganization of New Pacific is not
consummated, this Agreement shall become void and of no further force and effect
with respect to such Reorganization and the respective New Pacific, except for
the provisions of Section 5.3.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Survival of Representations and Warranties. The
representations, warranties and covenants in this Agreement or in any
certificate or instrument delivered pursuant to this Agreement shall survive the
consummation of the transactions contemplated hereunder for a period of one (1)
year following the Closing Date.
SECTION 8.2 Governing Law. This Agreement shall be construed and
interpreted according to the laws of the State of Delaware applicable to
contracts made and to be performed wholly within such state.
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SECTION 8.3 Binding Effect, Persons Benefiting, No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns of the parties and such Persons.
Nothing in this Agreement is intended or shall be construed to confer upon any
entity or Person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. Without the prior written consent of the parties
hereto, this Agreement may not be assigned by any of the parties hereto;
provided, however, that AIM International may assign its rights and obligations
under this Agreement to AIM International Mutual Funds, a Delaware business
trust, as successor to AIM International under that certain Agreement and Plan
of Reorganization dated December 7, 1999, without the prior consent of AIM
Growth.
SECTION 8.4 Obligations of AIM International and AIM Growth. (a) AIM
Growth and AIM International hereby acknowledge and agree that Asian Growth is a
separate investment portfolio of AIM International, that AIM International is
executing this Agreement on behalf of Asian Growth, and that any amounts payable
by AIM International under or in connection with this Agreement shall be payable
solely from the revenues and assets of Asian Growth. AIM Growth further
acknowledges and agrees that this Agreement has been executed by a duly
authorized officer of AIM International in his or her capacity as an officer of
AIM International intending to bind AIM International as provided herein, and
that no officer, director or shareholder of AIM International shall be
personally liable for the liabilities or obligations of AIM International
incurred hereunder.
(b) AIM Growth and AIM International hereby acknowledge and agree that New
Pacific is a separate investment portfolio of AIM Growth, that AIM Growth is
executing this Agreement on behalf of New Pacific and that any amounts payable
by AIM Growth under or in connection with this Agreement shall be payable solely
from the revenues and assets of New Pacific. AIM International further
acknowledges and agrees that this Agreement has been executed by a duly
authorized officer of AIM Growth in his or her capacity as an officer of AIM
Growth intending to bind AIM Growth as provided herein, and that no officer,
trustee or shareholder of AIM Growth shall be personally liable for the
liabilities of AIM Growth incurred hereunder.
SECTION 8.5 Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by AIM Growth and AIM
International.
SECTION 8.6 Enforcement. The parties agree irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 8.7 Interpretation. When a reference is made in this Agreement to
a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Each
representation and warranty contained in Article 3 or 4 that relates to a
general category of a subject matter shall be deemed superseded by a specific
representation and warranty relating to a subcategory thereof to the extent of
such specific representation or warranty.
SECTION 8.8 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and each of which shall constitute one
and the same instrument.
SECTION 8.9 Entire Agreement; Schedules. This Agreement, including the
Schedules, certificates and lists referred to herein, and any documents executed
by the parties simultaneously herewith or pursuant thereto, constitute the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, written or oral, between the parties with respect to such
subject matter.
I-18
<PAGE> 49
SECTION 8.10 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or when sent by telecopier
(with receipt confirmed), provided, in the case of a telecopied notice, a copy
is also sent by registered mail, return receipt requested, or by courier,
addressed as follows (or to such other address as a party may designate by
notice to the other):
(a) If to AIM Growth:
AIM Growth Series
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
with a copy to:
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
Attn: Arthur J. Brown, Esq.
Fax: (202) 778-9100
(b) If to AIM International:
AIM International Funds, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
with a copy to:
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Attn: William H. Rheiner, Esq.
Fax: (215) 864-8999
SECTION 8.11 Representations by AIM Advisors. In its capacity as
investment adviser to AIM Growth, AIM Advisors represents to AIM International
that to the best of its knowledge the representations and warranties of AIM
Growth and New Pacific contained in this Agreement are true and correct as of
the date of this Agreement. In its capacity as investment adviser to AIM
International, AIM Advisors represents to AIM Growth that to the best of its
knowledge the representations and warranties of AIM International and Asian
Growth contained in this Agreement are true and correct as of the date of this
Agreement. For purposes of this Section 8.11, the best knowledge standard shall
be deemed to mean that the officers of AIM Advisors who have substantive
responsibility for the provision of investment advisory services to AIM Growth
and AIM International do not have actual knowledge to the contrary after due
inquiry.
I-19
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AIM GROWTH SERIES, acting
on behalf of AIM New Pacific Growth
By: /s/ ROBERT H. GRAHAM
----------------------------------
AIM INTERNATIONAL FUNDS, INC.,
acting
on behalf of AIM Asian Growth Fund
By: /s/ ROBERT H. GRAHAM
----------------------------------
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
----------------------------------
I-20
<PAGE> 51
SCHEDULE 6.1(D)
OPINION OF COUNSEL TO AIM GROWTH
1. AIM Growth is duly organized and validly existing as a business trust
under the Delaware Business Trust Act.
2. AIM Growth is an open-end, management investment company registered
under the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AIM Growth
have been duly authorized and approved by all requisite trust action on the part
of AIM Growth. The Agreement has been duly executed and delivered by AIM Growth
and constitutes the valid and binding obligation of AIM Growth.
4. New Pacific Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable.
5. To the best of our knowledge, AIM Growth is not required to submit any
notice, report or other filing with or obtain any authorization, consent or
approval from any governmental authority or self regulatory organization prior
to the consummation of the transactions contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer who is
the current primary contact for AIM Growth or who has devoted substantive
attention on behalf of AIM Growth during the preceding twelve months and who is
still currently employed by or is currently a member of this firm, no litigation
or governmental proceeding is pending or threatened in writing against New
Pacific (i) with respect to the Agreement or (ii) which involves in excess of
$500,000 in damages.
I-21
<PAGE> 52
SCHEDULE 6.2(F)
TAX OPINIONS
(i) The transfer of the assets of New Pacific to Asian Growth in exchange
for Asian Growth Shares distributed directly to New Pacific Shareholders, as
provided in the Agreement, will constitute a "reorganization" within the meaning
of Section 368(a) of the Code and that New Pacific and Asian Growth will be "a
party to a reorganization" within the meaning of Section 368(b) of the Code.
(ii) In accordance with Section 361(a) and Section 361(c)(1) of the Code,
no gain or loss will be recognized by New Pacific on the transfer of its assets
to Asian Growth solely in exchange for Asian Growth Class A Shares, Asian Growth
Class B Shares and Asian Growth Class C Shares or on the distribution of Asian
Growth Class A Shares, Asian Growth Class B Shares and Asian Growth Class C
Shares to New Pacific Shareholders.
(iii) In accordance with Section 1032 of the Code, no gain or loss will be
recognized by Asian Growth upon the receipt of assets of New Pacific in exchange
for Asian Growth Class A Shares, Asian Growth Class B Shares and Asian Growth
Class C Shares issued directly to New Pacific Shareholders.
(iv) In accordance with Section 354(a)(1) of the Code, no gain or loss will
be recognized by New Pacific Shareholders on the receipt of Asian Growth Class A
Shares, Asian Growth Class B Shares and Asian Growth Class C Shares in exchange
for New Pacific Shares.
(v) In accordance with Section 362(b) of the Code, the basis to Asian
Growth of the assets of New Pacific will be the same as the basis of such assets
in the hands of New Pacific immediately prior to the Reorganization.
(vi) In accordance with Section 358(a) of the Code, a New Pacific
Shareholder's basis for Asian Growth Class A Shares, Asian Growth Class B Shares
or Asian Growth Class C Shares received by the New Pacific Shareholder will be
the same as his basis for New Pacific Shares exchanged therefor.
(vii) In accordance with Section 1223(1) of the Code, a New Pacific
Shareholder's holding period for Asian Growth Class A Shares, Asian Growth Class
B Shares or Asian Growth Class C Shares will be determined by including New
Pacific Shareholder's holding period for New Pacific Shares exchanged therefor,
provided that the New Pacific Shareholder held New Pacific Shares as a capital
asset.
(viii) In accordance with Section 1223(2) of the Code, the holding period
with respect to the assets of New Pacific transferred to Asian Growth in the
Reorganization will include the holding period for such assets in the hands of
New Pacific.
I-22
<PAGE> 53
SCHEDULE 6.3(d)
OPINION OF COUNSEL TO AIM INTERNATIONAL
1. AIM International is a corporation validly existing and in good standing
under the Maryland General Corporation Law.
2. AIM International is an open-end, management investment company
registered under the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AIM
International have been duly authorized and approved by all requisite trust
action on the part of AIM International. The Agreement has been duly executed
and delivered by AIM International and constitutes the valid and binding
obligation of AIM International.
4. Asian Growth Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable.
5. To the best of our knowledge, AIM International is not required to
submit any notice, report or other filing with or obtain any authorization,
consent or approval from any governmental authority or self regulatory
organization prior to the consummation of the transactions contemplated by the
Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer who is
the current primary contact for AIM International or who has devoted substantive
attention on behalf of AIM International during the preceding twelve months and
who is still currently employed by or is currently a member of this firm, no
litigation or governmental proceeding is pending or threatened in writing
against Asian Growth (i) with respect to the Agreement or (ii) which involves in
excess of $500,000 in damages.
I-23
<PAGE> 54
APPENDIX II
AIM INTERNATIONAL FUNDS, INC.
AIM ASIAN GROWTH FUND
Supplement dated March 31, 2000
to the Prospectus dated February 28, 2000
The following replaces in its entirety the third paragraph under the heading
"INVESTMENT OBJECTIVE AND STRATEGIES" on page 1 of the Prospectus:
"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 35% of its total assets in
securities of non-Asian companies. The fund may also invest up to
35% 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. dollar or foreign currencies."
<PAGE> 55
AIM ASIAN GROWTH FUND
- --------------------------------------------------------------------------------
AIM Asian Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
FEBRUARY 28, 2000
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it before
investing and keep it for future reference.
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
The Board of Directors voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 56
---------------------
AIM ASIAN GROWTH FUND
---------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 2
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 3
Performance Table 3
FEE TABLE AND EXPENSE EXAMPLE 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 4
Expense Example 4
FUND MANAGEMENT 5
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 5
Advisor Compensation 5
Portfolio Managers 5
OTHER INFORMATION 6
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 6
Dividends and Distributions 6
Submission of Matters to Shareholders 6
FINANCIAL HIGHLIGHTS 7
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 57
---------------------
AIM ASIAN 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, normally, at least 80%
(65% beginning March 1, 2000) 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 (1) organized under the laws of a country in Asia and
having a principal office in a country in Asia; (2) that derive 50% or more of
their total revenues from business in Asia; or (3) 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 may also 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.
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
cycles.
The portfolio managers focus on companies that have experienced above-average
long-term growth in earnings and have strong prospects for future growth. In
selecting countries in which the fund will invest, the 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
portfolio managers consider whether to sell a particular security when any of
those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objective. If the fund does trade in this way, it may
incur increased transaction costs, which can lower the actual return on your
investment. Active trading may also increase short-term gains and losses, which
may affect the taxes you have to pay.
1
<PAGE> 58
---------------------
AIM ASIAN GROWTH FUND
---------------------
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 prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. This is
especially true with respect to equity securities of small and micro-cap
companies, whose prices may go up and down more than the prices of equity
securities of larger, more established companies. Also, since equity securities
of small and micro-cap companies may not be traded as often as equity securities
of larger, more established companies, it may be difficult or impossible for the
fund to sell securities at a desired price.
The prices of foreign securities may be further affected by other factors,
including:
- - 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.
- - 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.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - 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 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.
The fund may participate in the initial public offering (IPO) market. Because
of the fund's small asset base, any investment the fund may make in IPOs may
significantly increase the fund's total return. As the fund's assets grow, the
impact of IPO investments will decline, which may reduce the fund's total
return.
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.
2
<PAGE> 59
---------------------
AIM ASIAN GROWTH FUND
---------------------
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. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1998................................... -8.54%
1999................................... 67.98%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
40.89% (quarter ended June 30, 1999) and the lowest quarterly return was -25.67%
(quarter ended June 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR INCEPTION DATE
- -------------------------------------------------------------------
<S> <C> <C> <C>
Class A 58.70% 11.14% 11/03/97
Class B 61.58 12.02 11/03/97
Class C 65.84 13.11 11/03/97
MSCI AC Asia Pacific Free ex-Japan
Index(1) 49.83 13.75(2) 10/31/97(2)
- -------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International All Country Asia Pacific Free
ex-Japan Index measures the performance of 12 of both developed and emerging
markets in this region. The index excludes shares that are not readily
purchased by non-local investors.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
3
<PAGE> 60
---------------------
AIM ASIAN GROWTH FUND
---------------------
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>
SHAREHOLDER FEES
- -------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<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>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.95% 0.95% 0.95%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses 1.42 1.64 1.64
Total Annual Fund
Operating Expenses 2.72 3.59 3.59
Fee Waivers and
Reimbursements(2) 0.80 0.80 0.80
Net Expenses 1.92 2.79 2.79
- -------------------------------------------------------
</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 contractually agreed to limit Total Annual Fund
Operating Expenses of Class A, Class B and Class C to 1.92%, 2.80% and
2.80%, respectively.
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 gross operating expenses remain the same. To the extent fees are waived,
the expenses will be lower. 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 $810 $1,348 $1,910 $3,433
Class B 862 1,400 2,059 3,662
Class C 462 1,100 1,859 3,854
- ----------------------------------------------
</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 $810 $1,348 $1,910 $3,433
Class B 362 1,100 1,859 3,662
Class C 362 1,100 1,859 3,854
- ----------------------------------------------
</TABLE>
4
<PAGE> 61
---------------------
AIM ASIAN GROWTH FUND
---------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
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, Bermuda HM12. INVESCO Asia Limited (the
subsubadvisor), the fund's subsubadvisor, is located at 2001 Exchange Square,
Tower 2, Central, 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 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives. The subadvisor has acted as an investment advisor since
1995. The subsubadvisor has acted as an investment advisor since 1972.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 1999, the advisor received compensation
of 0.15% of average daily 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, both of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Shuxin Cao, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1997. Prior to 1997, Mr. Cao was an international equity analyst for Boatmen's
Trust Company.
- - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for
the fund since its inception in 1997 and has been associated with the advisor
and/or its affiliates since 1989.
- - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund
since its inception in 1997 and has been associated with the advisor and/or
its affiliates since 1990.
5
<PAGE> 62
---------------------
AIM ASIAN GROWTH FUND
---------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Asian Growth 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. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Directors of AIM
International Funds, Inc. (the company), on behalf of the fund, voted to request
shareholders to approve the following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the company, which is currently a Maryland corporation, as a Delaware
business trust;
- - A new advisory agreement between the company and A I M Advisors, Inc. (AIM).
The principal changes to the advisory agreement are (i) the deletion of
references to the provision of administrative services and certain expense
limitations that are no longer applicable, and (ii) the clarification of
provisions relating to delegations of responsibilities and the non-exclusive
nature of AIM's services. The revised advisory agreement does not change the
fees paid by the fund (except that the agreement permits the fund to pay a fee
to AIM in connection with any new securities lending program implemented in
the future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective so that it is non-fundamental. If the
investment objective of the fund becomes non-fundamental, it can be changed in
the future by the Board of Directors of the company without further approval
by shareholders.
The Board of Directors of the company has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 are entitled to
vote at the meeting. Proposals that are approved are expected to become
effective on or about May 22, 2000.
6
<PAGE> 63
---------------------
AIM ASIAN GROWTH FUND
---------------------
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).
This information has been audited by KPMG 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
-------------------------- -------------------------- --------------------------
NOVEMBER 3, NOVEMBER 3, NOVEMBER 3,
1997 1997 1997
YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999(a) 1998 1999(a) 1998 1999(a) 1998
- --------------------------------------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 7.69 $ 10.00 $ 7.63 $ 10.00 $ 7.61 $ 10.00
Income from investment
operations:
Net investment income (loss) (0.03) 0.05 (0.13) (0.01) (0.13) (0.01)
Net gains (losses) on
securities (both
realized and
unrealized) 3.14 (2.36) 3.16 (2.36) 3.16 (2.38)
Total from investment
operations 3.11 (2.31) 3.03 (2.37) 3.03 (2.39)
Less distributions:
Dividends from net
investment income (0.04) -- (0.01) -- (0.01) --
Net asset value, end of
period $ 10.76 $ 7.69 $ 10.65 $ 7.63 $ 10.63 $ 7.61
Total return(b) 40.66% (23.10)% 39.76% (23.70)% 39.86% (23.90)%
- --------------------------------------------------------- -------------------------- --------------------------
Ratios/supplemental data:
- --------------------------------------------------------- -------------------------- --------------------------
Net assets, end of period
(000s omitted) $25,420 $ 7,716 $12,070 $ 3,030 $ 5,008 $ 686
Ratio of expenses to
average net assets(c) 1.92%(d) 1.92%(e) 2.79%(d) 2.80%(e) 2.79%(d) 2.80%(e)
Ratio of net investment
income (loss) to average
net assets(f) (0.50)%(d) 0.70%(e) (1.37)%(d) (0.18)%(e) (1.37)%(d) (0.18)%(e)
Portfolio turnover rate 142% 79% 142% 79% 142% 79%
- --------------------------------------------------------- -------------------------- --------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(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
2.72% and 4.88% (annualized) for Class A for 1999-1998, 3.59% and 5.75%
(annualized) for Class B for 1999-1998, and 3.59% and 5.75% (annualized) for
Class C for 1999-1998.
(d) Ratios are based on average net assets of $17,430,236, $6,408,688 and
$2,061,860 for Class A, Class B and Class C, respectively.
(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 (1.30)% and (2.27)% (annualized) for Class A for
1999-1998, (2.17)% and (3.15)% (annualized) for Class B for 1999-1998,
(2.17)% and (3.15)% (annualized), for Class C for 1999-1998.
7
<PAGE> 64
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of 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>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares 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.
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.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<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>
A-1 MCF--02/00
<PAGE> 65
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<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>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<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.
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>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<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>
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.
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
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - 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
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--02/00 A-2
<PAGE> 66
-------------
THE AIM FUNDS
-------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
<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 application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. 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 Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--02/00
<PAGE> 67
-------------
THE AIM FUNDS
-------------
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. 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 10th or 25th day of the month, whichever
you specify, 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 in any
AIM Fund at net asset value. 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. You may realize taxable gains from these
exchanges. 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
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
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 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
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.
MCF--02/00 A-4
<PAGE> 68
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
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 (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE 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.
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.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet 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 the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--02/00
<PAGE> 69
-------------
THE AIM FUNDS
-------------
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 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.
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 not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at 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 may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. 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;
(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
MCF--02/00 A-6
<PAGE> 70
-------------
THE AIM FUNDS
-------------
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.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
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:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - 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);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired 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
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 of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
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 ITS AGENTS 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;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
- --------------------------------------------------------------------------------
A-7 MCF--02/00
<PAGE> 71
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THE AIM FUNDS
-------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. 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 Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. 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
customary trading session of the 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' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the customary trading session 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.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. 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. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
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, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
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, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THIS
PROSPECTUS.
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.
MCF--02/00 A- 8
<PAGE> 72
---------------------
AIM ASIAN GROWTH FUND
---------------------
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
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 semiannual 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 semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
- -----------------------------------------------------
</TABLE>
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Asian Growth Fund
SEC 1940 Act file number: 811-6463
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com AAG-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 73
APPENDIX III
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND FEASTS ON ASIAN RECOVERY
THIS YEAR, ASIAN MARKETS HAVE BOUNCED BACK IMPRESSIVELY FROM THEIR 1997-1998
CRISIS. HOW HAS THE FUND RESPONDED?
What a difference a year makes. After weathering last year's dramatic Asian
crisis, the fund roared back to life. Average annual returns at net asset value
(without sales charges) for the fiscal year ended October 31, 1999, were
impressive, totaling 40.79% for Class A shares, 39.76% for Class B shares and
39.86% for Class C shares. By comparison, the fund's benchmark--the MSCI All
Country Asia Free ex-Japan Index--posted a return of 53.45% for the same period.
The fund's performance helped attract significant investor attention over
the 12-month period as net assets increased almost fourfold to $42.5 million.
WHAT'S DRIVING ASIA'S RECOVERY?
Performance during the first half of 1999 was largely driven by improvements at
the macro level, including emergence from a recession, stable currencies, benign
inflation, improving trade balances and--perhaps most importantly--declining
interest rates.
When the crisis hit, interest rates shot up and remained at high levels,
choking off economic growth while at the same time stabilizing economies and
currencies. Once economies stabilized, banks were able to lower rates. Since
then, we've seen a strong correlation between declining interest rates and
market performance.
Restructuring has also played a major role in the Asian recovery. Countries
that have focused most on cleaning up their banking systems and stabilizing
their currencies have outperformed this year, including Singapore, Taiwan and
South Korea.
Trends like these are bringing foreign investors back into the region and
are beginning to build confidence among consumers within the region as well.
DO YOU THINK THE RECOVERY IS SUSTAINABLE?
We feel confident that the recovery we've seen so far in 1999 will persist
because the region is back in a growth environment. We're not blindly
optimistic, but many of the countries are taking the steps necessary to further
their recoveries, and that's being reflected in such indicators as corporate
earnings expectations. Recent analysts' earnings revisions have turned net
positive, meaning more upgrades than downgrades. Another positive sign is that
almost every economy in Asia is expected to post positive economic growth in
1999, as measured by gross domestic product (GDP).
We think the past quarter marked a defining period for these markets going
forward. As mentioned before, the first-half performance was driven by
macro-level improvements, which benefited every economy in the region.
Third-quarter weakness indicates these factors have largely played themselves
out. We believe the focus now will shift to earnings growth and sustainability
of the restructuring efforts that began in response to last year's financial
crisis.
OTHER THAN THE OBVIOUS RECOVERY, TO WHAT DO YOU ATTRIBUTE THE FUND'S STRONG
PERFORMANCE THIS YEAR?
Because we use a bottom-up selection process and because the fund is fairly
small, we've been able to be nimble and invest our way around the crisis. For
example, early on in the crisis we favored the more developed countries,
including Hong Kong, Australia and Singapore, and maintained low weightings in
Thailand and South Korea because they were probably the two most troubled
economies in the region. But now South Korea has one of the largest weightings
in the fund because we're finding a number of terrific earnings-momentum stories
there as companies restructure and reduce their debt levels.
HAVE THERE BEEN ANY DISAPPOINTMENTS?
Almost without exception, the first-half rally in Asian stock markets peaked in
early July--the same time regional interest rates reached a trough. As rates
appeared to bottom out, Asian markets outside of Japan dipped in September--some
as much as 15%--eroding some of the fund's gains from earlier in the year.
In the third quarter, the fund slightly underperformed its peer group due to
a low weighting in India, which posted a surprisingly strong return for the
quarter, and an overweight position in the Philippines. We've divested some
holdings there as a result of earnings disappointments and have increased our
exposure to Australia and South Korea by adding some
================================================================================
ASIA'S POWERFUL PURCHASING POTENTIAL
A major element of Asia's economic potential is its people. Accounting for more
than half the world's population, Asian consumers represent formidable
purchasing power, which bears heavily on continued recovery in the region.
[MAP]
CHINA NEW ZEALAND
SOUTH KOREA AUSTRALIA
HONG KONG SINGAPORE
TAIWAN INDONESIA
VIETNAM BANGLADESH
PHILIPPINES THAILAND
MALAYSIA SRI LANKA
INDIA
PAKISTAN
================================================================================
See important fund and index disclosures inside front cover.
AIM ASIAN GROWTH FUND
2
<PAGE> 74
ANNUAL REPORT / MANAGERS' OVERVIEW
companies with strong upward revision momentum, including Foster's Brewing and
Samsung Electronics.
WHAT SECTORS DID YOU FIND MOST ATTRACTIVE?
With personal consumption in the region improving, the fund has increased its
exposure to the Asian consumer in countries where spending is coming back--for
example, mid-market clothing retailers in Hong Kong. Recovery in exports is also
driving fund performance through holdings in port operators, cargo handlers and
contract manufacturers.
The financial sector's continuing consolidation has drawn our attention as
well. For example, Development Bank of Singapore has made some judicious
acquisitions. Hong Kong financial companies also look promising because of their
moves to diversify their earnings base to include more non-interest income
offerings--such as credit cards--to help reduce cyclical risk.
WHAT IS YOUR OUTLOOK FOR THE REGION?
Overall we're fairly positive on Asia right now. When you marry a strong,
relatively long earnings cycle with improving economic growth and markets that
are still reasonably valued, you have a good recipe for equity performance.
For the moment, attractive market fundamentals are being overshadowed by
several issues: investor concerns about demand in the United States--a major
export destination for Asian-produced goods--U.S. interest rates and a nascent
Japanese recovery. These issues are worthy of consideration since Asia's
recovery is geared to global economic growth. However, it's important to
remember that a major element of Asia's economic potential is its large
population, and domestic personal consumption bears heavily on continued
recovery. Asian consumers have enormous savings and once they begin to feel
secure about their jobs, they will exert their buying power.
THE WAY TO AN INVESTOR'S HEART
Political and economic unrest in Indonesia--especially its former colony of East
Timor--may have given some Asian investors financial heartburn. Fund managers
agreed and largely steered clear of investing in a country they felt had done
little to rectify its problems. However, using their bottom-up stock-selection
approach, which relies on company-by-company analysis, fund managers did find at
least one appetizing investment opportunity in Indonesia: the world's largest
noodle-maker, Indofood. According to fund managers, "Whether you're in crisis or
not, noodles are the staple of the Indonesian diet and the company continues to
increase its sales every year."
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
<TABLE>
<CAPTION>
===================================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. ERG Ltd. (Australia) 3.01% 1. Electronics (Component Distribution) 5.91% 1. Hong Kong 26.33%
2. Giordano International Ltd. (Hong Kong) 2.10 2. Banks (Major Regional) 5.29 2. Singapore 15.43
3. Li & Fung Ltd. (Hong Kong) 1.97 3. Banks (Regional) 4.92 3. Australia 13.85
4. Kookmin Bank (South Korea) 1.91 4. Electrical Equipment 4.76 4. South Korea 10.20
5. Far Eastern Textile Ltd. (Taiwan) 1.87 5. Land Development 4.72 5. Philippines 6.48
6. Korea Telecom Corp.-ADR (South Korea) 1.82 6. Telephone 4.58 6. Taiwan 6.16
7. Esprit Asia Holdings Ltd. (Hong Kong) 1.81 7. Telecommunications (Cellular/ 7. Thailand 4.47
8. Hon Hai Precision Industry Co. Ltd. Wireless) 3.43 8. India 3.76
(Taiwan) 1.80 8. Beverages (Alcoholic) 3.31 9. Indonesia 2.42
9. Videsh Sanchar Nigam Ltd. - GDR (India) 1.79 9. Broadcasting (Television, Radio & 10. New Zealand 1.21
10. Samsung Electronics (South Korea) 1.77 Cable) 3.27
10. Computers (Software and Services) 2.78
The fund's portfolio is subject to change, and there is no assurance that the fund will continue to hold any particular security.
===================================================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM ASIAN GROWTH FUND
3
<PAGE> 75
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM ASIAN GROWTH FUND VS. BENCHMARK INDEX
11/3/97-10/31/99
in thousands
================================================================================
MSCI All Country AIM Asian Growth AIM Asian Growth AIM Asian Growth
Asia Free Fund, Class A Fund, Class B Fund, Class C
ex-Japan Index Shares Shares Shares
- --------------------------------------------------------------------------------
11/3/97 10,000 9,432 10,000 10,000
1/31/98 8,811 7,836 8,280 8,290
4/30/98 9,367 8,715 9,200 9,200
7/31/98 7,421 6,682 7,040 7,030
10/31/98 8,110 7,268 7,630 7,610
1/31/99 8,905 7,307 7,670 7,640
4/30/99 11,029 9,140 9,582 9,552
7/31/99 11,713 10,461 10,934 10,914
10/31/99 11,340 10,233 10,263 10,643
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
================================================================================
ABOUT THIS CHART
This chart compares your fund's shares to a benchmark index. It is intended to
give you a general idea of how your fund performed compared to this benchmark
over the period 11/3/97- 10/31/99. (Please note that the index's performance
figures are for the period (10/31/97- 10/31/99.) It is important to understand
the differences between your fund and the index. An index measures performance
of a hypothetical portfolio. A market index such as the MSCI All Country Asia
Free ex-Japan Index is not managed, incurring no sales charges, expenses or
fees. If you could buy all the securities that make up a market index, you would
incur expenses that would affect your investment's return.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
Inception (11/3/97) 1.16%
1 year 33.00
CLASS B SHARES
- --------------------------------------------------------------------------------
Inception (11/3/97) 1.31%
1 year 34.76
CLASS C SHARES
- --------------------------------------------------------------------------------
Inception (11/3/97) 3.18%
1 year 38.86
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
For fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AIM ASIAN GROWTH FUND
4
<PAGE> 76
------------
FIRST CLASS
U.S. POSTAGE
PAID
[AIM LOGO APPEARS HERE] PROXY
TABULATOR
------------
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY!
**** Control number: 999999999999 ****
-- Please fold and detach card at perforation before mailing --
PROXY CARD PROXY CARD
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF
AIM NEW PACIFIC GROWTH FUND
(A PORTFOLIO OF AIM GROWTH SERIES)
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 31, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, and each of
them separately, proxies with the power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders on May 31, 2000, at 3:00 p.m., Central time, and at any
adjournment thereof, all of the shares of the fund which the undersigned would
be entitled to vote if personally present. IF THIS PROXY IS SIGNED AND RETURNED
WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED "FOR" THE APPROVAL OF THE
PROPOSAL.
Dated _________________________________
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. All joint
owners should sign. When signing as
executor, administrator, attorney,
trustee or guardian or as custodian for
a minor, please give full title as such.
If a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the
partnership name.
_______________________________________
_______________________________________
Signature(s)
<PAGE> 77
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY!
-- Please fold and detach card at perforation before mailing --
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
THE TRUSTEES RECOMMEND VOTING "FOR" THE PROPOSAL.
TO VOTE, FILL IN THE BOX COMPLETELY. EXAMPLE: [X]
1. To approve an Agreement and Plan of FOR AGAINST ABSTAIN
Reorganization by and among AIM Growth
Series, acting on behalf of AIM New [ ] [ ] [ ]
Pacific Growth Fund, AIM International
Funds, Inc., acting on behalf of AIM
Asian Growth Fund, and A I M Advisors,
Inc.
2. IN THE DISCRETION OF SUCH PROXIES, UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
