<PAGE> 1
As filed with the Securities and Exchange Commission on July 29, 1997
1933 Act Reg. No. 33-66242
1940 Act Reg. No. 811-7890
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No.
---
Post-Effective Amendment No. 5 X
---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 6 X
---
(Check appropriate box or boxes.)
AIM TAX-EXEMPT FUNDS, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
----------------
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, TX 77046
-----------------------------------------------
(Name and Address of Agent for Service)
Copy to:
P. Michelle Grace, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed
Public Offering: As soon as practicable after the effective
date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
X on August 1, 1997 pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(1)
---
on (date) pursuant to paragraph (a)(1)
---
75 days after filing pursuant to paragraph (a)(2)
---
on (date) pursuant to paragraph (a)(2) of Rule 485.
---
(Continued on next page)
<PAGE> 2
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
--- previously filed post-effective amendment.
Registrant continues its election to register an indefinite number of its
shares of beneficial interest under Rule 24f-2 under the Investment Company Act
of 1940, and filed its Rule 24f-2 Notice for the fiscal year ended March 31,
1997 on May 28, 1997.
<PAGE> 3
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
FORM N-1A ITEM PROSPECTUS CAPTION
- -------------- ------------------
<S> <C> <C>
Part A
Item 1. Cover Page.............................................................................Cover Page
Item 2. Synopsis......................................................Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information.................................Financial Highlights; Performance
Item 4. General Description of Registrant.................................Cover Page; Summary; Investment
Program; Management; General Information
Item 5. Management of the Fund...............................................Summary; Investment Program;
Management; General Information
Item 5A. Management's Discussion of Fund Performance........................................Not applicable
Item 6. Capital Stock and Other Securities..............Summary; Management; Organization of the Company;
Dividends, Distributions and Tax Matters;
General Information
Item 7. Purchase of Securities Being Offered..........................Management; How to Purchase Shares;
Terms and Conditions of Purchase of the
AIM Funds; Special Plans; Exchange
Privilege; Determination of Net Asset Value
Item 8. Redemption or Repurchase......................................How To Redeem Shares; Special Plans
Item 9. Pending Legal Proceedings..........................................................Not Applicable
STATEMENT OF ADDITIONAL INFORMATION CAPTION
Part B
Item 10. Cover Page.............................................................................Cover Page
Item 11. Table of Contents...............................................................Table of Contents
Item 12. General Information and History.................................Introduction; General Information
About the Company
Item 13. Investment Objectives and Policies.............Investment Program and Restrictions;Description of
Money Market Instruments; Ratings of Securities
Item 14. Management of the Fund........................Management - Directors and officers, - Remuneration
of Directors, - AIM Funds Retirement Plan for Eligible
Directors/Trustees,- Deferred Compensation Agreements
Item 15. Control Persons and Principal
Holders of Securities........................Miscellaneous Information - Control Persons
and Principal Holders of Securities
Item 16. Investment Advisory and Other Services.....................Investment Advisory and Other Services
Item 17. Brokerage Allocation and Other Practices...................................Portfolio Transactions
Item 18. Capital Stock and Other Securities..........................General Information About the Company
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered.......................General Information About the Company;
How to Purchase and Redeem Shares;
Determination of Net Asset Value
Item 20. Tax Status................................................Dividend, Distributions and Tax Matters
Item 21. Underwriters...............................................Investment Advisory and Other Services
Item 22. Calculation of Performance Data...........................................Performance Information
Item 23. Financial Statements.........................................................Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 4
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
AIM TAX-EXEMPT FUNDS, INC.
AIM TAX-EXEMPT CASH FUND
AIM TAX-FREE INTERMEDIATE SHARES
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
PROSPECTUS
AUGUST 1, 1997
AIM Tax-Exempt Funds, Inc. (the "Company") is designed for investors
seeking income which is exempt from federal income taxes and, for
investments in one portfolio of the Company, Connecticut taxes. This
Prospectus contains information about the three mutual funds listed
below (the "Funds"), which are separate series portfolios of the
Company.
AIM TAX-EXEMPT CASH FUND: A diversified portfolio primarily
consisting of municipal obligations, including project notes, various
anticipation notes and tax-exempt commercial paper having a maturity
of 397 days or less. AN INVESTMENT IN AIM TAX-EXEMPT CASH FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN
BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
INTERMEDIATE PORTFOLIO: A diversified portfolio primarily consisting
of high quality, intermediate-term municipal obligations having a
maturity of ten and one-half years or less. The Fund currently offers
one class of shares, AIM TAX-FREE INTERMEDIATE SHARES.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT: A non-diversified portfolio
primarily consisting of municipal bonds and other municipal
securities issued by the State of Connecticut and authorities,
agencies, instrumentalities and political subdivisions of the State
of Connecticut. THE FUND MAY INVEST IN LOWER RATED DEBT SECURITIES,
COMMONLY REFERRED TO AS "JUNK BONDS." JUNK BONDS ARE CONSIDERED TO BE
SPECULATIVE WITH REGARD TO THE PAYMENT OF INTEREST AND RETURN OF
PRINCIPAL. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THIS FUND. FOR A DISCUSSION OF CERTAIN RISK
FACTORS ASSOCIATED WITH THE FUND, SEE "AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT -- QUALITY STANDARDS" UNDER "INVESTMENT PROGRAM."
This Prospectus sets forth basic information that a prospective investor
should know about the Funds before investing. It should be read and
retained for future reference. A Statement of Additional Information,
dated August 1, 1997, has been filed with the United States Securities
and Exchange Commission (the "SEC") and is incorporated herein by
reference. The Statement of Additional Information is available without
charge upon written request to the Company at P.O. Box 4739, Houston,
Texas 77210-4739 or by calling (800) 347-4246. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information
regarding the Company. Additional information about the Funds may also
be obtained from http://www.aimfunds.com.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF
THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................... 2 How to Purchase Shares................ A-1
THE FUNDS.................................. 3 Terms and Conditions of Purchase of
Table of Fees and Expenses............... 3 the AIM Funds...................... A-2
Financial Highlights..................... 4 Special Plans......................... A-9
Performance.............................. 6 Exchange Privilege.................... A-11
Investment Program....................... 7 How to Redeem Shares.................. A-13
Management............................... 13 Determination of Net Asset Value...... A-17
Organization of the Company.............. 15 Dividends, Distributions and Tax
INVESTOR'S GUIDE TO THE AIM Matters............................ A-18
FAMILY OF FUNDS--Registered Trademark--.. A-1 General Information................... A-20
Introduction to The AIM Family of APPENDIX................................ A-21
Funds................................. A-1 APPLICATION INSTRUCTIONS................ B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS. AIM Tax-Exempt Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end series management investment company.
Currently, the Company has three separate series portfolios. This Prospectus
relates to the Class A shares of all of such portfolios, which are: AIM
TAX-EXEMPT CASH FUND, the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT (collectively, the "Funds"). The INTERMEDIATE PORTFOLIO currently
offers one class of shares, AIM TAX-FREE INTERMEDIATE SHARES, which consists of
Class A shares.
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Funds' investment
advisor pursuant to a Master Investment Advisory Agreement (the "Advisory
Agreement"). AIM, together with its subsidiaries, manages or advises 46
investment company portfolios. As of July 15, 1997, the total assets advised or
managed by AIM or its subsidiaries were approximately $76.0 billion. Under the
terms of the Advisory Agreement, AIM supervises all aspects of each Fund's
operations and provides investment advisory services to each Fund. As
compensation for these services, AIM receives a fee based on the respective
average daily net assets of each Fund. Under a Master Administrative Services
Agreement, AIM may be reimbursed by each Fund for its costs of performing, or
arranging for the performance of, certain accounting and other administrative
services for the Funds. Under a Transfer Agency and Service Agreement, A I M
Fund Services, Inc. ("AFS"), AIM's wholly owned subsidiary and a registered
transfer agent, receives a fee for its provision of transfer agency, dividend
distribution and disbursement, and shareholder services to the Funds.
PURCHASING SHARES. Class A shares of AIM TAX-EXEMPT CASH FUND are offered
by this Prospectus at net asset value. Class A shares of the INTERMEDIATE
PORTFOLIO are offered by this Prospectus at net asset value plus a maximum sales
charge of 1% of the public offering price per share, which sales charge is
reduced on purchases of $100,000 or more. Class A shares of AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT are offered by this Prospectus at net asset value plus a
maximum sales charge of 4.75% of the public offering price, which sales charge
is reduced on purchases of $50,000 or more. Initial investments in each Fund
generally must be at least $500, and subsequent investments must be at least
$50. The distributor of the Funds' shares is A I M Distributors, Inc. ("AIM
Distributors"), P.O. Box 4739, Houston, Texas 77210-4739. See "How to Purchase
Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Funds are among those mutual funds distributed by
AIM Distributors (collectively, "The AIM Family of Funds"). Shares of the Funds
may be exchanged for shares of other funds in The AIM Family of Funds in the
manner and subject to the policies and charges set forth herein. See "Exchange
Privilege."
REDEEMING SHARES. Shareholders may redeem all or a portion of their shares
at net asset value, generally without charge. A contingent deferred sales charge
of 1% may apply to certain redemptions of shares of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, where purchases of $1 million or more are made at net asset value.
See "How To Redeem Shares."
DISTRIBUTIONS. Dividends from net investment income are declared daily and
paid monthly, and distributions from net capital gains, if any, are paid
annually, although AIM TAX-EXEMPT CASH FUND may pay distributions of short-term
capital gains more frequently. Dividends and distributions paid by a Fund may be
reinvested at their net asset value (without payment of a sales charge) in the
Fund's shares or, subject to certain conditions, in shares of another fund in
The AIM Family of Funds. See "Dividends, Distributions and Tax Matters" and
"Special Plans."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Link, AIM Institutional Funds, La Familia AIM de
Fondos and La Familia AIM de Fondos and Design are registered service marks and
aimfunds.com is a service mark of A I M Management Group Inc.
2
<PAGE> 6
THE FUNDS
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Funds understand
the various costs that an investor will bear, both directly and indirectly. The
fees and expenses set forth in the table are based on expenses of the Funds for
the most recent fiscal year, except where they have been restated to reflect
current fee waivers. In addition, the rules of the SEC require that the maximum
sales charge be reflected in the table, even though certain investors may
qualify for reduced sales charges. See "How to Purchase Shares."
<TABLE>
<CAPTION>
AIM
AIM AIM TAX-EXEMPT
TAX-EXEMPT TAX-FREE BOND FUND
CASH INTERMEDIATE OF
FUND SHARES CONNECTICUT
---- ------ -----------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchases of shares (as
a % of offering price)............................ None 1.00% 4.75%
Maximum sales load on reinvested dividends and
distributions..................................... None None None
Deferred sales load.................................. None None None*
Redemption fees...................................... None None None
Exchange fee......................................... None None None
Annual Operating Expenses (as a % of average net
assets)
Management fees...................................... 0.35% 0.30% 0.25%**
Rule 12b-1 distribution plan payments................ 0.10%** None 0.25%
Other expenses....................................... 0.59% 0.26% 0.34%
---- ---- ----
Total fund operating expenses................ 1.04%** 0.56% 0.84%**
==== ==== ====
</TABLE>
- ------------
* Purchases of $1 million or more are not subject to an initial sales charge.
However, a contingent deferred sales charge of 1% applies to certain
redemptions made within 18 months following the end of the calendar month
of such purchase. See the Investor's Guide, under the caption "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
** After fee waivers. With respect to AIM TAX-EXEMPT CASH FUND, absent a
partial fee waiver, Rule 12b-1 distribution plan payments would have been
0.25% and total fund operating expenses would have been 1.19%. With respect
to AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, absent a partial fee waiver,
management fees would have been 0.50% and total fund operating expenses
would have been 1.09%.
EXAMPLES. An investor in each of the Funds would pay the following expenses
on a $1,000 investment, assuming (1) a 5% annual return and (2) redemption at
the end of each time period:
<TABLE>
<CAPTION>
AIM
AIM AIM TAX-EXEMPT
TAX-EXEMPT TAX-FREE BOND FUND
CASH INTERMEDIATE OF
FUND SHARES CONNECTICUT
---- ------ -----------
<S> <C> <C> <C>
1 Year......................................... $ 11 $16 $ 56
3 Years........................................ $ 33 $28 $ 73
5 Years........................................ $ 57 $41 $ 92
10 Years....................................... $127 $79 $146
</TABLE>
As a result of 12b-1 distribution plan payments, a long-term shareholder of
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT may pay more than the economic
equivalent of the maximum front-end sales charges permitted by rules of the
National Association of Securities Dealers, Inc. Given the maximum front-end
sales charge and 12b-1 distribution plan payments applicable to shares of AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM estimates that it would require a
substantial number of years to exceed the maximum permissible front-end sales
charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIVE OF THE
FUNDS' ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN.
In addition, while the examples assume a 5% annual return, the Funds' actual
performance will vary and may result in an actual return that is greater or less
than 5%.The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total operating expenses remain the same for
each year. The examples assume payment of a sales charge at the time of purchase
(if applicable); actual expenses may vary for purchases of $1 million or more
which are made at net asset value and are subject to a contingent deferred sales
charge for 18 months following the end of the calendar month of purchase.
3
<PAGE> 7
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AIM TAX-EXEMPT CASH FUND*
Shown below are the condensed financial highlights for the years ended
March 31, 1997, 1996 and 1995, the three months ended March 31, 1994 and the
year ended December 31, 1993, which have been audited by KPMG Peat Marwick LLP,
independent auditors, whose reports thereon were unqualified. The information
presented for the periods other than the years ended March 31, 1997, 1996 and
1995, the three months ended March 31, 1994 and the year ended December 31, 1993
was derived from financial statements audited by Price Waterhouse LLP,
independent accountants, whose reports thereon were also unqualified. The report
of KPMG Peat Marwick LLP, independent auditors, for the fiscal year ended March
31, 1997 is included in the Statement of Additional Information.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
---------------------------------------------- ------------------------------------------
1997 1996 1995 1994 1993 1992(a) 1991 1990
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment
income.............. 0.03 0.03 0.03 0.004 0.02 0.02 0.04 0.05
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income... (0.03) (0.03) (0.03) (0.004) (0.02) (0.02) (0.04) (0.05)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= =======
Total return........... 2.82% 2.92% 2.54% 1.73%(b) 1.78% 2.42% 3.91% 5.17%
======= ======= ======= ======= ======= ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period
(000s omitted)...... $56,880 $30,014 $30,365 $33,658 $35,230 $41,291 $43,366 $43,302
======= ======= ======= ======= ======= ======= ======= =======
Ratio of expenses to
average net
assets.............. 1.04%(c)(d) 1.05%(d) 1.01%(d) 1.00%(b)(d) 1.00%(d) 0.98%(d) 0.98% 0.99%
======= ======= ======= ======= ======= ======= ======= =======
Ratio of net
investment income to
average net
assets.............. 2.78%(c)(e) 2.97%(e) 2.53%(e) 1.75%(b)(e) 1.76%(e) 2.42%(e) 3.87% 5.05%
======= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
DECEMBER 31,
-----------------------------
1989 1988 1987
------- ------- -------
<S> <C> <C> <C>
Net asset value,
beginning
of period............. $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment
income.............. 0.05 0.05 0.04
------- ------- -------
Less distributions:
Dividends from net
investment income... (0.05) (0.05) (0.04)
------- ------- -------
Net asset value, end of
period................ $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return........... 5.62% 4.65% 3.95%
======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period
(000s omitted)...... $45,995 $51,597 $54,616
======= ======= =======
Ratio of expenses to
average net
assets.............. 0.93% 0.83% 0.72%
======= ======= =======
Ratio of net
investment income to
average net
assets.............. 5.48% 4.54% 3.87%
======= ======= =======
</TABLE>
- ---------------
* On October 15, 1993 the Fund redomesticated from a portfolio of a
Massachusetts business trust to a portfolio of the Company. In addition, on
April 30, 1985 shareholders of the Fund approved a plan of reorganization
whereby the Fund, which was a Maryland corporation, became a portfolio of a
Massachusetts business trust.
(a) The Fund changed investment advisors on June 30, 1992.
(b) Annualized.
(c) Ratios are based on average daily net assets of $35,863,626.
(d) After waiver of fees and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of fees and/or expense reimbursements
were 1.19%, 1.20%, 1.16%, 1.14% (annualized), 1.36% and 1.00% for the
periods 1997-1992, respectively.
(e) After waiver of fees and/or expense reimbursements. Ratios of income to
average net assets prior to waiver of fees and/or expense reimbursements
were 2.63%, 2.82%, 2.38%, 1.61% (annualized), 1.40% and 2.40% for the
periods 1997-1992, respectively.
4
<PAGE> 8
- --------------------------------------------------------------------------------
AIM TAX-FREE INTERMEDIATE SHARES*
Shown below are the condensed financial highlights for each of the years in
the eight-year period ended March 31, 1997, the eleven months ended March 31,
1989 and the period from May 11, 1987 (date operations commenced) through April
30, 1988. The following information has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon was unqualified. The report of KPMG
Peat Marwick LLP, independent auditors, for the fiscal year ended March 31, 1997
is included in the Statement of Additional Information.
<TABLE>
<CAPTION>
MARCH 31,
--------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989
-------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.............. $ 10.79 $ 10.67 $ 10.62 $ 10.74 $ 10.27 $ 10.07 $ 9.89 $ 9.69 $ 9.88
Income from
investment
operations:
Net investment
income............ 0.50 0.52 0.49 0.48 0.53 0.62 0.63 0.62 0.56
Net gains (losses)
on securities
(both realized and
unrealized)....... (0.04) 0.12 0.04 (0.10) 0.47 0.20 0.18 0.20 (0.19)
-------- ------- ------- ------- ------- ------- ------ ------ ------
Total from
investment
operations........ 0.46 0.64 0.53 0.38 1.00 0.82 0.81 0.82 0.37
-------- ------- ------- ------- ------- ------- ------ ------ ------
Less distributions:
Dividends from net
investment
income............ (0.52) (0.52) (0.48) (0.48) (0.53) (0.62) (0.63) (0.62) (0.56)
Distributions from
net realized
capital gains..... -- -- -- (0.02) -- -- -- -- --
-------- ------- ------- ------- ------- ------- ------ ------ ------
Total
distributions..... (0.52) (0.52) (0.48) (0.50) (0.53) (0.62) (0.63) (0.62) (0.56)
-------- ------- ------- ------- ------- ------- ------ ------ ------
Net asset value, end
of period........... $ 10.73 $ 10.79 $ 10.67 $ 10.62 $ 10.74 $ 10.27 $10.07 $ 9.89 $ 9.69
======== ======= ======= ======= ======= ======= ====== ====== ======
Total return(a)...... 4.33% 6.06% 5.17% 3.47% 10.01% 8.39% 8.39% 8.66% 3.85%
======== ======= ======= ======= ======= ======= ====== ====== ======
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted).......... $173,342 $83,066 $82,355 $99,757 $70,120 $38,773 $6,184 $5,231 $4,413
======== ======= ======= ======= ======= ======= ====== ====== ======
Ratio of expenses to
average net
assets............ 0.56%(b) 0.65% 0.59% 0.61%(c) 0.38%(c) 0.02%(c) 0.50%(c) 0.50%(c) 0.53%(c)(d)
======== ======= ======= ======= ======= ======= ====== ====== ======
Ratio of net
investment income
to average net
assets............ 4.63%(b) 4.81% 4.65% 4.37%(c) 5.00%(c) 5.78%(c) 6.29%(c) 6.27%(c) 6.74%(c)(d)
======== ======= ======= ======= ======= ======= ====== ====== ======
Portfolio turnover
rate.............. 26% 32% 75% 26% 29% 15% 0% 12% 31%
======== ======= ======= ======= ======= ======= ====== ====== ======
<CAPTION>
APRIL 30,
1988
---------
<S> <C>
Net asset value,
beginning of
period.............. $10.00
Income from
investment
operations:
Net investment
income............ 0.55
Net gains (losses)
on securities
(both realized and
unrealized)....... (0.12)
------
Total from
investment
operations........ 0.43
------
Less distributions:
Dividends from net
investment
income............ (0.55)
Distributions from
net realized
capital gains..... --
------
Total
distributions..... (0.55)
------
Net asset value, end
of period........... $ 9.88
======
Total return(a)...... 4.46%
======
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted).......... $5,594
======
Ratio of expenses to
average net
assets............ 0.50%(c)(d)
======
Ratio of net
investment income
to average net
assets............ 5.86%(c)(d)
======
Portfolio turnover
rate.............. 80%
======
</TABLE>
- ---------------
* On October 15, 1993 the Fund redomesticated from a portfolio of another
Maryland corporation to a portfolio of the Company.
(a) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(b) Ratios are based on average net assets of $92,275,955.
(c) After waiver of advisory fees and/or expense reimbursements. The ratios of
expenses and net investment income prior to waivers and/or expense
reimbursements were as follows:
<TABLE>
<CAPTION>
Net Investment
Period ended Expenses Income
------------ -------- --------------
<C> <C> <C>
1994 0.64% 4.35%
1993 0.66% 4.71%
1992 0.98% 4.81%
1991 1.79% 5.00%
1990 1.91% 4.86%
1989 2.09% 5.18%
1988 1.57% (Annualized 4.79%(Annualized)
</TABLE>
(d) Annualized.
5
<PAGE> 9
- --------------------------------------------------------------------------------
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT*
Shown below are the condensed financial highlights for each of the years in
the three-year period ended March 31, 1997, the three months ended March 31,
1994 and the year ended December 31, 1993, which have been audited by KPMG Peat
Marwick LLP, independent auditors, whose reports thereon were unqualified. The
information presented for the period October 3, 1989 (date operations commenced)
through December 31, 1989, and the three-year period ended December 31, 1992 was
derived from financial statements audited by Price Waterhouse LLP, independent
accountants, whose reports thereon were also unqualified. The report of KPMG
Peat Marwick LLP, independent auditors, for the fiscal year ended March 31, 1997
is included in the Statement of Additional Information.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------------------------- --------------------------------
1997 1996 1995 1994 1993 1992(a) 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................. $ 10.81 $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52 $ 10.07
Income from investment
operations:
Net investment income..... 0.56 0.56 0.56 0.15 0.60 0.66 0.69
Net gains (losses) on
securities (both
realized and
unrealized)............. (0.05) 0.10 0.04 (0.61) 0.65 0.17 0.50
------- ------- ------- ------- ------- ------- -------
Total from investment
operations.............. 0.51 0.66 0.60 (0.46) 1.25 0.83 1.19
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income....... (0.55) (0.56) (0.57) (0.14) (0.60) (0.66) (0.69)
Distributions from net
realized capital
gains................... -- -- -- -- (0.01) (0.04) (0.05)
Returns of capital........ -- -- (0.01) -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total distributions....... (0.55) (0.56) (0.58) (0.14) (0.61) (0.70) (0.74)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period.................... $ 10.77 $ 10.81 $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52
======= ======= ======= ======= ======= ======= =======
Total return(b)............. 4.84% 6.24% 5.78% (4.06)% 11.99% 8.22% 12.23%
======= ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).......... $38,118 $39,355 $38,289 $42,361 $46,224 $33,110 $27,298
======= ======= ======= ======= ======= ======= =======
Ratio of expenses to
average net assets(c)... 0.72%(d) 0.66% 0.55% 0.50%(e) 0.34% 0.25% 0.25%
======= ======= ======= ======= ======= ======= =======
Ratio of net investment
income to average net
assets(c)............... 5.18%(d) 5.16% 5.37% 5.32%(e) 5.42% 6.25% 6.73%
======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate... 17% 17% 7% 2% 5% 43% 43%
======= ======= ======= ======= ======= ======= =======
<CAPTION>
DECEMBER 31,
--------------------
1990 1989
-------- --------
<S> <C> <C>
Net asset value, beginning
of period................. $ 10.19 $10.00
Income from investment
operations:
Net investment income..... 0.67 0.14
Net gains (losses) on
securities (both
realized and
unrealized)............. (0.10) 0.16
------- ------
Total from investment
operations.............. 0.57 0.30
------- ------
Less distributions:
Dividends from net
investment income....... (0.69) (0.11)
Distributions from net
realized capital
gains................... -- --
Returns of capital........ -- --
------- ------
Total distributions....... (0.69) (0.11)
------- ------
Net asset value, end of
period.................... $ 10.07 $10.19
======= ======
Total return(b)............. 5.88% 3.06%
======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).......... $16,685 $6,556
======= ======
Ratio of expenses to
average net assets(c)... 0.25% 0.25%(e)
======= ======
Ratio of net investment
income to average net
assets(c)............... 6.82% 6.21%(e)
======= ======
Portfolio turnover rate... 57% 63%
======= ======
</TABLE>
- ---------------
* On October 15, 1993 the Fund redomesticated from a portfolio of a
Massachusetts business trust to a portfolio of the Company.
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(c) After waiver of advisory fees and expense reimbursements. Ratios of expenses
to average net assets prior to waiver of advisory fees and expense
reimbursements are 1.09%, 1.16%, 1.13%, 1.23% (annualized), 1.30%, 1.12%,
1.26%, 1.33% and 1.99% (annualized) for the period 1997-1989, respectively.
Ratios of net investment income to average net assets prior to waiver of
advisory fees and expense reimbursements are 4.81%, 4.66%, 4.79%, 4.59%
(annualized), 4.45%, 5.38%, 5.72%, 5.74% and 4.48% (annualized) for the
period 1997-1989, respectively.
(d) Ratios are based on average daily net assets of $38,874,455.
(e) Annualized.
- --------------------------------------------------------------------------------
PERFORMANCE
The performance of each Fund may be quoted in advertising in terms of yield
or total return. Both types of performance are based on historical results and
are not intended to indicate future performance. All advertisements for each
Fund will disclose the maximum sales charge imposed on purchases of that Fund's
shares. If any advertised performance data does not reflect the maximum sales
charge, such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Funds. Further information regarding each Fund's
performance is contained in that Fund's annual report to shareholders, which is
available upon request and without charge.
A Fund's total return shows its overall change in value, including changes
in share price and assuming all the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the performance
of a Fund over a stated period of time.
6
<PAGE> 10
An average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the Fund's
performance had been constant over the entire period. BECAUSE AVERAGE ANNUAL
RETURNS TEND TO EVEN OUT VARIATIONS IN A FUND'S RETURNS, INVESTORS SHOULD
RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To
illustrate the components of overall performance, a Fund may separate its
cumulative and average annual returns into income results and capital gain or
loss.
Yield is computed in accordance with standardized formulas described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, yield
information may not provide a basis for comparison with investments which pay a
fixed rate of interest for a stated period of time. Yield reflects investment
income net of expenses over the relevant period attributable to a Fund share,
expressed as an annualized percentage of the maximum offering price per share
for AIM TAX-FREE INTERMEDIATE SHARES and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, and net asset value per share for AIM TAX-EXEMPT CASH FUND.
Yield is a function of the type and quality of a Fund's investments, the
maturity of the securities held in a Fund's portfolio and the operating expense
ratio of the Fund. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in a Fund. A tax-equivalent yield is calculated in the same
manner as the standard yield with an adjustment for a stated, assumed tax rate.
The Funds may also demonstrate the effect of such tax-equivalent adjustments
generally by comparing various yield levels with their corresponding
tax-equivalent yields, given a stated tax rate.
From time to time and in its discretion, AIM or its affiliates may waive
all or a portion of advisory or distribution fees and/or assume certain expenses
of any Fund. Such a practice will have the effect of increasing the Fund's yield
and total return.
The annual reports of the Funds contain management's discussion of fund
performance and may be obtained without charge upon written request to the
Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling (800)
347-4246.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
AIM TAX-EXEMPT CASH FUND
AIM TAX-EXEMPT CASH FUND's investment objective is to earn the highest
level of current income free from federal income taxes that is consistent with
safety of principal and liquidity. The Fund's policy is to invest at least 80%
of its net assets in securities which are exempt from federal income taxes. This
objective will not be changed without the approval of a majority of the Fund's
outstanding shares (within the meaning of the Investment Company Act of 1940
(the "1940 Act")). There can be no assurance that the Fund will attain its
objective. As used in this Prospectus and the Statement of Additional
Information, interest which is "tax-exempt" or "exempt from federal income
taxes" means interest on municipal securities which is excluded from gross
income for federal income tax purposes, and which does not give rise to federal
alternative minimum tax liability.
The Fund may invest up to 20% of its net assets in money market instruments
that may be subject to federal taxes. Such taxable instruments may include,
without limitation, repurchase agreements, bankers' acceptances and commercial
paper. Money market instruments in which the Fund may invest will be "Eligible
Securities" as defined in Rule 2a-7 under the 1940 Act, as such Rule may be
amended from time to time. The securities in which the Fund invests may include
but shall not be limited to the following:
MUNICIPAL SECURITIES. "Municipal Securities" can be broadly classified as
follows: (a) "general obligation" bonds, debentures and notes, which are secured
as to payment of principal and interest by a state or local government's pledge
of its full faith, credit and taxing power and (b) "revenue" bonds, debentures
and notes, which are payable only from the revenues derived from a particular
facility or class of facilities, from the proceeds of a special excise tax or
from some other specifically identified revenue source. Municipal Securities,
such as those listed below, include short-term obligations issued or guaranteed
by any state, territory or possession of the United States, or by the District
of Columbia, or by any political subdivision, agency, municipality or
instrumentality thereof.
BOND ANTICIPATION NOTES usually are general obligations of state and local
governmental issuers which are sold to obtain interim financing for projects
that will eventually be funded through the sale of long-term debt obligations or
bonds.
TAX ANTICIPATION NOTES are issued by state and local governments to finance
the current operations of such governments. Repayment is generally to be derived
from specific future tax revenues. Tax anticipation notes are usually general
obligations of the issuer.
REVENUE ANTICIPATION NOTES are issued by governments or governmental bodies
with the expectation that future revenues from a designated source will be used
to repay the notes. In general, they also constitute general obligations of the
issuer.
TAX-EXEMPT COMMERCIAL PAPER (MUNICIPAL PAPER) is identical to taxable
commercial paper, except that tax-exempt commercial paper is issued by states,
municipalities and their agencies.
VARIABLE OR FLOATING RATE INSTRUMENTS are Municipal Securities which have
variable or floating interest rates which readjust periodically. Such
readjustment may be based either upon a predetermined standard, such as a bank
prime rate or the U.S. Treasury bill rate, or upon prevailing market conditions.
Variable or floating interest rates generally reduce changes in the market price
of
7
<PAGE> 11
Municipal Securities from their original purchase price. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable or floating rate Municipal Securities than for
fixed income securities. Many variable or floating rate securities are subject
to redemption or repurchase at par, plus accrued interest, upon demand by the
Fund (frequently upon no more than seven days' notice). The terms of such demand
instruments require payment of principal and accrued interest from the issuer or
a guarantor. Frequently such obligations are secured by letters of credit or
other credit support arrangements provided by financial institutions. For a
further discussion of such instruments, see the Statement of Additional
Information.
QUALITY STANDARDS. AIM TAX-EXEMPT CASH FUND will limit its investments to
those securities which at the date of purchase are "Eligible Securities" as
defined in Rule 2a-7, as such Rule may be amended from time to time. Generally,
"Eligible Securities" are securities that are rated in one of the two highest
rating categories by two nationally recognized statistical rating organizations
("NRSROs"), or if rated only by one NRSRO, are rated in one of the two highest
rating categories by that NRSRO, or if unrated, are determined by AIM (under the
supervision of and pursuant to guidelines established by the Board of Directors)
to be of comparable quality to a rated security that meets such quality
standards. Since AIM TAX-EXEMPT CASH FUND invests in securities backed by banks
and other financial institutions, changes in the credit quality of these
institutions could cause losses to the Fund and affect its share price.
MATURITIES. AIM TAX-EXEMPT CASH FUND will attempt to maintain a constant
net asset value per share of $1.00 and, to this end, values its assets by the
amortized cost method and rounds the per share net asset value of its shares in
compliance with applicable rules and regulations. Accordingly, the Fund invests
only in securities having remaining maturities of 397 days or less and maintains
a dollar weighted average portfolio maturity of 90 days or less. The maturity of
a security held by the Fund is determined in compliance with applicable rules
and regulations. Certain securities bearing interest at rates that are adjusted
prior to the stated maturity of the instrument or that are subject to redemption
or repurchase agreements are deemed to have maturities shorter than their stated
maturities.
SYNTHETIC MUNICIPAL INSTRUMENTS. AIM believes that certain synthetic
municipal instruments provide opportunities for mutual funds to invest in high
credit quality securities providing attractive returns, even in market
conditions where the supply of short-term tax-exempt instruments may be limited.
Synthetic municipal instruments (sometimes referred to as "derivative municipal
instruments") are securities the value of and return on which are derived from
underlying securities. Synthetic municipal instruments comprise a large
percentage of tax-exempt securities eligible for purchase by tax-exempt money
market funds. The types of synthetic municipal instruments in which AIM
TAX-EXEMPT CASH FUND may invest involve the deposit into a trust or custodial
account of one or more long-term tax-exempt bonds or notes ("Underlying Bonds"),
and the sale of certificates evidencing interests in the trust or custodial
account to investors such as the Fund. The trustee or custodian receives the
long-term fixed rate interest payments on the Underlying Bonds, and pays
certificate holders short-term floating or variable interest rates which are
reset periodically. Synthetic municipal instruments typically are created by a
bank, broker-dealer or other financial institution ("Sponsor"). Typically, a
portion of the interest paid on the Underlying Bonds which exceeds the interest
paid to the certificate holders is paid to the Sponsor or other investors. For
further information regarding specific types of synthetic municipal instruments
in which the Fund may invest see the Statement of Additional Information.
All such instruments must meet the minimum quality standards required for
the Fund's investments and must present minimal credit risks. In selecting
synthetic municipal instruments for the Fund, AIM considers the creditworthiness
of the issuer of the Underlying Bond, the Sponsor and the party providing
certificate holders with a conditional right to sell (put) their certificates at
stated times and prices. Typically, a certificate holder cannot exercise its put
upon the occurrence of certain conditions, such as where the issuer of the
Underlying Bond defaults on interest payments. Moreover, because synthetic
municipal instruments involve a trust or custodial account and a third party
conditional put feature, they involve complexities and potential risks that may
not be present where a municipal security is owned directly.
The tax-exempt character of the interest paid to certificate holders is
based on the assumption that the holders have an ownership interest in the
Underlying Bonds; however, the Internal Revenue Service has not issued a ruling
addressing this issue. In the event the Internal Revenue Service issues an
adverse ruling or successfully litigates this issue, it is possible that the
interest paid to the Fund on certain synthetic municipal instruments would be
deemed to be taxable. The Fund relies on opinions of special tax counsel on this
ownership question and opinions of bond counsel regarding the tax-exempt
character of interest paid on the Underlying Bonds.
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. AIM TAX-EXEMPT CASH FUND may
purchase securities on a "when-issued" basis, that is, delivery of and payment
for the securities is not fixed at the date of purchase but is set after the
securities are issued (normally within forty-five days after the date of the
transaction), and may purchase or sell securities on a delayed delivery basis.
The payment obligation and the interest rate that will be received on the
securities are fixed at the time the buyer enters into the commitment. The Fund
will only make commitments to purchase when-issued or delayed delivery
securities with the intention of actually acquiring such securities, but may
sell these securities before the settlement date if it is deemed advisable. No
more than 25% of the Fund's net assets may be committed to when-issued or
delayed delivery securities.
Investments in when-issued or delayed delivery securities may increase the
Fund's exposure to market fluctuations and may increase the possibility that the
Fund will incur short-term gains subject to federal taxation or short-term
losses if the Fund engages in portfolio transactions in order to honor a
when-issued or delayed delivery commitment. In a delayed delivery transaction,
the Fund
8
<PAGE> 12
relies on the other party to complete the transaction. If the transaction is not
completed, the Fund may miss a price or yield considered to be advantageous. The
Fund will employ techniques designed to reduce such risks.
If the Fund purchases a when-issued or delayed delivery security, it will
direct its custodian bank to segregate cash or other high grade securities
(including temporary investments and Municipal Securities) in an amount equal to
the when-issued or delayed delivery commitment. If the market value of such
segregated securities declines, additional cash or securities will be segregated
on a daily basis so that the market value of the segregated cash or securities
will equal the amount of the Fund's when-issued or delayed delivery commitments.
To the extent assets of the Fund are segregated, they will not be available for
new investments or to meet redemptions.
For a more complete description of when-issued and delayed delivery
securities, see the Statement of Additional Information.
PARTICIPATION INTERESTS AND MUNICIPAL LEASES. The Fund may purchase
participation interests or custodial receipts from financial institutions. These
participation interests give the purchaser an undivided interest in one or more
underlying Municipal Securities. The Fund may also invest in municipal leases
and participation interests therein. Such obligations, which may take the form
of a lease or an installment sales contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities. Interest payments on qualifying municipal leases are exempt from
federal income taxes.
OTHER CONSIDERATIONS. The ability of the Fund to attain its investment
objective depends on the continuing ability of the issuers or guarantors of
Municipal Securities held by the Fund to meet their obligations for the payment
of interest and principal when due. The securities in which the Fund invests may
not yield as high a level of current income as longer term or lower grade
securities, which generally have less liquidity and greater fluctuation in
value.
The investment policies and standards stated above are not fundamental
policies of the Fund and may be changed by the Board of Directors without
shareholder approval. Shareholders will be notified before any material change
in the foregoing investment policies becomes effective.
INTERMEDIATE PORTFOLIO
The investment objective of the INTERMEDIATE PORTFOLIO is to generate as
high a level of tax-exempt income as is consistent with preservation of capital
by investing in high quality, intermediate-term Municipal Securities having a
maturity of ten and one-half years or less. No assurance can be given that the
Fund's investment objective will be achieved.
MUNICIPAL SECURITIES. Municipal Securities which are considered appropriate
for investment by the Fund (provided that the interest paid thereon, in the
opinion of bond counsel, is exempt from federal income taxes) include debt
obligations issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities, the refunding of outstanding
obligations, the obtaining of funds for general operating expenses and the
lending of such funds to other public institutions and facilities. Certain types
of industrial development bonds issued by or on behalf of public authorities to
obtain funds to provide for the construction, equipment, repair or improvement
of privately operated facilities ("private activity bonds") also are considered
appropriate for investment by the Fund. The Fund will seek to avoid the purchase
of those private activity bonds the interest on which could give rise to an
alternative minimum tax liability for shareholders under the Internal Revenue
Code of 1986, as amended (the "Code"). See "Dividends, Distributions and Tax
Matters" herein and the Statement of Additional Information.
VARIABLE OR FLOATING RATE INSTRUMENTS. The Fund may invest in Municipal
Securities which have variable or floating interest rates. All variable or
floating rate instruments must meet the quality standards of the Fund. AIM will
monitor the pricing, quality and liquidity of the variable or floating rate
Municipal Securities held by the Fund. For additional information regarding such
instruments see "AIM TAX-EXEMPT CASH FUND -- Variable or Floating Rate
Instruments" above and the Statement of Additional Information.
QUALITY STANDARDS. The following quality standards apply at the time a
security is purchased. Information concerning the ratings criteria of Moody's
Investors Service, Inc. ("Moody's"), Standard and Poor's Ratings Services
("S&P"), and Fitch Investors Service, Inc. ("Fitch") appears in Appendix A to
this Prospectus and/or in the Statement of Additional Information.
The INTERMEDIATE PORTFOLIO may purchase Municipal Securities which meet any
of the following quality criteria:
(a) They are rated within the three highest ratings for municipal
obligations by Moody's (Aaa, Aa or A) or S&P (AAA, AA or A), or have
received a comparable rating from another NRSRO; or
(b) They are rated within the two highest ratings for short-term
municipal obligations by Moody's (MIG 1/VMIG 1/P-1 or MIG 2/VMIG 2/P-2), or
S&P (SP-1/A-1 or SP-2/A-2), or have received a comparable rating from
another NRSRO; or
(c) They are guaranteed as to payment of principal and interest by the
U.S. Government; or
(d) They are fully collateralized by an escrow of U.S. Government or
other high quality securities; or
(e) They are not rated, if other Municipal Securities of the same
issuer are rated A or better by Moody's or S&P, or have received a
comparable rating from another NRSRO; or
9
<PAGE> 13
(f) They are not rated, but are determined by AIM to be of comparable
quality to the rated obligations in which the Fund may invest.
Since the INTERMEDIATE PORTFOLIO invests in securities backed by insurance
companies and other financial institutions, changes in the financial condition
of these institutions could cause losses to the Fund and affect its share price.
MATURITIES. The Fund may invest only in Municipal Securities which have
maturities of ten and one-half years or less, and will maintain a dollar
weighted average maturity of more than three years and not more than seven and
one-half years. For purposes of this limitation, the maturity of an instrument
will be considered to be the earlier of:
(a) the stated maturity of the instrument; or
(b) the date, if any, on which the issuer has agreed to redeem or
purchase the instrument; or
(c) in the case of a variable rate instrument, the next date on which
the coupon rate is to be adjusted.
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. The Fund may purchase Municipal
Securities on a when-issued or delayed delivery basis, but no more than 25% of
the Fund's net assets may be committed to such investments. For further
information regarding such investments see "AIM TAX-EXEMPT CASH FUND --
When-Issued or Delayed Delivery Securities" above and the Statement of
Additional Information.
PARTICIPATION INTERESTS AND MUNICIPAL LEASES. The Fund may purchase
participation interests or custodial receipts from financial institutions. These
participation interests give the purchaser an undivided interest in one or more
underlying Municipal Securities. The Fund may also invest in municipal leases
and participation interests therein. Such obligations, which may take the form
of a lease or an installment sales contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities. Interest payments on qualifying municipal leases are exempt from
federal income taxes.
TEMPORARY INVESTMENTS. The Fund may from time to time on a temporary basis
or for defensive purposes, make certain investments which may result in taxable
ordinary income; however, the Fund intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. Short-term
taxable investments may include obligations of the U.S. Government, its agencies
or instrumentalities, and repurchase agreements (instruments under which the
seller agrees to repurchase the security at a specified time and price) relating
thereto; commercial paper rated within the highest rating category by a NRSRO;
and certificates of deposit of domestic banks with assets of $1.5 billion or
more as of the date of their most recently published financial statements.
It is a fundamental policy of the Fund to invest its assets so that at
least 80% of the Fund's assets will be invested in securities that generate
interest that is exempt from federal income taxes. The Fund will seek to avoid
the purchase of "private activity bonds" the interest on which could give rise
to an alternative minimum tax liability for individuals and other noncorporate
shareholders.
PORTFOLIO TURNOVER. Ordinarily, the Fund does not purchase securities with
the intention of engaging in short-term trading. However, any particular
security will be sold, and the proceeds reinvested, whenever such action is
deemed prudent from the view-point of the Fund's investment objective,
regardless of the holding period of that security. Also, to the extent that
higher portfolio turnover results in a higher rate of net realized capital gains
to the Fund, the portion of the Fund's distributions constituting taxable
capital gain may increase. It is expected that total portfolio turnover in any
year will be less than 100%. See "Dividends, Distributions and Tax Matters."
OTHER CONSIDERATIONS. The ability of the Fund to achieve its investment
objective depends upon the continuing ability of the issuers or guarantors of
Municipal Securities held by the Fund to meet their obligations for the payment
of interest and principal when due. The securities in which the Fund invests may
not yield as high a level of current income as longer term or lower grade
securities, which generally have less liquidity and greater fluctuation in
value. The net asset value of shares of the Fund will generally vary inversely
with changes in prevailing interest rates.
Unless otherwise noted, the investment policies and standards stated above
are not fundamental policies of the Fund and may be changed by the Board of
Directors without shareholder approval. Shareholders will be notified before any
material change in the foregoing investment policies becomes effective.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT's investment objective is to earn a
high level of current income free from federal taxes and Connecticut taxes by
investing at least 80% of its net assets in municipal bonds and other Municipal
Securities. This objective is a fundamental policy and will not be changed
without the approval of a majority of the Fund's outstanding shares (within the
meaning of the 1940 Act). There can be no assurance that the Fund will attain
its objective.
MUNICIPAL SECURITIES. To achieve its objective, the Fund intends to invest
up to 100% of its assets, and no less than 80% of its net assets, in municipal
bonds and other Municipal Securities issued by the State of Connecticut and
authorities, agencies, instrumentalities and political subdivisions of the State
of Connecticut, or other entities, the interest from which, in the opinion of
bond counsel for the issuer, is exempt from federal income taxes (including the
alternative minimum tax) and from Connecticut income taxes on individuals. The
Fund will maintain at least 65% of its assets in municipal bonds. This 65%
figure represents a minimum level of
10
<PAGE> 14
investment; the actual level of investment will, of course, fluctuate in
accordance with AIM's assessment of market conditions. For temporary defensive
purposes, the Fund may invest up to 35% of its net assets in municipal bond
obligations and in other Municipal Securities issued by or on behalf of states
(including the State of Connecticut) territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies,
authorities and instrumentalities which are free from federal income taxes but
are subject to Connecticut income taxes, and up to 20% of its net assets in
money market instruments that may not be exempt from federal income taxes. See
"Tax Matters" in the Statement of Additional Information for a further
discussion of federal and Connecticut tax considerations. The net asset value of
shares of the Fund can be expected to rise when market interest rates decline
and to fall when market interest rates rise.
The Fund may invest in high quality, taxable short-term money market
instruments such as certificates of deposit, commercial paper, bankers'
acceptances, short-term U.S. Government obligations, repurchase agreements and
reverse repurchase agreements, pending investment in portfolio securities or to
meet anticipated short-term cash needs such as dividend payments or redemptions
of shares. Such investments generally will have maturities of 60 days or less
and normally will be held to maturity.
Municipal bonds include debt obligations issued to obtain funds for various
public purposes, including the construction of public facilities, the refunding
of outstanding obligations, the obtaining of funds for general operating
expenses and the providing of loans to public institutions and facilities. The
principal and interest payments on industrial development bonds or pollution
control bonds are often the sole responsibility of the industrial user and
therefore may not be backed by the taxing power of the issuing municipality.
Such obligations are included within the term municipal bonds if the interest
paid thereon qualifies as exempt from federal income tax, although such interest
may be subject to the alternative minimum tax.
VARIABLE OR FLOATING RATE INSTRUMENTS. The Fund may invest in Municipal
Securities which have variable or floating interest rates. All variable or
floating rate instruments must meet the quality standards of the Fund. AIM will
monitor the pricing, quality and liquidity of the variable or floating rate
Municipal Securities held by the Fund. For further information regarding such
instruments see "AIM TAX-EXEMPT CASH FUND -- Variable or Floating Rate
Instruments" above and the Statement of Additional Information.
QUALITY STANDARDS. At least 80% of the municipal bonds purchased by the
Fund will be rated within the four highest rating categories, or will be
obligations of issuers having an issue of outstanding municipal bonds rated
within the four highest rating categories, of any NRSRO. A description of
municipal bond ratings is contained in the Statement of Additional Information.
The Fund will maintain less than 35% of its net assets in bonds and other
Municipal Securities rated below Baa/BBB by Moody's or S&P, respectively, or a
comparable rating of any other NRSRO. During the last fiscal year, the Fund did
not invest in any such securities, and the Fund expects to invest less than 5%
of its net assets in such securities during the current fiscal year. See
Appendix A to this Prospectus and the Statement of Additional Information for
information regarding bond rating categories. Up to 20% of the Fund's net assets
may be invested in unrated municipal bonds and other Municipal Securities if in
the judgment of AIM, after considering available information as to the
creditworthiness of the issuer and its ability to meet its future debt
obligations, such investments are similar in quality to those bonds and other
Municipal Securities rated within the four highest NRSRO rating categories
mentioned above. For purposes of the foregoing percentage limitations, municipal
bonds (i) which have been collateralized with U.S. Government securities held in
escrow until the municipal securities refunding date or final maturity, but (ii)
which have not been re-rated by a NRSRO, will be treated by the Fund as the
equivalent of Aaa/AAA rated securities.
Securities held by the Fund that are rated below Baa/BBB by Moody's or S&P,
respectively, may be subject to certain risk factors to which other securities
are not subject to the same degree. An economic downturn tends to disrupt the
market for high yield bonds and adversely affect their values. Such an economic
downturn may be expected to result in increased price volatility of high yield
bonds and an increase in issuers' defaults on such bonds.
Also, many issuers of high yield bonds are substantially leveraged, which
may impair their ability to meet their obligations. In some cases, the
securities in which the Fund invests are subordinated to the prior payment of
senior indebtedness, thus potentially limiting the Fund's ability to recover
full principal or to receive payments when senior securities are in default.
The credit rating of a security does not necessarily address its market
value risk. Also, ratings may from time to time be changed to reflect
developments in the issuer's financial condition. Securities held by the Fund
may have speculative characteristics which are apt to increase in number and
significance with each lower rating category.
When the secondary market for high yield bonds becomes increasingly
illiquid, or in the absence of readily available market quotations for such
bonds, the relative lack of reliable, objective data makes the responsibility of
the Board of Directors to value the Fund's securities more difficult, and
judgment plays a greater role in the valuation of portfolio securities. Also,
increased illiquidity of the high yield bond market may affect the Fund's
ability to dispose of portfolio securities at a desirable price.
In addition, if the Fund experiences unexpected net redemptions, it could
be forced to sell its high yield bonds without regard to their investment
merits, thereby decreasing the asset base upon which the Fund's expenses can be
spread and possibly reducing the Fund's rate of return. Also, prices of high
yield bonds have been found to be less sensitive to interest rate changes and
more sensitive to adverse economic changes and individual issuer developments
than are more highly rated instruments.
11
<PAGE> 15
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. The Fund may purchase
securities on a when-issued or delayed delivery basis. For further information
regarding such securities see "AIM TAX-EXEMPT CASH FUND -- When-Issued or
Delayed Delivery Securities" above and the Statement of Additional Information.
PARTICIPATION INTERESTS AND MUNICIPAL LEASES. The Fund may purchase
participation interests or custodial receipts from financial institutions. These
participation interests give the purchaser an undivided interest in one or more
underlying Municipal Securities. The Fund may also invest in municipal leases
and participation interests therein. Such obligations, which may take the form
of a lease or an installment sales contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities. Interest payments on qualifying municipal leases are exempt from
federal income taxes.
RISK FACTORS IN CONCENTRATING IN CONNECTICUT MUNICIPAL OBLIGATIONS. Since
the Fund invests primarily in obligations of the State of Connecticut, the
marketability and market value of these obligations may be affected by the
regional economy, certain Connecticut constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives.
The ability of the Fund to achieve its objective is affected by the ability of
municipal issuers to meet their payment obligations. Problems which may arise in
the foregoing areas and which are not resolved could adversely affect the
various Connecticut issuers' abilities to meet their financial obligations.
INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS. The Fund may purchase
and sell interest rate futures contracts or purchase options thereon to hedge
its portfolio against changes in interest rates. An interest rate futures
contract is an agreement between two parties to buy and sell a debt security for
a set price on a future date. The Fund may purchase and sell futures contracts
and related options in order to hedge the value of its portfolio against changes
in market conditions. Generally, the Fund may elect to close a position in a
futures contract by taking an opposite position which will operate to terminate
the Fund's position in the futures contract. See the Statement of Additional
Information for a description of interest rate futures contracts and options on
futures contracts, including certain related risks.
The Fund will not purchase or sell futures contracts or purchase related
options thereon, if immediately thereafter the sum of the amount of margin
deposits and premiums on open positions with respect to futures contracts and
related options would exceed 5% of the market value of the Fund's total assets.
The Fund will not hedge more than 20% of its assets at one time.
PORTFOLIO TURNOVER. Ordinarily, the Fund does not purchase securities with
the intention of engaging in short-term trading. However, any particular
security will be sold, and the proceeds reinvested, whenever such action is
deemed prudent in light of the Fund's investment objective, regardless of the
holding period of that security. A higher rate of portfolio turnover may result
in higher transaction costs. Also, to the extent that higher portfolio turnover
results in a higher rate of net realized capital gains to the Fund, the portion
of the Fund's distributions constituting taxable capital gain may increase. It
is expected that total portfolio turnover in any year will be less than 100%.
See "Dividends, Distributions and Tax Matters."
Unless otherwise noted, the investment policies and standards stated above
are not fundamental policies of the Fund and may be changed by the Board of
Directors without shareholder approval. Shareholders will be notified before any
material change in the foregoing investment policies becomes effective.
INVESTMENT RESTRICTIONS
Each of the Funds' investment programs is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. The most significant of these restrictions are set forth
below, and other investment restrictions are set forth in the Statement of
Additional Information. In addition to the restrictions described herein, AIM
TAX-EXEMPT CASH FUND must comply with the requirements of Rule 2a-7 under the
1940 Act which may be more restrictive. Pursuant to these restrictions:
(1) Neither AIM TAX-EXEMPT CASH FUND nor the INTERMEDIATE PORTFOLIO
will, with respect to 75% of its total assets, purchase the securities of
any issuer if such purchase would cause more than 5% of the value of its
total assets to be invested in the securities of such issuer (except
securities issued, guaranteed or sponsored by the U.S. Government or its
agencies and instrumentalities and, with respect to AIM TAX-EXEMPT CASH
FUND, except as permitted by Rule 2a-7, as amended from time to time, and
except that each such Fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order).
(2) The Funds will not borrow money or issue senior securities except
for temporary or emergency purposes, except that the Funds may enter into
reverse repurchase agreements and may purchase when-issued securities
(consistent with their respective investment policies and objectives), and
except that AIM TAX-EXEMPT BOND FUND OF CONNECTICUT may enter into
financial futures contracts and it may borrow from banks provided that no
borrowing exceeds one-third of the value of its total assets. The Funds
will not purchase securities while borrowings in excess of 5% of their
respective total assets are outstanding and, in addition, AIM TAX-EXEMPT
CASH FUND will not borrow money if such borrowing will exceed the borrowing
limits established by the Securities and Exchange Commission (the "SEC")
for money market funds, as amended from time to time.
12
<PAGE> 16
(3) The INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT will not invest more than 15% of the value of their respective
net assets in illiquid securities, including repurchase agreements with
remaining maturities in excess of seven days. AIM TAX-EXEMPT CASH FUND will
not invest more than 10% of its net assets in such securities.
Restrictions (1) and (2) above are matters of fundamental policy and may
not be changed without shareholder approval. Restriction (3) above is a
non-fundamental policy which may be changed by the Board of Directors. For
additional investment restrictions applicable to the Funds see the Statement of
Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Funds is vested
in the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Company, on behalf of the Funds, and persons
or companies furnishing services to the Funds, including the investment advisory
agreement and administrative services agreement with AIM, the agreement with AIM
Distributors regarding distribution of each Fund's shares, the agreement with
The Bank of New York as the custodian and the agreement with AFS as transfer
agent. The day-to-day operations of each Fund are delegated to the officers of
the Company and to AIM, subject always to the objective and policies of the
applicable Fund and to the general supervision of the Board of Directors.
Certain directors and officers of the Company are affiliated with AIM and A I M
Management Group Inc. ("AIM Management"), the parent corporation of AIM. AIM
Management is a holding company engaged in the financial services business and
is an indirect subsidiary of AMVESCAP plc. AMVESCAP plc and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail mutual fund businesses in the United States, Europe and
the Pacific Region. Information concerning the Board of Directors may be found
in the Statement of Additional Information.
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as the investment advisor to each Fund pursuant to
a Master Investment Advisory Agreement, dated as of February 28, 1997 (the
"Advisory Agreement"). AIM was organized in 1976 and, together with its
subsidiaries, manages or advises 46 investment company portfolios. As of July
15, 1997, the total assets of such investment company portfolios were
approximately $76.0 billion.
Under the terms of the Advisory Agreement, AIM supervises all aspects of
each Fund's operations and provides investment advisory services to the Funds.
AIM obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Funds. The Advisory
Agreement also provides that, upon the request of the Board of Directors, AIM
may perform or arrange for certain accounting and other administrative services
for the Funds which are not required to be performed by AIM under the Advisory
Agreement. The Board of Directors has made such a request. As a result, AIM and
the Company have entered into a Master Administrative Services Agreement, dated
as of February 28, 1997 (the "Administrative Services Agreement"), pursuant to
which AIM is entitled to receive from each Fund reimbursement of its costs or
such reasonable compensation as may be approved by the Board of Directors.
Currently, AIM is reimbursed for the services of the Funds' principal financial
officer and his staff, and any expenses related to fund accounting services. In
addition, A I M Fund Services Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046, a wholly owned subsidiary of AIM and a registered transfer agent,
receives a fee pursuant to a Transfer Agency and Service Agreement for its
provision of transfer agency, dividend distribution and disbursement, and
shareholder services to the Funds.
In accordance with policies established by the directors, AIM may take into
account sales of shares of the Funds and other funds advised by AIM in selecting
broker-dealers to effect portfolio transactions on behalf of the Funds. See the
Statement of Additional Information under the caption "Portfolio Transactions."
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Funds. AIM's investment staff consists of 127 individuals. While
individual members of AIM's investment staff are assigned primary responsibility
for the day-to-day management of each of AIM's accounts, all accounts are
reviewed on a regular basis by AIM's Investment Policy Committee to ensure that
they are being invested in accordance with the accounts' and AIM's investment
policies. The individuals on the investment team primarily responsible for the
day-to-day management of AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and the
INTERMEDIATE PORTFOLIO are Richard A. Berry and Stephen D. Turman. Mr. Berry is
Vice President of A I M Capital Management, Inc. ("AIM Capital"), and has been
responsible for AIM TAX-EXEMPT BOND FUND OF CONNECTICUT since 1992 and for the
INTERMEDIATE PORTFOLIO since 1987. Mr. Berry has been associated with AIM since
1987, and has a total of 29 years of experience as an investment professional.
Mr. Turman is Vice President of AIM Capital, and has been responsible for AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT since 1992 and for the INTERMEDIATE
PORTFOLIO since 1988. Mr. Turman has been associated with AIM since 1985 and has
a total of 14 years of experience as an investment professional.
FEES AND EXPENSES. For the year ended March 31, 1997, AIM TAX-EXEMPT CASH
FUND paid 0.35% of its average daily net assets to AIM for its advisory
services, and its total expenses for the same period, stated as a percentage of
average daily net assets, were 1.04%. For the year ended March 31, 1997, the
INTERMEDIATE PORTFOLIO paid 0.30% of its average daily net assets to AIM for its
advisory services, and its total expenses for the same period, stated as a
percentage of its average daily net assets were 0.56%. For the year ended March
31, 1997, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT paid 0.25% of its average
daily net assets to AIM for its advisory fees and its total expenses for the
same period, stated as a percentage of its average daily net assets, were 0.84%.
13
<PAGE> 17
For the year ended March 31, 1997, AIM TAX-EXEMPT CASH FUND paid 0.10% of
its average daily net assets to AIM as reimbursement for administrative
services. For the year ended March 31, 1997, the INTERMEDIATE PORTFOLIO paid
0.06% of its average daily net assets to AIM as reimbursement for administrative
services. For the year ended March 31, 1997, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT paid 0.13% of its average daily net assets to AIM as reimbursement
for administrative services.
FEE WAIVERS. In order to increase the yield to investors, AIM or its
affiliates may from time to time voluntarily waive or reduce advisory or
distribution fees, while retaining the ability to be reimbursed for such fees
prior to the end of each fiscal year. Fee waivers or reductions, other than
those which may be set forth in the Advisory Agreement, may be rescinded at any
time without notice to investors; provided, however, that the Board of Directors
of the applicable Fund will be notified of the discontinuance of each fee waiver
described below.
For the year ended March 31, 1997, AIM voluntarily waived 0.37% of its
advisory fee from AIM TAX-EXEMPT BOND FUND OF CONNECTICUT. Had it not waived
such fee, the advisory fee would have been 0.50% of that Fund's average daily
net assets for this period.
DISTRIBUTOR. The Company has entered into a Master Distribution Agreement,
dated February 28, 1997, relating to the Funds (the "Distribution Agreement")
with A I M Distributors, Inc. ("AIM Distributors"), a registered broker-dealer
and a wholly owned subsidiary of AIM, to act as the distributor of the Funds'
shares. The address of AIM Distributors is P.O. Box 4739, Houston, Texas
77210-4739. Certain directors and officers of the Company are affiliated with
AIM Distributors. The Distribution Agreement provides AIM Distributors with the
exclusive right to distribute shares of the Funds through affiliated
broker-dealers and through other broker-dealers with whom AIM Distributors has
entered into selected dealer agreements.
DISTRIBUTION PLAN. The Company has adopted a Master Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to AIM TAX-EXEMPT
CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT. The Company has not
adopted such a plan with respect to the INTERMEDIATE PORTFOLIO. Under the Plan,
AIM TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT each pays
compensation of 0.25% per annum of its respective average daily net assets to
AIM Distributors for the purpose of financing any activity which is primarily
intended to result in the sale of shares of each respective Fund. The Plan is
designed to compensate AIM Distributors for certain promotional and other
sales-related costs, and to implement an incentive program which provides for
periodic payments to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
shares of such Funds. Under the Plan, AIM Distributors may in its discretion
from time to time agree to waive voluntarily all or any portion of its fee,
while retaining its ability to be reimbursed for such fee prior to the end of
the fiscal year. Currently, AIM Distributors has voluntarily elected to waive a
portion of its compensation payable by AIM TAX-EXEMPT CASH FUND such that the
compensation paid pursuant to the Plan equals 0.10% per annum of that Fund's
average daily net assets. This waiver may be rescinded by AIM Distributors at
any time and without further notice to investors.
Activities that may be financed under the Plan include, but are not limited
to, the following: printing of prospectuses and statements of additional
information and reports for other than existing shareholders, overhead,
preparation and distribution of advertising material and sales literature,
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements and the cost of administering the Plan. Amounts payable by AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT under the Plan
need not be directly related to the expenses actually incurred by AIM
Distributors on behalf of each Fund. Thus, even if AIM Distributors' actual
expenses exceed the fee payable to AIM Distributors thereunder at any given
time, such Funds will not be obligated to pay more than that fee, and, if AIM
Distributors' expenses are less than the fee it receives, AIM Distributors may
retain the full amount of the fee.
The Plan may be terminated at any time by a vote of a majority of those
directors who are not "interested persons" of the Company or by a vote of the
holders of a majority of the outstanding shares of AIM TAX-EXEMPT CASH FUND or
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
Certain financial institutions which have entered into service agreements
and which sell shares of AIM TAX-EXEMPT CASH FUND and/or AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT on an agency basis, may receive payments from those Funds
pursuant to the Plan. AIM Distributors does not act as principal, but rather as
agent, for those Funds in making such payments. The Funds will obtain a
representation from such financial institutions that they will either be
licensed as dealers as required under applicable state law, or that they will
not engage in activities which would constitute acting as a "dealer" as defined
under applicable state law.
Payments pursuant to the Plan are subject to any applicable limitations
imposed by rules of the National Association of Securities Dealers, Inc.
("NASD"). The Plan conforms to rules of the NASD by limiting payments made to
dealers and other financial institutions who provide continuing personal
shareholder services to their customers who purchase and own shares of AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT to no more than
0.25% per annum of the average daily net assets of each Fund attributable to the
customers of such dealers or financial institutions, and by imposing a cap on
the total sales charges, including asset-based sales charges, that may be paid
by each Fund. As a result of AIM Distributors' waiver of compensation due from
AIM TAX-EXEMPT CASH FUND, payments to dealers and other financial institutions
by that Fund will be limited to 0.10% of that Fund's average daily net assets.
For additional information concerning the operation of the Plan see the
Statement of Additional Information.
14
<PAGE> 18
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ORGANIZATION OF THE COMPANY
The Company was incorporated in Maryland on May 4, 1993. Shares of common
stock of the Company are currently divided into three portfolios, AIM TAX-EXEMPT
CASH FUND, the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT each of which has a retail class of shares consisting of Class A
shares. The INTERMEDIATE PORTFOLIO currently has one class, AIM TAX-FREE
INTERMEDIATE SHARES, which consists of Class A shares. All shares of the Company
have equal rights with respect to voting, except that the holders of shares of a
particular Fund will have the exclusive right to vote on matters (such as
advisory fees) pertaining solely to that Fund. In the event of dissolution or
liquidation, holders of each Fund's shares will receive pro rata, subject to the
rights of creditors, (a) the proceeds of the sale of the assets held in the
respective Fund to which such shares relate, less (b) the liabilities of the
Company attributable to the respective Fund or allocated between the Funds based
on the respective liquidation values of each such Fund.
There are no preemptive or conversion rights applicable to any of the
Company's shares, and such shares, when issued, are fully paid and
non-assessable.
Under Maryland law and the Company's By-laws, the Company need not hold an
annual meeting of shareholders unless a meeting is otherwise required under the
1940 Act to elect directors. Shareholders may remove directors from office, and
a meeting of shareholders may be called at the request of the holders of 10% or
more of the Company's outstanding shares.
As of July 15, 1997, Mr. Gary Crum owned more than 25 percent of the shares
of INTERMEDIATE PORTFOLIO, and therefore, could be deemed to "control" the Fund,
as that term is defined in the 1940 Act.
15
<PAGE> 19
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS(R)
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds*:
<TABLE>
<S> <C>
AIM ADVISOR CASH MANAGEMENT FUND(1),(2) AIM GLOBAL INCOME FUND
AIM ADVISOR FLEX FUND AIM GLOBAL UTILITIES FUND
AIM ADVISOR INCOME FUND(2) AIM GROWTH FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM HIGH YIELD FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM INCOME FUND
AIM ADVISOR MULTIFLEX FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ADVISOR REAL ESTATE FUND AIM INTERNATIONAL EQUITY FUND
AIM AGGRESSIVE GROWTH FUND AIM LIMITED MATURITY TREASURY SHARES
AIM BALANCED FUND AIM MONEY MARKET FUND(1)
AIM BLUE CHIP FUND AIM MUNICIPAL BOND FUND
AIM CAPITAL DEVELOPMENT FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CHARTER FUND AIM TAX-EXEMPT CASH FUND(1)
AIM CONSTELLATION FUND AIM TAX-FREE INTERMEDIATE SHARES
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
</TABLE>
* All Class C shares of the AIM Funds (as defined below) and all portfolios
of AIM Advisor Funds, Inc. will not be offered for sale pursuant to this
prospectus until August 4, 1997.
(1) Class A shares of AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND, and Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
(2)Fund closed to new investments on August 4, 1997. However, until October 3,
1997 the Fund will continue to accept investments (i) from shareholders of
record on August 4, 1997 of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND or (ii) on behalf of clients of selling group members who were
INVESCO Advisor Funds, Inc. selling group members on August 1, 1997. Please
refer to "Exchange Privilege" herein and the Fund's prospectus dated August
4, 1997.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
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HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") is $250. There are
no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, IRA/Simplified Employee
Pension ("SEP") accounts, 403(b) plans or 457 (state deferred compensation)
plans (except that the minimum initial investment for salary deferrals for such
plans is $25), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM Funds account. A Salary Reduction SEP ("SARSEP")
may not be established after December 31, 1996; however existing SARSEP accounts
can remain in effect.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-ATEF 07/97
A-1
<PAGE> 20
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
HOW TO PURCHASE ADDITIONAL SHARES. The minimum investment for subsequent
purchases is $50. The minimum employee salary deferral investment for
participants in money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or
457 plans is $25. There are no such minimum investment requirements for
investment of dividends and distributions of any of the AIM Funds into any other
existing AIM Funds account.
Additional shares may be purchased directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors.
Direct investments may be made by mail or by wiring payment to AFS as follows:
SUBSEQUENT PURCHASES BY MAIL: Investors must indicate their account number and
the name of the Fund being purchased. The remittance slip from a confirmation
statement should be used for this purpose, and sent to AFS.
PURCHASES BY WIRE: To insure prompt credit to his account, an investor or his
dealer should call AFS' Client Services Department at (800) 959-4246 prior to
sending a wire to receive a reference number for the wire. The following wire
instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
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TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME
FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND,
AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM AGGRESSIVE GROWTH
FUND, AIM BALANCED FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM
CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM
GROWTH FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND
FUND, AIM VALUE FUND and AIM WEINGARTEN FUND, collectively (other than AIM
AGGRESSIVE GROWTH FUND), the "Multiple Class Funds," may be purchased at their
respective net asset value plus a sales charge as indicated below, except that
Class A shares of AIM TAX-EXEMPT CASH FUND, Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold
without a sales charge and Class B shares (the "Class B shares") and Class C
shares ("Class C shares") of the Multiple Class Funds (except Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND) are sold at net asset value subject to a
contingent deferred sales charge payable upon certain redemptions. These
contingent deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-ATEF 07/97
A-2
<PAGE> 21
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL
DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND, AIM GLOBAL UTILITIES
FUND, AIM GROWTH FUND, AIM INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM
VALUE FUND and AIM WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM ADVISOR INCOME FUND, AIM ADVISOR REAL ESTATE FUND, AIM BALANCED
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL
INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT
FUND and AIM MUNICIPAL BOND FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-ATEF 07/97
A-3
<PAGE> 22
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are AIM LIMITED MATURITY TREASURY SHARES and the Class A shares
of AIM TAX-FREE INTERMEDIATE SHARES.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE
SHARES as follows: 1% of the first $2 million of such purchases, plus 0.80% of
the next $1 million of such purchases, plus 0.50% of the next $17 million of
such purchases, plus 0.25% of amounts in excess of $20 million of such
purchases. See "Contingent Deferred Sales Charge Program for Large Purchases."
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), and which are sold at net
asset value and are not subject to a contingent deferred sales charge, in an
amount up to 0.10% of such purchases of shares of AIM LIMITED MATURITY TREASURY
SHARES, and in an amount up to 0.25% of such purchases of shares of AIM TAX-FREE
INTERMEDIATE SHARES.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price (0.60% of the
purchase price of the AIM ADVISOR INCOME FUND) of the Class C shares sold by the
dealer or institution, and will consist of a sales commission of 0.75% of the
purchase price (0.35% of the purchase price of the AIM ADVISOR INCOME FUND) of
the Class C shares sold plus an advance of the first year service fee of 0.25%
with respect to such shares. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. The
portion of the payments to AIM Distributors under the Class C Plan attributable
to Class C shares which constitutes an asset-based sales charge (0.75%) (0.35%
for AIM ADVISOR INCOME FUND) is intended in part to permit AIM Distributors to
recoup a portion of such on-going sales commission plus financing costs, if any.
MCF-ATEF 07/97
A-4
<PAGE> 23
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES (except Class A shares of AIM ADVISOR CASH MANAGEMENT FUND)
are sold subject to the initial sales charges described above and are
subject to the other fees and expenses described herein. Class A shares of
AIM MONEY MARKET FUND are designed to meet the needs of an investor who
wishes to establish a dollar cost averaging program, pursuant to which
Class A shares an investor owns may be exchanged at net asset value for
Class A shares of another Multiple Class Fund or shares of another AIM Fund
which is not a Multiple Class Fund, subject to the terms and conditions
described under the caption "Exchange Privilege -- Terms and Conditions of
Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND)
are subject, however, to Rule 12b-1 Plan payments of 1.00% per annum on the
average daily net assets of a Multiple Class Fund attributable to Class C
shares. See the discussion under the caption "Management -- Distribution
Plans." In addition, Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) redeemed within one year from the date such shares
were purchased are subject to a 1.00% contingent deferred sales charge. No
contingent deferred sales charge will be imposed if Class C shares are
redeemed after one year from the date such shares were purchased.
Redemptions of Class C shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are sold without an initial sales
charge and are not subject to a contingent deferred sales charge. (A
contingent deferred sales charge may be imposed upon redemptions of Class A
and Class C shares of AIM ADVISOR CASH MANAGEMENT FUND when such shares
were purchased in an exchange. See "How to Redeem Shares -- Multiple
Distribution System -- Class C Shares" and "How to Redeem
Shares -- Contingent Deferred Sales Charge Program for Large Purchases").
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are, however, subject to
the other fees and expenses described in the prospectus for AIM MONEY
MARKET FUND.
MCF-ATEF 07/97
A-5
<PAGE> 24
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM ADVISOR CASH MANAGEMENT FUND, AIM MONEY
MARKET FUND, AND AIM TAX-EXEMPT CASH FUND (THE "MONEY MARKET FUNDS"). Because
each Money Market Fund uses the amortized cost method of valuing the securities
it holds and rounds its per share net asset value to the nearest whole cent, it
is anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH MANAGEMENT
FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class B and Class C
shares of the Multiple Class Funds will not be taken into account in determining
whether a purchase qualifies for a reduction in initial sales charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP") where the employer has
notified AIM Distributors in writing that all of its related employee SEP or
SARSEP accounts should be linked;
MCF-ATEF 07/97
A-6
<PAGE> 25
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of
AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and (ii) Class B and Class C shares of the Multiple Class Funds)
within the following 13 consecutive months. By marking the LOI section on the
account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND, Class A and Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii)
Class B and Class C shares of the Multiple Class Funds) at the time of the
proposed purchase. Rights of Accumulation are also available to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND, Class A and Class C
shares of AIM ADVISOR CASH MANAGEMENT FUND, and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) owned by such purchaser, calculated at their then current public offering
price. If a purchaser so qualifies for a reduced sales charge, the reduced sales
charge applies to the total amount of money then being invested by such
purchaser and not just to the portion that exceeds the breakpoint above which a
reduced sales charge applies. For example, if a purchaser already owns
qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest
an additional $20,000 in a fund with a maximum
MCF-ATEF 07/97
A-7
<PAGE> 26
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares of
certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; and (h) certain broker-dealers,
investment advisers or bank trust departments that provide asset allocation,
similar specialized investment services or investment company transaction
services for their customers, that charge a minimum annual fee for such
services, and that have entered into an agreement with AIM Distributors with
respect to their use of the AIM Funds in connection with such services.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any AIM Limited
Maturity Treasury Shares sold at net asset value to an employee benefit plan in
accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided:
MCF-ATEF 07/97
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<PAGE> 27
(a) that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is effected within 30 days of such redemption or repurchase;
and (b) that the unit holder or his dealer provides AIM Distributors with a
letter which: (i) identifies the name, address and telephone number of the
dealer who sold to the unit holder the units to be redeemed or repurchased; and
(ii) states that the investment in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND is being funded exclusively by the proceeds from the
redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual checks in any amount (but not less than
$50) to be drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds, AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and Class A shares of AIM ADVISOR CASH
MANAGEMENT FUND), it is disadvantageous to effect such purchases while a
Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make monthly or quarterly
investments may establish an Automatic Investment Plan. Under this plan, on or
about the tenth and/or twenty-fifth day of the applicable month, a draft is
drawn on the shareholder's bank account in the amount specified by the
shareholder (minimum $50 per investment, per account). The proceeds of the draft
are invested in shares of the designated AIM Fund at the applicable offering
price determined on the date of the draft. An Automatic Investment Plan may be
discontinued upon 10 days' prior notice to the Transfer Agent or AIM
Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
MCF-ATEF 07/97
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<PAGE> 28
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM TAX-FREE
INTERMEDIATE SHARES, AIM TAX-EXEMPT CASH FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the following prototype
retirement plans available to corporations, individuals and employees of
non-profit organizations and public schools: combination money-
purchase/profit-sharing plans; 403(b) plans; IRA plans; SARSEP plans; and SEP
plans (collectively, "retirement accounts"). Information concerning these plans,
including the custodian's fees and the forms necessary to adopt such plans, can
be obtained by calling or writing the AIM Funds or AIM Distributors. Shares of
the AIM Funds are also available for investment through existing 401(k) plans
(for both individuals and employers) adopted under the Code. The plan custodian
currently imposes an annual $10 maintenance fee with respect to each retirement
account for which it serves as the custodian. This fee is generally charged in
December. Each AIM Fund and/or the custodian reserve the right to change this
maintenance fee and to initiate an establishment fee (not to exceed its cost).
MCF-ATEF 07/97
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<PAGE> 29
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds (except AIM
ADVISOR CASH MANAGEMENT FUND), listed below and referred to herein as the "Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 5.50% or 4.75% of the public offering price of such shares; Class A shares
(or shares which normally involve the payment of initial sales charges) of
certain of the AIM Funds, listed below and referred to herein as the "Lower Load
Funds," are sold at a public offering price that includes a maximum sales charge
of 1.00% of the public offering price of such shares; and Class A shares or
shares of certain other funds, listed below and referred to herein as the "No
Load Funds," are sold at net asset value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY SHARE
CLASS A FUND -- CLASS A AIM TAX-FREE INTERMEDIATE
AIM ADVISOR INCOME FUND -- AIM GLOBAL INCOME SHARES -- CLASS A
CLASS A FUND -- CLASS A NO LOAD FUNDS:
AIM ADVISOR INTERNATIONAL AIM GLOBAL UTILITIES
VALUE FUND -- CLASS A FUND -- CLASS A AIM ADVISOR CASH MANAGEMENT FUND
AIM ADVISOR LARGE CAP AIM GROWTH FUND -- CLASS A -- CLASS A
VALUE FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A AIM MONEY MARKET FUND
AIM ADVISOR MULTIFLEX AIM INCOME FUND -- CLASS A -- AIM CASH RESERVE SHARES
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT AIM TAX-EXEMPT CASH FUND -- CLASS A
AIM ADVISOR REAL ESTATE FUND -- CLASS A
FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM AGGRESSIVE GROWTH FUND -- CLASS A
FUND -- CLASS A AIM MONEY MARKET
AIM BALANCED FUND -- CLASS A FUND -- CLASS A
AIM BLUE CHIP FUND -- CLASS A AIM MUNICIPAL BOND
AIM CAPITAL DEVELOPMENT FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM CHARTER FUND -- CLASS A OF CONNECTICUT -- CLASS A
AIM CONSTELLATION AIM VALUE FUND -- CLASS A
FUND -- CLASS A AIM WEINGARTEN FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) effective August 4, 1997
(except with respect to shares of AIM ADVISOR CASH MANAGEMENT FUND, AIM ADVISOR
FLEX FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM
ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM ADVISOR REAL
ESTATE FUND), no shares of any Load Fund, Class C of a Multiple Class Fund,
Lower Load Fund or No Load Fund may be exchanged for shares of AIM ADVISOR CASH
MANAGEMENT FUND or AIM ADVISOR INCOME FUND; (ii) effective October 3, 1997 no
share of any Load Fund, Class C of a Multiple Class Fund, Lower Load Fund or No
Load Fund may be exchanged for shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM
ADVISOR INCOME FUND; (iii) Load Fund share purchases of $1,000,000 or more which
are subject to a contingent deferred sales charge may not be exchanged for Lower
Load Funds or for AIM TAX-EXEMPT CASH FUND; (iv) LOWER LOAD FUND SHARE PURCHASES
OF $1,000,000 OR MORE AND AIM Cash Reserve Shares of AIM MONEY MARKET FUND and
AIM TAX-EXEMPT CASH FUND PURCHASES MAY BE EXCHANGED FOR LOAD FUND SHARES IN
AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A CONTINGENT
DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE CONTINGENT
DEFERRED SALES CHARGE ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH PERIOD
SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (v) Class A shares and AIM
LIMITED MATURITY TREASURY SHARES may be exchanged for Class A shares or AIM
LIMITED MATURITY TREASURY SHARES, (vi) Class B shares may be exchanged only for
Class B shares; (vii) Class C shares may only be exchanged for Class C shares;
(viii) Class A shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged for
Class A shares of any Load Fund, Lower Load Fund or No-Load Fund at net asset
value; (ix) Class C shares of AIM ADVISOR CASH MANAGEMENT FUND may be exchanged
for Class C shares of any Multiple Class Fund at net asset value; and (x) AIM
Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged for Class A
shares of AIM MONEY MARKET FUND or for Class B or Class C shares.
MCF-ATEF 07/97
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<PAGE> 30
Broker-dealers and institutions of record for Class A or Class C shares
purchased pursuant to an exchange from Class A or Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND will be compensated according to the sales commission or
concession that would apply if these Class A or Class C share purchases had been
purchased in a manner other than pursuant to an exchange.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds..... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds........
No Load Funds.. Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B...... Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds..... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds........ acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.. Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B...... Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C...... Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate Internal Revenue Service ("IRS") Form W-8
(certificate of foreign status) or Form W-9 (certifying exempt status) must have
been received by the fund; (g) newly acquired shares (through either an initial
or subsequent investment) are held in an account for at least ten business days,
and all other shares are held in an account for at least one day, prior to the
exchange; and (h) certificates representing shares must be returned before
shares can be exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
MCF-ATEF 07/97
A-12
<PAGE> 31
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares (except for Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-ATEF 07/97
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<PAGE> 32
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INCOME FUND, AIM
ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, and AIM ADVISOR REAL ESTATE FUND, by shareholders of record on
April 30, 1995 of these funds. Shareholders whose broker/dealers maintain a
single omnibus account with the Transfer Agent on behalf of those shareholders,
perform sub-accounting functions with respect to those shareholders, and are
unable to segregate shareholders of record prior to April 30, 1995 from
shareholders whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996; or (v) on Class C shares of AIM
ADVISOR CASH MANAGEMENT FUND except in certain cases when the shares were
purchased in an exchange. Redemptions of shares of AIM ADVISOR CASH MANAGEMENT
FUND are generally not subject to a contingent deferred sales charge; however, a
contingent deferred sales charge may be applicable to redemptions of shares of
AIM ADVISOR CASH MANAGEMENT FUND if the redeemed shares were exchanged from
another Class C share fund and the one year holding period in such fund has not
been completed.
Contingent deferred sales charges on Class B and Class C shares will be waived
on redemptions (1) following the death or post-purchase disability, as defined
in Section 72(m)(7) of the Code, of a shareholder or a settlor of a living trust
(provided AIM Distributors is notified of such death or post-purchase disability
at the time of the redemption request and is provided with satisfactory evidence
of such death or post-purchase disability), (2) in connection with certain
distributions from individual retirement accounts, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the fifth paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds.".
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70- 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
MCF-ATEF 07/97
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<PAGE> 33
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund, Class A shares of AIM ADVISOR CASH MANAGEMENT FUND or AIM Cash Reserve
Shares of AIM MONEY MARKET FUND which were acquired through an exchange of
shares which previously were subject to the 1% contingent deferred sales charge
will be credited with the period of time such exchanged shares were held, and
(ii) shares of any Load Fund which are subject to the 1% contingent deferred
sales charge and which were acquired through an exchange of shares of a Lower
Load Fund or a No Load Fund which previously were not subject to the 1%
contingent deferred sales charge will not be credited with the period of time
such exchanged shares were held. The charge will be waived in the following
circumstances: (1) redemptions of shares by employee benefit plans ("Plans")
qualified under Sections 401 or 457 of the Code, or Plans created under Section
403(b) of the Code and sponsored by nonprofit organizations as defined under
Section 501(c)(3) of the Code, where shares are being redeemed in connection
with employee terminations or withdrawals, and (a) the total amount invested in
a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a letter of
intent to invest at least $1,000,000 in one or more of the AIM Funds, or (c) the
shares being redeemed were purchased by an employer-sponsored Plan with at least
100 eligible employees; provided, however, that Plans created under Section
403(b) of the Code which are sponsored by public educational institutions shall
qualify under (a), (b) or (c) above on the basis of the value of each Plan
participant's aggregate investment in the AIM Funds, and not on the aggregate
investment made by the Plan or on the number of eligible employees; (2)
redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59- 1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or wired to the pre-authorized bank
account as indicated on the account application; (b) there has been no change of
address of record on the account within the preceding 30 days; (c) the shares to
be redeemed are not in certificate form; (d) the person requesting the
redemption can provide proper identification information; and (e) the proceeds
of the redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM
MCF-ATEF 07/97
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<PAGE> 34
Distributors has made arrangements with certain dealers and investment advisors
to accept telephone instructions for the redemption of shares. AIM Distributors
reserves the right to impose conditions on these dealers and investment
advisors, including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The Transfer Agent and AIM Distributors will not be liable for any
loss, expense or cost arising out of any telephone redemption request effected
in accordance with the authorization set forth at that item of the account
application if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures may include recordings of
telephone transactions (maintained for six months), requests for confirmation of
the shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM ADVISOR CASH MANAGEMENT FUND and
the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does not
apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally mailed within seven
days following the redemption date. However, in the event of a redemption of
shares purchased by check, the investor may be required to wait up to ten
business days before the redemption proceeds are sent. See "Terms and Conditions
of Purchase of the AIM Funds -- Timing of Purchase Orders." A charge for special
handling (such as wiring of funds or expedited delivery services) may be made by
the Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent by wire to
other than the bank of record for the account; (4) redemptions requesting
proceeds to be sent to a new address or an address that has been changed within
the past 30 days; (5) requests to transfer the registration of shares to another
owner; (6) telephone exchange and telephone redemption authorization forms; (7)
changes in previously designated wiring instructions; and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as
MCF-ATEF 07/97
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<PAGE> 35
certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES AND LIMITED MATURITY TREASURY SHARES
ONLY). Within 90 days of a redemption, a shareholder may invest all or part of
the redemption proceeds in Class A shares of any AIM Fund (except Class A shares
of AIM ADVISOR CASH MANAGEMENT FUND) and AIM Limited Maturity Treasury Shares at
the net asset value next computed after receipt by the Transfer Agent of the
funds to be reinvested; provided, however, if the redemption was made from AIM
Limited Maturity Treasury Shares or Class A shares of AIM TAX-FREE INTERMEDIATE
SHARES, the reinvested proceeds will be subject to the difference in sales
charge between the shares redeemed and the shares the proceeds are reinvested
in. The shareholder must ask the Transfer Agent for such privilege at the time
of reinvestment. A realized gain on the redemption is taxable, and reinvestment
may alter any capital gains payable. If there has been a loss on the redemption
and shares of the same fund are repurchased, all of the loss may not be tax
deductible, depending on the timing and amount reinvested. Under the Code, if
the redemption proceeds of fund shares on which a sales charge was paid are
reinvested in (or exchanged for) shares of another AIM Fund at a reduced sales
charge within 90 days of the payment of the sales charge, the shareholder's
basis in the fund shares redeemed may not include the amount of the sales charge
paid, thereby reducing the loss or increasing the gain recognized from the
redemption; however, the shareholder's basis in the fund shares purchased will
include the sales charge. Each AIM Fund may amend, suspend or cease offering
this privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation. This privilege may only be exercised once
each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE SHARES value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors or Trustees of the
applicable AIM Fund.
MCF-ATEF 07/97
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<PAGE> 36
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR CASH MANAGEMENT FUND.......... declared daily; paid monthly annually annually
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INCOME FUND................... declared and paid monthly monthly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY SHARES...... declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE SHARES.......... declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (except Class C shares of AIM ADVISOR CASH
MANAGEMENT FUND) (iii) dividends and distributions attributable to Class A
shares or AIM Limited Maturity Treasury Shares may not be reinvested in Class A
shares of AIM ADVISOR CASH MANAGEMENT FUND or Class B or Class C shares, and
(iv) dividends and distributions attributable to the AIM Cash Reserve Shares of
AIM MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund
or in any Class B or Class C shares. Investors who have not previously selected
such a reinvestment option on the account application form may contact the
Transfer Agent at any time to obtain a form to authorize such reinvestments in
another AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares (except Class C shares of AIM ADVISOR
CASH MANAGEMENT FUND) are expected to be lower than those for Class A shares or
AIM Cash Reserve Shares because of higher distribution fees paid by Class B and
Class C shares (except Class C shares of AIM ADVISOR CASH MANAGEMENT FUND).
Dividends on all shares may also be affected by other class-specific expenses.
MCF-ATEF 07/97
A-18
<PAGE> 37
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, and AIM TAX-FREE
INTERMEDIATE SHARES (the "Tax-Exempt Funds") which are exempt from federal tax.
Dividends paid by a fund (other than capital gain distributions) may qualify for
the federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR CASH
MANAGEMENT FUND, AIM ADVISOR INCOME FUND, AIM ADVISOR INTERNATIONAL VALUE FUND,
AIM ADVISOR REAL ESTATE FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY SHARES, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE
INTERMEDIATE SHARES will qualify for this dividends received deduction. Shortly
after the end of each year, shareholders will receive information regarding the
amount and federal income tax treatment of all distributions paid during the
year. Certain dividends declared in October, November or December of a calendar
year are taxable to shareholders as though received on December 31 of that year
if paid to shareholders during January of the following calendar year. No gain
or loss will be recognized by shareholders upon the automatic conversion of
Class B shares of a Multiple Class Fund into Class A shares of such Fund. With
respect to tax-exempt shareholders, distributions from the Funds will not be
subject to federal income taxation to the extent permitted under the applicable
tax-exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
MCF-ATEF 07/97
A-19
<PAGE> 38
other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
SHARES -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. Government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM INTERNATIONAL EQUITY FUND, AIM
GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND
AND AIM GLOBAL UTILITIES FUND -- SPECIAL TAX INFORMATION. For taxable years in
which it is eligible to do so, each of these funds may elect to pass through to
shareholders credits for foreign taxes paid. If the fund makes such an election,
a shareholder who receives a distribution (1) will be required to include in
gross income his proportionate share of foreign taxes allocable to the
distribution and (2) may claim a credit or deduction for such share for his
taxable year in which the distribution is received, subject to the general
limitations imposed on the allowance of foreign tax credits and deductions.
Shareholders should also note that certain gains or losses attributable to
fluctuations in exchange rates or foreign currency forward contracts may
increase or decrease the amount of income of the fund available for distribution
to shareholders, and should note that if such losses exceed other income during
a taxable year, the fund would not be able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM MUNICIPAL BOND
FUND, AIM LIMITED MATURITY TREASURY SHARES AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE SHARES, for
which The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, serves as custodian. Texas Commerce Bank National Association, P.O. Box
2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail purchases of
the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
the legality of the shares offered pursuant to this Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-ATEF 07/97
A-20
<PAGE> 39
APPENDIX
- --------------------------------------------------------------------------------
DESCRIPTIONS OF RATING CATEGORIES
The following are descriptions of ratings assigned by Moody's Investors
Service, Inc. ("Moody's") and Standard and Poor's Ratings Services ("S&P") to
certain debt securities in which AIM HIGH YIELD FUND and AIM INCOME FUND may
invest. See the Statement of Additional Information for descriptions of other
Moody's and S&P rating categories and those of other rating agencies.
MOODY'S: Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. These are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements,
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
S&P: AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC and C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the lowest degree of speculation and
C the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or large exposures
to adverse conditions.
A-21
<PAGE> 40
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-ATEF 07/97
B-1
<PAGE> 41
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice.
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
MCF-ATEF 07/97
B-2
<PAGE> 42
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
The Bank of New York
90 Washington Street, 11th Floor
New York, NY 10286
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Building
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of Funds,
including charges and expenses, please call (800) 347-4246, or write to A I M
Distributors, Inc. and request a free prospectus. Please read the prospectus
carefully before you invest or send money.
<PAGE> 43
STATEMENT OF
ADDITIONAL INFORMATION
AIM TAX-EXEMPT FUNDS, INC.
AIM TAX-EXEMPT CASH FUND
AIM TAX-FREE INTERMEDIATE SHARES
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
11 Greenway Plaza
Suite 100
Houston, Texas 77046
(713) 626-1919
-------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT
SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS FOR THE ABOVE-NAMED
FUNDS, A COPY OF WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY
WRITING A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739,
OR BY CALLING (800) 347-4246
-------------
Statement of Additional Information Dated: August 1, 1997
Relating to the Prospectus Dated: August 1, 1997
<PAGE> 44
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Yield Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
INVESTMENT PROGRAM AND RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Investment Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Municipal Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
When-Issued or Delayed Delivery Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Synthetic Municipal Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Variable or Floating Rate Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investments in Securities Owned by Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . 10
Eligible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Concentration of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investment in High Risk Securities: AIM Tax-Exempt Bond Fund of Connecticut Only . . . . . . . . . . . . . . 14
Risks Regarding Interest Rate Futures Contracts and Related Options: AIM Tax-Exempt Bond
Fund of Connecticut Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Control Persons and Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
DESCRIPTION OF MONEY MARKET INSTRUMENTS (AIM Tax-Exempt Cash Fund Only) . . . . . . . . . . . . . . . . . . . . . . . 36
Money Market Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
i
<PAGE> 45
<TABLE>
<S> <C>
RATINGS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
ii
<PAGE> 46
INTRODUCTION
AIM Tax-Exempt Funds, Inc. (formerly named AIM Tax-Free Funds, Inc.)
(the "Company") is a series mutual fund. The rules and regulations of the
United States Securities and Exchange Commission (the "SEC") require all mutual
funds to furnish prospective investors certain information concerning the
activities of the fund being considered for investment. This information is
included in a Prospectus (the "Prospectus"), dated August 1, 1997, which
relates to the Company's AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE
SHARES, a class of the INTERMEDIATE PORTFOLIO, and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT each of which has a retail class of shares consisting of Class A
shares (collectively, the "Funds" and each separately a "Fund"). Copies of the
Prospectus and additional copies of this Statement of Additional Information
may be obtained without charge by writing the distributor of the Funds' shares,
A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas
77210-4739, or by calling (800) 347-4246. Investors must receive a Prospectus
before they invest in any Fund.
This Statement of Additional Information is intended to furnish
investors with additional information concerning the Funds. Some of the
information required to be in this Statement of Additional Information is also
included in the Funds' current Prospectus. Additionally, the Prospectus and
this Statement of Additional Information omit certain information contained in
the Company's Registration Statement filed with the SEC. Copies of the
Registration Statement, including items omitted from the Prospectus and this
Statement of Additional Information, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was incorporated under the laws of the State of Maryland
on May 4, 1993, and is registered with the SEC as an open-end series management
investment company.
On October 15, 1993, pursuant to an Agreement and Plan of
Reorganization between the Company and AIM Funds Group, a Massachusetts
business trust ("AFG"), the Company's AIM TAX-EXEMPT CASH FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT succeeded to the assets and assumed the
liabilities of AFG's AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of
Connecticut (the "AFG Funds"), respectively. Similarly, on October 15, 1993,
pursuant to an Agreement and Plan of Reorganization between the Company and
Tax-Free Investments Co., a Maryland corporation ("TFIC"), the Company's
INTERMEDIATE PORTFOLIO succeeded to the assets and assumed the liabilities of
TFIC's Intermediate Portfolio (together with the AFG Funds, the "Predecessor
Funds"). All historical financial and other information contained in this
Statement of Additional Information for periods prior to October 15, 1993,
relating to the Funds is that of the Predecessor Funds. Shares of common stock
of the Company are redeemable at their net asset value at the option of the
shareholder or at the option of the Company in certain circumstances. Shares
of AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE INTERMEDIATE SHARES
purchased in amounts of $1 million or more may be subject to a contingent
deferred sales charge under certain circumstances. For information concerning
the methods of redemption and the rights of share ownership, investors should
consult the Prospectus under the captions "General Information" and "How to
Redeem Shares."
As used in the Prospectus, the term "majority of the outstanding
shares" of the Company or a Fund means, respectively, the vote of the lesser of
(i) 67% or more of the shares of the Company or the Fund present at a meeting
of shareholders, if the holders of more than 50% of the outstanding shares of
the Company or the Fund are present or represented by proxy or (ii) more than
50% of the outstanding shares of the Company or the Fund.
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<PAGE> 47
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to the Fund and, upon liquidation of a Fund, to participate proportionately in
the Fund's net assets remaining after satisfaction of the Fund's outstanding
liabilities. Each Fund's shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive, conversion or exchange rights.
Fractional shares have proportionately the same rights, including voting
rights, as do full shares.
Shareholders of the Funds do not have cumulative voting rights and
therefore the holders of more than 50% of the outstanding shares of all Funds
voting together for election of directors can elect all the members of the
Board of Directors of the Company. In such event, the remaining holders cannot
elect any directors of the Company.
The assets received by the Company for the issue or sale of shares of
each Fund, and all income, earnings, profits, losses and proceeds thereof,
subject only to the rights of creditors, are specifically allocated to the
appropriate Fund. They constitute the underlying assets of each Fund, are
required to be segregated on the Company's books of account, and are to be
charged with the expenses of such Fund. Any general expenses of the Company
not readily identifiable as belonging to a particular Fund are allocated by or
under the direction of the Board of Directors, primarily on the basis of
relative net assets, or other relevant factors.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
Calculations of yield will take into account the total income earned
by the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT,
respectively, including taxable income, if any; however, both Funds intend to
invest their respective assets so that 100% of annual interest income will be
tax-exempt.
Yields for each Fund used in advertising are computed as follows: (a)
divide the Fund's income for a given 30-day or one-month period, net of
expenses, by the average number of shares entitled to receive dividends during
the period; (b) divide the figure arrived at in step (a) by the offering price
of the Fund's shares (including the maximum sales charge) at the end of the
period; and (c) annualize the result (assuming compounding of income) in order
to arrive at an annual percentage rate. For purposes of such yield quotation,
income is calculated in accordance with standardized methods applicable to all
stock and bond mutual funds. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by subtracting a
portion of the premium from income on a daily basis, and is increased with
respect to bonds trading at a discount by adding a portion of the discount to
daily income. Capital gains and losses are excluded from this yield
calculation.
A Fund's tax equivalent yield is the rate an investor would have to
earn from a fully taxable investment in order to equal the Fund's yield after
taxes. Tax equivalent yields are calculated by dividing the Fund's yield by
one minus a stated tax rate (if only a portion of the Fund's yield was
tax-exempt, only that portion would be adjusted in the calculation).
A Fund also may quote its distribution rate, which expresses the
historical amount of income the Fund paid as dividends to its shareholders as a
percentage of the Fund's offering price. The distribution rates for the
INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT for the
thirty days ended March 31, 1997, were 4.70% and 4.88%, respectively.
Income calculated for purposes of calculating a Fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the
2
<PAGE> 48
compounding assumed in yield calculations, the yield quoted for a Fund may
differ from the rate of distributions from the Fund paid over the same period
or the rate of income reported in the Fund's financial statements.
AIM TAX-EXEMPT CASH FUND
The standard formula for calculating annualized yield for AIM
TAX-EXEMPT CASH FUND is as follows:
Y = (V - V ) x 365
1 0
------------ ---
V 7
0
Where Y = annualized yield.
V = the value of a hypothetical pre-existing account
0 in the Fund having a balance of one share
at the beginning of a stated seven-day period.
V = the value of such an account at the end of the
1 stated period.
The standard formula for calculating effective annualized yield for
the Fund is as follows:
365/7
EY = (Y + 1) - 1
Where EY = effective annualized yield.
Y = annualized yield, as determined above.
For purposes of the annualized yield and effective annualized yield,
the net change in the value of the hypothetical AIM TAX-EXEMPT CASH FUND
account reflects the value of additional shares purchased with dividends from
the original shares and any such additional shares, and all fees charged, other
than non-recurring account or sales charges, to all shareholder accounts in
proportion to the length of the base period and the Fund's average account
size, but does not include realized gains or losses or unrealized appreciation
and depreciation.
Tax-equivalent yield for the Fund will be calculated by dividing that
portion of the yield of the Fund (as determined above) which is tax-exempt by
one minus a stated income tax rate and adding the product to that portion of
the yield that is not tax-exempt.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of a Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the Fund's net asset value per share over the
period. Average annual total returns are calculated by determining the growth
or decline in value of a hypothetical investment in a Fund over a stated period
of time, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant over the period. While average annual total returns are a
convenient means of comparing investment alternatives, investors should realize
that a Fund's performance is not constant over time, but changes from year to
year, and that average annual total return does not represent the actual
year-to-year performance of a Fund.
In addition to average annual total return, a Fund may quote
unaveraged or cumulative total return reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions, over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns, yields, and other performance
information may be quoted numerically or in tables, graphs or similar
3
<PAGE> 49
illustrations. Total returns may be quoted with or without taking any
applicable maximum sales charge into account. The total returns included for
the Funds do not include applicable maximum sales charges. Excluding a sales
charge from a total return calculation produces a higher total return figure.
HISTORICAL PORTFOLIO RESULTS
A Fund's performance may be compared in advertising to the performance
of other mutual funds in general, or of particular types of mutual funds,
especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc. and other independent services
which monitor the performance of mutual funds. A Fund may also advertise
mutual fund performance rankings which have been assigned to it by such
monitoring services.
A Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the Consumer Price Index, the
Standard & Poor's 500 Stock Index, and fixed-price investments such as bank
certificates of deposit and/or savings accounts. In addition, a Fund's
long-term performance may be described in advertising in relation to
historical, political and/or economic events. An investor should be aware that
an investment in a Fund is subject to risks not present in ownership of a
certificate of deposit, due to greater risk of loss of capital.
From time to time, sales literature and/or advertisements for any of
the Funds may disclose (i) the largest holdings in the Fund's portfolio, (ii)
certain selling group members and/or (iii) certain institutional shareholders.
Although performance data may be useful to prospective investors when
comparing a Fund's performance with other mutual funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by a Fund.
From time to time, the Funds' sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. These
topics include, but are not limited to, literature addressing general
information about mutual funds, variable annuities, dollar-cost averaging,
stocks, bonds, money markets, certificates of deposit, asset allocation,
tax-free investing, college planning and inflation.
AIM TAX-EXEMPT CASH FUND
The annualized and effective annualized yields for the seven-day
period ended March 31, 1997, were 2.85% and 2.89%, respectively. Assuming a
tax rate of 39.6%, these yields for the Fund on a tax-equivalent basis were
4.19% and 4.25%, respectively.
The annual average total returns of the Fund for the one, five and
ten-year periods ended March 31, 1997, were 2.82%, 2.45% and 3.53%,
respectively. The cumulative total returns of the Fund for the one, five and
ten-year periods ended March 31, 1997, were 2.82%, 12.85% and 41.43%,
respectively.
INTERMEDIATE PORTFOLIO - AIM TAX-FREE INTERMEDIATE SHARES
The following chart shows the total returns of the Fund for the one
and five-year periods ended March 31, 1997, and the period from May 11, 1987
(date operations commenced) through March 31, 1997:
4
<PAGE> 50
<TABLE>
<CAPTION>
Average
Period Annual Return Cumulative Return
------ ------------- -----------------
<S> <C> <C>
One year ended 3/31/97 3.29% 3.29%
Five year ended 3/31/97 5.57% 31.14%
5/11/87 through 3/31/97 6.22% 81.53%
</TABLE>
The Fund's 30-day yield as of March 31, 1997, was 3.55%, with a
corresponding tax-equivalent yield of 5.88%, assuming a tax rate of 39.6%.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
The following chart shows the total returns of the Fund for the one
and five-year periods ended March 31, 1997, and the period from October 3, 1989
(date operations commenced) through March 31, 1997:
<TABLE>
<CAPTION>
Average
Period Annual Return Cumulative Return
------ ------------- -----------------
<S> <C> <C>
One year ended 3/31/97 -0.14% -0.14%
Five year ended 3/31/97 5.54% 30.94%
10/03/89 through 3/31/97 6.46% 59.79%
</TABLE>
The Fund's 30-day yield as of March 31, 1997, was 4.33%, with a
corresponding Connecticut individual's tax-equivalent yield of 7.51%, assuming
a federal tax rate of 39.6%, and a state tax rate of 4.5%.
PORTFOLIO TRANSACTIONS
A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and
sell securities for the Funds, selection of broker-dealers and negotiation of
commission rates. Since purchases and sales of portfolio securities by the
Funds are usually principal transactions, each Fund incurs little or no
brokerage commissions. Portfolio securities are normally purchased directly
from the issuer or from a market maker for the securities. The purchase price
paid to dealers serving as market makers may include a spread between the bid
and asked prices. The Funds also may purchase securities from underwriters at
prices which include a commission paid by the issuer to the underwriter.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To
the extent that the execution and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which AIM deems
to be beneficial to the Funds' investment programs. Such research services
supplement AIM's own research. Research services may include the following:
statistical and background information on U.S. and foreign economies, industry
groups and individual companies; forecasts and interpretations with respect to
U.S. and foreign economies, money markets, fixed income markets, equity
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indices and investment
accounts; information concerning prices of securities; the providing of
equipment used to communicate research information; the arranging of meetings
with management of companies; and the providing of access to consultants who
supply research information. Certain research services furnished by dealers
may be useful to AIM with clients other than the Funds. Similarly, any
research services received by AIM through placement of portfolio transactions
of other clients may be of value to AIM in fulfilling their obligations to a
Fund. AIM is of the opinion that the material received is beneficial in
supplementing AIM's research and analysis; and therefore, it may benefit a Fund
by improving
5
<PAGE> 51
the quality of AIM's investment advice. The advisory fee paid by a Fund is not
reduced because AIM receives such services; however, because AIM must evaluate
information received as a result of such services, receipt of such services
does not reduce AIM's workload.
Under the Investment Company Act of 1940, as amended (the "1940 Act"),
persons affiliated with the Company are prohibited from dealing with the Funds
as principal in any purchase or sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC. The 1940 Act prohibits
the Funds from purchasing a security being publicly underwritten by a syndicate
of which a person affiliated with the Company is a member except in accordance
with certain conditions. These conditions may restrict the ability of a Fund
to purchase municipal securities being publicly underwritten by such syndicate,
and the Fund may be required to wait until the syndicate has been terminated
before buying such securities. At such time, the market price of the
securities may be higher or lower than the original offering price. A person
affiliated with the Company may, from time to time, serve as placement agent or
financial advisor to an issuer of municipal securities and be paid a fee by
such issuer. Each Fund may purchase such municipal securities directly from
the issuer, provided that the purchase is reviewed by the Board of Directors
and a determination is made that the placement fee or other remuneration paid
by the issuer to a person affiliated with the Company is fair and reasonable in
relation to the fees charged by others performing similar services.
From time to time, an identical security may be sold by an investment
company managed by AIM (an "AIM Fund") or another investment account advised by
AIM or A I M Capital Management, Inc. ("AIM Capital") and simultaneously
purchased by another AIM Fund or another investment account advised by AIM or
AIM Capital, when such transactions comply with applicable rules and
regulations and are deemed consistent with the investment objective(s) and
policies of the investment accounts involved. Procedures pursuant to Rule
17a-7 under the 1940 Act regarding transactions between investment accounts
advised by AIM or AIM Capital have been adopted by the Boards of
Directors/Trustees of the various AIM Funds. Although such transactions may
result in custodian, tax or other related expenses, no brokerage commissions or
other direct transaction costs are generated by transactions among the
investment accounts advised by AIM or AIM Capital.
Provisions of the 1940 Act and rules and regulations thereunder have
also been construed to prohibit the Funds from purchasing securities or
instruments from, or selling securities or instruments to, any holder of 5% or
more of the voting securities of any investment company managed or advised by
AIM. The Company has obtained an order of exemption from the SEC which permits
the Funds to engage in certain transactions with such 5% holder if the Funds
comply with conditions and procedures designed to ensure that such transactions
are executed at fair market value and present no conflicts of interest.
Some of the AIM Funds may have objectives similar to those of the
Funds. It is possible that at times identical securities will be appropriate
for investment by a Fund and by one or more of the other AIM Funds. The
position of each account, however, in the securities of the same issue may vary
and the length of time that each account may choose to hold its investment in
the securities of the same issue may likewise vary. The timing and amount of
purchase by each account will also be determined by its cash position. If the
purchase or sale of securities consistent with the investment policies of a
Fund and one or more of the other AIM Funds is considered at or about the same
time, transactions in such securities will be allocated among the Fund and the
other AIM Funds in a manner deemed equitable by AIM. AIM may combine such
transactions, in accordance with applicable laws and regulations, in order to
obtain the best net price and most favorable execution. Simultaneous
transactions could, however, adversely affect the ability of a Fund to obtain
or dispose of the full amount of a security which it seeks to purchase or sell.
In some cases the procedure for allocating portfolio transactions
among the Funds and the other AIM Funds could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
the main factors considered by AIM are the respective investment objectives and
policies of the Funds and the other AIM Funds, the relative size of portfolio
holdings by the same or comparable securities, the availability of cash for
investment, the size of investment commitments generally held and the judgments
of the persons responsible for recommending the investment.
6
<PAGE> 52
The Funds paid no brokerage commissions to brokers affiliated with the
Funds during the past three fiscal years of each Fund.
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
Information concerning each Fund's investment objective and operating
policies is set forth in the Prospectus. The principal features of each Fund's
investment program and the primary risks associated with that investment
program are also discussed in the Prospectus. There can be no assurance that a
Fund will achieve its objective. The values of the securities in which a Fund
invests fluctuate based upon interest rates, the financial stability of the
issuer and other market factors. The following is a more detailed description
of the portfolio instruments eligible for purchase by the Funds, which augments
the discussion of the Funds' investment programs which appears under the
caption "Investment Program" in the Prospectus.
Subsequent to its purchase by a Fund, an issue of Municipal Securities
may cease to be rated by Moody's Investors Service, Inc. ("Moody's") or
Standard and Poor's Ratings Services ("S&P"), or another nationally recognized
statistical rating organization ("NRSRO"), or the rating of such a security may
be reduced below the minimum rating required for purchase by a Fund. Neither
event would require a Fund to dispose of the security, but AIM will consider
such events to be relevant in determining whether the Fund should continue to
hold the security. To the extent that the ratings applied by Moody's, S&P or
another NRSRO to Municipal Securities may change as a result of changes in
these rating systems, a Fund will attempt to use comparable ratings as
standards for its investments in Municipal Securities in accordance with the
investment policies described herein.
The Funds may from time to time invest in taxable short-term
investments ("Taxable Investments") consisting of obligations of the U.S.
Government, its agencies or instrumentalities, and repurchase
agreements/reverse repurchase agreements (instruments under which the seller
agrees to repurchase the security at a specified time and price) relating
thereto; commercial paper rated within the highest rating category by a
recognized rating agency; and certificates of deposit of domestic banks with
assets of at least $1.5 billion or more as of the date of their most recently
published financial statements. A Fund may invest in Taxable Investments, for
example, due to market conditions or pending the investment of proceeds from
the sale of its shares or proceeds from the sale of portfolio securities or in
anticipation of redemptions. Although interest earned from Taxable Investments
will be taxable to shareholders as ordinary income, the Funds generally intend
to minimize taxable income through investment, when possible, in short-term
tax-exempt securities, which may include shares of other investment companies
whose dividends are tax-exempt.
MUNICIPAL SECURITIES
"Municipal Securities" include debt obligations issued to obtain funds
for various public purposes, including the construction of a wide range of
public facilities such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works.
Other public purposes for which Municipal Securities may be issued
include the refunding of outstanding obligations, obtaining funds for general
operating expenses and lending such funds to other public institutions and
facilities. In addition, certain types of industrial development bonds are
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated housing
facilities, airport, mass transit, industrial, port or parking facilities, air
or water pollution control facilities and certain local facilities for water
supply, gas, electricity or sewage or solid waste disposal. The interest paid
on such bonds may be exempt from federal income tax, although current federal
tax laws place substantial limitations on the purposes and size of such issues.
Such obligations are
7
<PAGE> 53
considered to be Municipal Securities provided that the interest paid thereon,
in the opinion of bond counsel, qualifies as exempt from federal income tax.
However, interest on Municipal Securities may give rise to a federal
alternative minimum tax liability and may have other collateral federal income
tax consequences. See "Dividends, Distributions and Tax Matters - Tax
Matters."
The two major classifications of Municipal Securities are bonds and
notes. Bonds may be further classified as "general obligation" or "revenue"
issues. General obligation bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenues derived from a particular facility
or class of facilities, and in some cases, from the proceeds of a special
excise or other specific revenue source, but not from the general taxing power.
Tax-exempt industrial development bonds are in most cases revenue bonds and do
not generally carry the pledge of the credit of the issuing municipality.
Notes are short-term instruments which usually mature in less than two years.
Most notes are general obligations of the issuing municipalities or agencies
and are sold in anticipation of a bond sale, collection of taxes or receipt of
other revenues. There are, of course, variations in the risks associated with
Municipal Securities, both within a particular classification and between
classifications. The Funds' assets may consist of any combination of general
obligation bonds, revenue bonds, industrial revenue bonds and notes. The
percentage of such Municipal Securities held by a Fund will vary from time to
time.
For purposes of the diversification requirements applicable to a Fund,
the identification of the issuer of Municipal Securities depends on the terms
and conditions of each individual security. When the assets and revenues of an
agency, authority, instrumentality or other political subdivision are separate
from those of the government creating the subdivision, and the security is
backed only by the assets and revenues of the subdivision, such subdivision
will be deemed to be the sole issuer. Similarly, in the case of an industrial
revenue bond, if that bond is backed only by the assets and revenues of the
non-governmental user, then such non-governmental user will be deemed to be the
sole issuer. If, however, in either case, the creating government or some
other entity guarantees a security, such guarantee would be considered a
separate security and will be treated as an issue of such government or other
entity unless the value of all securities issued or guaranteed by such
government or other entity and owned by a Fund does not exceed 10% of the total
assets of such Fund. Certain Municipal Securities may be secured by a guaranty
or irrevocable letter of credit of a major banking institution, or may be
insured by an insurance company.
The yields on Municipal Securities are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions of the Municipal Securities market, size of a particular
offering, and maturity and rating of the obligation. The yield realized by a
Fund's shareholders will be the yield realized by the Fund on its investments,
reduced by the general expenses of the Fund and the Company. The market values
of the Municipal Securities held by a Fund will be affected by changes in the
yields available on similar securities. If yields increase following the
purchase of a Municipal Security, the market value of such Municipal Security
will generally decrease. Conversely, if yields decrease, the market value of a
Municipal Security will generally increase.
WHEN-ISSUED OR DELAYED DELIVERY SECURITIES
The Funds may purchase Municipal Securities on a "when-issued" basis,
that is, the date for delivery of and payment for the securities is not fixed
at the date of purchase, but is set after the securities are issued (normally
within forty-five days after the date of the transaction). The Funds also may
purchase or sell Municipal Securities on a delayed delivery basis. The payment
obligation and the interest rate that will be received on the when-issued
securities are fixed at the time the buyer enters into the commitment. The
Funds will only make commitments to purchase when-issued or delayed delivery
Municipal Securities with the intention of actually acquiring such securities,
but the Funds may sell these securities before the settlement date if it is
deemed advisable.
If a Fund purchases a when-issued or delayed delivery security, the
Fund will direct its custodian bank to segregate cash or other high grade
securities (including Temporary Investments and Municipal Securities)
8
<PAGE> 54
in an amount equal to the when-issued or delayed delivery commitment. If Fund
assets are so segregated, the assets will be valued at market for the purpose
of determining the adequacy of the segregated securities. If the market value
of such securities declines, additional cash or securities will be segregated
on a daily basis so that the market value of the segregated assets will equal
the amount of the Fund's when-issued or delayed delivery commitments. To the
extent assets are segregated, they will not be available for new investment or
to meet redemptions.
Securities purchased on a when-issued or delayed delivery basis and
the other securities held by a Fund are subject to changes in market value
based on the public's perception of the creditworthiness of the issuer and
changes in the level of interest rates (which will generally result in all of
those securities changing in value in the same way (e.g., appreciating when
interest rates fall)). Therefore, if in order to achieve higher interest
income a Fund remains substantially fully invested at the same time that it has
purchased securities on a when-issued or delayed delivery basis, there is a
possibility that the Fund will experience greater fluctuation in the market
value of its assets.
Furthermore, when the time comes for a Fund to meet its obligations
under when-issued or delayed delivery commitments, the Fund will do so by use
of its then available cash, by the sale of the segregated securities, by the
sale of other securities or, although it would not normally expect to do so, by
directing the sale of the when-issued or delayed delivery securities themselves
(which may have a market value greater or less than the Fund's payment
obligation thereunder). The sale of securities to meet such obligations
carries with it a greater potential for the realization of net short-term
capital gains, which are not exempt from federal income taxes. The value of
when-issued or delayed delivery securities on the settlement date may be more
or less than the purchase price.
In a delayed delivery transaction, a Fund relies on the other party to
complete the transaction. If the transaction is not completed, the Fund may
miss a price or yield considered to be advantageous.
As a non-fundamental policy, AIM TAX-EXEMPT CASH FUND will not enter
into when-issued commitments if more than 25% of its net assets would be
subject to commitments for when-issued and delayed delivery securities.
SYNTHETIC MUNICIPAL INSTRUMENTS
AIM TAX-EXEMPT CASH FUND may invest in synthetic municipal instruments
the value of and return on which are derived from underlying securities. The
types of synthetic municipal instruments in which the Fund may invest include
tender option bonds and variable rate trust certificates. Both types of
instruments involve the deposit into a trust or custodial account of one or
more long-term tax-exempt bonds or notes ("Underlying Bonds"), and the sale of
certificates evidencing interests in the trust or custodial account to
investors such as the Fund. The trustee or custodian receives the long-term
fixed rate interest payments on the Underlying Bonds, and pays certificate
holders short-term floating or variable interest rates which are reset
periodically. A "tender option bond" provides a certificate holder with the
conditional right to sell (put) its certificate to the Sponsor or some
designated third party at specified intervals and receive the par value of the
certificate plus accrued interest. A "variable rate trust certificate"
evidences an interest in a trust entitling the certificate holder to receive
variable rate interest based on prevailing short-term interest rates and also
typically providing the certificate holder with the conditional right to put
its certificate at par value plus accrued interest.
Because synthetic municipal instruments involve a trust or custodial
account and a third party conditional put feature, they involve complexities
and potential risks that may not be present where a municipal security is owned
directly. For further information regarding certain risks associated with
investing in synthetic municipal instruments see the Prospectus under the
caption "Investment Program--AIM Tax-Exempt Cash Fund--Synthetic Municipal
Instruments."
9
<PAGE> 55
VARIABLE OR FLOATING RATE INSTRUMENTS
The Funds may invest in Municipal Securities which have variable or
floating interest rates which are readjusted periodically. Variable or
floating interest rates generally reduce changes in the market price of
Municipal Securities from their original purchase price. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable or floating rate Municipal Securities than
for fixed rate obligations.
Many Municipal Securities with variable or floating interest rates
purchased by a Fund are subject to payment of principal and accrued interest
(usually within seven days) on the Fund's demand. The terms of such demand
instruments require payment of principal and accrued interest by the issuer, a
guarantor, and/or a liquidity provider. All variable or floating rate
instruments will meet the applicable quality standards of a Fund. AIM will
monitor the pricing, quality and liquidity of the variable or floating rate
Municipal Securities held by the Funds.
INVESTMENTS IN SECURITIES OWNED BY OFFICERS AND DIRECTORS
No Fund will purchase or retain the securities of any issuer if the
officers and directors of the Company or AIM who beneficially own more than 1/2
of 1% of the securities of such issuer together own more than 5% of the
securities of such issuer. This is a non-fundamental policy of each of the
Funds.
ELIGIBLE SECURITIES
AIM TAX-EXEMPT CASH FUND will limit its investments to those
securities which at the time of purchase are "Eligible Securities" as defined
in Rule 2a-7 under the 1940 Act, as amended from time to time, and which the
Fund's Board of Directors has determined present minimal credit risk.
CONCENTRATION OF INVESTMENTS
As a non-fundamental policy, neither AIM TAX-EXEMPT CASH FUND nor the
INTERMEDIATE PORTFOLIO will purchase any securities which would cause more than
25% of the value of its net assets at the time of such purchase to be invested
in: (i) securities of one or more issuers conducting their principal activities
in the same state, (ii) securities, the interest on which is paid from revenues
of projects with similar characteristics or (iii) industrial development bonds;
provided, that there is no limit with respect to investments in U.S. Treasury
bills, other obligations issued or guaranteed by the U.S. Government and its
agencies or instrumentalities, certificates of deposit and guarantees of
Municipal Securities by banks.
INVESTMENT RESTRICTIONS
Each Fund is subject to the following restrictions which may not be
changed without the approval of the lesser of (i) 67% or more of the Fund's
shares present at a meeting if the holders of more than 50% of the outstanding
shares are present in person or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares. Any investment restriction that involves a
percentage limitation applies at the time of investment, without regard to
later increases or decreases in the values of securities or assets.
AIM TAX-EXEMPT CASH FUND may not:
1. With respect to 75% of its total assets, purchase the securities
of any issuer if such purchase would cause more than 5% of the value of its
total assets to be invested in the securities of such issuer (except securities
issued, guaranteed or sponsored by the U.S. Government or its agencies and
instrumentalities and except as permitted by Rule 2a-7, as amended from time
to time, and except that such Fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order).
10
<PAGE> 56
2. Borrow money or issue senior securities except for temporary or
emergency purposes, except that it may enter into reverse repurchase agreements
and may purchase when-issued securities (consistent with its investment
policies and objectives).
3. Purchase securities while borrowings in excess of 5% of its total
assets are outstanding and, in addition, will not borrow money if such
borrowing will exceed the borrowing limits established by the SEC for money
market funds, as amended from time to time.
4. Lend any portfolio securities if the value of the securities
loaned by it would exceed an amount equal to one-third of its total assets.
5. Concentrate 25% or more of its total assets in issuers in a
particular industry. Tax-exempt securities issued by governments or political
subdivisions of governments are not included within this restriction.
6. Make short sales of securities or purchase securities on margin or
invest in puts, calls, straddles, spreads or any combination thereof, except
that it may obtain such short-term credits as are necessary for the clearance
of purchases and sales of securities.
7. Make loans, other than by investing in obligations in which it may
invest consistent with its investment objective and policies, and other than by
engaging in repurchase agreements and loans of portfolio securities as
described above.
8. Pledge, mortgage or hypothecate more than 33-1/3% of its total
assets; provided that for purposes of this restriction, reverse repurchase
agreements and loans of portfolio securities are not deemed to involve the
pledge, mortgage or hypothecation of assets.
9. Purchase or sell real estate, but it may invest in marketable
securities secured by real estate or interests therein.
10. Purchase or sell commodities or commodities futures contracts.
11. Underwrite any issue of securities, except that it may purchase
securities, either directly from an issuer or from an underwriter for an
issuer, and later dispose of such securities in accordance with its investment
program.
The INTERMEDIATE PORTFOLIO may not:
1. With respect to 75% of its total assets, purchase the securities
of any issuer if such purchase would cause more than 5% of the value of its
total assets to be invested in the securities of such issuer (except securities
issued, guaranteed or sponsored by the U.S. Government or its agencies and
instrumentalities and except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order).
2. Borrow money or issue senior securities except for temporary or
emergency purposes, except that it may enter into reverse repurchase agreements
and may purchase when-issued securities (consistent with its investment
policies and objectives).
3. Purchase securities while borrowings in excess of 5% of its total
assets are outstanding.
4. Lend money or lend any portfolio securities if the value of the
securities loaned by it would exceed an amount equal to one-third of its total
assets.
11
<PAGE> 57
5. Concentrate 25% or more of its total assets in issuers in a
particular industry. Tax-exempt securities issued by governments or political
subdivisions of governments are not included within this restriction.
6. Make short sales of securities or purchase securities on margin or
invest in puts, calls, straddles, spreads or any combination thereof, except
that it may obtain such short-term credits as are necessary for the clearance
of purchases and sales of securities.
7. Make loans, other than by investing in obligations in which it may
invest consistent with its investment objective and policies, and other than by
engaging in repurchase agreements and loans of portfolio securities as
described above.
8. Pledge, mortgage or hypothecate more than 33-1/3% of its total
assets; provided that for purposes of this restriction, reverse repurchase
agreements and loans of portfolio securities are not deemed to involve the
pledge, mortgage or hypothecation of assets.
9. Purchase or sell real estate, but it may invest in marketable
securities secured by real estate or interests therein.
10. Purchase or sell commodities or commodities futures contracts.
11. Underwrite any issue of securities, except that it may purchase
securities, either directly from an issuer or from an underwriter for an
issuer, and later dispose of such securities in accordance with its investment
program.
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT may not:
1. Borrow money or issue senior securities except for temporary or
emergency purposes, except that it may enter into reverse repurchase agreements
and may purchase when-issued securities (consistent with its investment
policies and objectives), and except that it may enter into financial futures
contracts and it may borrow from banks provided that no borrowing exceeds
one-third of the value of its total assets.
2. Purchase securities while borrowings in excess of 5% of its total
assets are outstanding.
3. Lend any portfolio securities if the value of the securities
loaned by it would exceed an amount equal to one-third of its total assets.
4. Concentrate 25% or more of its total assets in issuers in a
particular industry. Tax-exempt securities issued by governments or political
subdivisions of governments are not included within this restriction.
5. Make short sales of securities or purchase securities on margin or
invest in puts, calls, straddles, spreads or any combination thereof, except
that it may obtain such short-term credits as are necessary for the clearance
of purchases and sales of securities, and it may make margin payments in
connection with transactions in financial futures contracts and options thereon
and municipal bond index futures contracts.
6. Make loans, other than by investing in obligations in which it may
invest consistent with its investment objective and policies, and other than by
engaging in repurchase agreements and loans of portfolio securities as
described above.
7. Pledge, mortgage or hypothecate more than 33-1/3% of its total
assets; provided that for purposes of this restriction, reverse repurchase
agreements and loans of portfolio securities are not deemed to involve the
pledge, mortgage or hypothecation of assets, and provided further that
collateral arrangements with
12
<PAGE> 58
respect to margin for financial or municipal bond index futures contracts are
not deemed to involve the pledge, mortgage or hypothecation of assets.
8. Purchase or sell real estate, but it may invest in marketable
securities secured by real estate or interests therein.
9. Purchase or sell commodities or commodities futures contracts.
10. Underwrite any issue of securities, except that it may purchase
securities, either directly from an issuer or from an underwriter for an
issuer, and later dispose of such securities in accordance with its investment
program.
The following restrictions are non-fundamental and may be changed by
the Company's Board of Directors. Pursuant to such restrictions:
1. None of the Funds may invest in oil, gas or other mineral leases,
rights, royalty contracts or exploration or development programs.
2. None of the Funds may invest for the purpose of exercising
control.
3. The INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT will not invest more than 15% of the value of their respective net
assets in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days. AIM TAX-EXEMPT CASH FUND will not invest
more than 10% of its net assets in such securities.
In order to permit the sale of the Funds' shares in certain states,
the Funds may from time to time make commitments that are more restrictive than
the restrictions described above. For example, as of the date of this
Statement of Additional Information, (1) each of the Funds has undertaken that
it will not invest more than 15% of its average net assets at the time of
purchase in investments which are not readily marketable (Texas); (2) each of
the Funds has undertaken to comply with Texas Rule 123.2(6) and follow SEC
guidelines which provide that loans of portfolio securities will be fully
collateralized (Texas); (3) each of the Funds has undertaken to comply with
Texas Rule 123.2(4) and not issue shares for any consideration other than cash
(Texas); (4) AIM TAX-EXEMPT BOND FUND OF CONNECTICUT has undertaken to not
hedge over 5% of the value of its assets without first amending its prospectus
to inform investors of the relevant risks (Maryland); (5) each of the Funds has
undertaken that it will not invest more than 15% of its respective total assets
in securities of issuers which together with any predecessors have a record of
less than three years of continuous operation or securities of issuers which
are restricted as to disposition (Ohio); and (6) each of the INTERMEDIATE
PORTFOLIO and AIM TAX-EXEMPT CASH FUND has undertaken that it will not invest
more than 5% of its total assets in securities of issuers which together with
any predecessors have a record of less than three years of continuous operation
(Arkansas). Should any of the Funds determine that any such commitment is no
longer in the best interests of the Fund and its shareholders, that Fund will
revoke the commitment by terminating sales of its shares in the state(s)
involved.
Any loan of portfolio securities by a Fund (as permitted by the above
restrictions) would involve risks of delay in receiving additional collateral
in the event the value of the collateral decreased below the value of the
securities loaned, or of delay in recovering the securities loaned, or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, loans of securities will only be made to borrowers
determined by AIM to be of good standing and only when, in AIM's judgment, the
income to be earned from such loans justifies the attendant risks.
13
<PAGE> 59
INVESTMENT IN HIGH RISK SECURITIES: AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
ONLY
As noted in the Prospectus, in pursuit of its investment objective,
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT will maintain less than 35% of its net
assets in debt securities rated below Baa/BBB. Such non-investment grade debt
securities are typically considered high risk securities and are commonly
referred to as "junk bonds." During the latest fiscal year, the Fund did not
invest in any securities which were rated below investment grade, and the Fund
expects to invest less than 5% of its net assets in such securities during the
next fiscal year.
Issuers of non-investment grade debt securities are substantially
leveraged, which may impair their ability to meet their obligations. In some
cases, such securities are subordinated to the prior payment of indebtedness
senior to the securities purchased by the Fund, thus potentially limiting the
Fund's ability to recover full principal or to receive payments when senior
securities are in default. When the secondary market for non-investment grade
debt securities becomes increasingly illiquid, including the absence of readily
available market quotations, the relative lack of reliable, objective data
makes the responsibility of the Board of Directors to value the Fund's
securities more difficult, and judgment plays a greater role in the valuation
of portfolio securities, which may have a negative impact on the ability to
accurately value the Fund's assets. Also, increased illiquidity in the
non-investment grade debt market may affect the Fund's ability to dispose of
portfolio securities at a desirable price.
The credit rating of a security does not necessarily address its
market value risk. Also, ratings may from time to time be changed to reflect
developments in the issuer's financial condition. Non-investment grade debt
securities have speculative characteristics which generally increase in number
and significance with each successive lower rating category. Also, prices of
non-investment grade debt securities have been found to be less sensitive to
interest rate changes and more sensitive to adverse economic changes and
individual corporate developments than more highly rated debt securities.
RISKS REGARDING INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS: AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT ONLY
There are several risks related to the use of interest rate futures
contracts and related options as hedging devices. One risk arises because of
the imperfect correlation between movements in the price of futures contracts
and movements in the price of the debt securities which are the subject of the
hedge. Such imperfect correlation is exacerbated in the case of AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT by the fact that futures contracts are not based on a
portfolio of bonds issued by the State of Connecticut and its political
subdivisions. If the price of a futures contract moves less than the price of
the Fund's investments which are the subject of the hedge, the hedge will not
be fully effective. If the price of a futures contract moves more than the
price of the Fund's investments, the Fund will experience either a loss or a
gain on the futures contract which will not be completely offset by movements
in the price of the investments which are the subject of the hedge. The use of
options on interest rate futures contracts also involves the risk that changes
in the value of the underlying futures contract will not be fully reflected in
the value of the option.
Successful use of interest rate futures contracts by the Fund is also
subject to AIM's ability to predict correctly movements in the direction of
interest rates. Because of possible price distortions in the futures and
options markets and because of the imperfect correlation between movements in
the prices of futures contracts and the investments being hedged, even a
correct forecast by AIM of general market trends may not result in a completely
successful hedging transaction.
It is possible that where the Fund has sold interest rate futures
contracts to hedge its portfolio against a decline in the market, the market
may advance and the value of debt securities held by the Fund may decline. If
this occurred, the Fund would lose money on the futures contracts and also
experience a decline in the value of its portfolio securities.
14
<PAGE> 60
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Fund intends to
purchase or sell futures contracts or purchase options only on exchanges or
boards of trade where there appears to be an active market, there is no
assurance that a liquid market on an exchange or board of trade will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures contract
position or purchase an option at such time. In the event of adverse price
movements under those circumstances, the Fund would continue to be required to
make daily cash payments of maintenance margin on its futures positions. The
extent to which the Fund may engage in futures contracts or related options
will be limited by tax law requirements for qualification as a regulated
investment company and the Fund's intent to continue to qualify as such.
The result of any hedging program cannot be foreseen and may cause the
Fund to incur losses which it would not otherwise sustain.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during at least the last five years are set forth below.
<TABLE>
<CAPTION>
============================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ------------------- ---------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (78) Director and Chairman of the Board of Directors,
11 Greenway Plaza, Suite 100 Chairman A I M Management Group Inc., A I M Advisors,
Houston, TX 77046 Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc.
and Fund Management Company; and Vice Chairman
and Director, AMVESCAP plc.
- ------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief
McLean, VA 22102 Executive Officer, COMSAT Corporation and
Chairman, Board of Governors of INTELSAT
(international communications company).
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
15
<PAGE> 61
<TABLE>
<CAPTION>
============================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ------------------- ---------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OWEN DALY II (72) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation.
- ------------------------------------------------------------------------------------------------------------
JACK FIELDS (45) Director Formerly, Member of the U.S. House of
2607 Old Humble Road Representatives.
Humble, TX 77338
- ------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (60) Director Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm); and Director, ERD Waste, Inc.
New York, NY 10022 (waste management company), Aegis Consumer
Finance (auto leasing company) and Lazard
Funds, Inc. (investment companies). Formerly,
Partner, Reid & Priest (law firm); and, prior
thereto, Partner, Spengler Carlson Gubar
Brodsky & Frischling (law firm).
- ------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (50) Director and Director, President and Chief Executive
11 Greenway Plaza, Suite 100 President Officer, A I M Management Group Inc.; Director
Houston, TX 77046 and President, A I M Advisors, Inc.; Director
and Senior Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management
Company; Director, AMVESCAP plc.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
** A director who is an "interested person" of the Company as defined in
the 1940 Act.
* A director who is an "interested person" of A I M Advisors, Inc. and
the Company as defined in the 1940 Act.
16
<PAGE> 62
<TABLE>
<CAPTION>
============================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ------------------- ---------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
JOHN F. KROEGER (72) Director Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund,
Morristown, NJ 07960 Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Equity Partners Fund,
Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund,
Inc., Managed Municipal Fund, Inc., Flag
Investors Value Builder Fund, Inc., Flag
Investors Maryland Intermediate Tax-Free
Income Fund, Inc., Flag Investors Real Estate
Securities Fund, Inc., Alex. Brown Cash
Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment
companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
- ------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (54) Director Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
- ------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (74) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
- ------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (57) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (real estate development).
Houston, TX 77056
- ------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 63
<TABLE>
<CAPTION>
============================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ------------------- ---------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
***JOHN J. ARTHUR (52) Senior Vice Senior Vice President and Treasurer,
11 Greenway Plaza, Suite President and A I M Advisors, Inc.; and Vice President and
100 Treasurer Treasurer, A I M Management Group Inc.,
Houston, TX 77046 A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc.
and Fund Management Company.
- ------------------------------------------------------------------------------------------------------------
GARY T. CRUM (49) Senior Vice Director and President, A I M Capital
11 Greenway Plaza, Suite 100 President Management, Inc.; Director and Senior Vice
Houston, TX 77046 President, A I M Management Group Inc. and
A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP plc.
- ------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (42) Senior Vice Senior Vice President, General Counsel and
11 Greenway Plaza, Suite President and Secretary, A I M Advisors, Inc.; Vice
100 Secretary President, General Counsel and Secretary,
Houston, TX 77046 A I M Management Group Inc.; Vice President
and General Counsel, Fund Management Company;
and Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and A I M Institutional Fund
Services, Inc.
- ------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (38) Vice President and Vice President and Fund Controller,
11 Greenway Plaza, Suite 100 Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
Houston, TX 77046 President and Assistant Treasurer, Fund
Management Company.
- ------------------------------------------------------------------------------------------------------------
STUART W. COCO (42) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc. and Vice President,
Houston, TX 77046 A I M Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (53) Vice President Vice President and Chief Compliance Officer,
11 Greenway Plaza, Suite 100 A I M Advisors, Inc., A I M Capital
Houston, TX 77046 Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management
Company.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
18
<PAGE> 64
<TABLE>
<CAPTION>
============================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ------------------- ---------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
KAREN DUNN KELLEY (37) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc. and Vice President,
Houston, TX 77046 A I M Advisors, Inc.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
All of the directors of the Company serve as directors or trustees of
some or all of the other AIM Funds. All of the Company's executive officers
hold similar offices with some or all of the other AIM Funds.
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee, and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. The Audit
Committee is responsible for meeting with the Funds' auditors to review audit
procedures and results and to consider any matters arising from an audit to be
brought to the attention of the directors as a whole with respect to the Funds'
portfolio accounting or their internal accounting controls, and for considering
such matters as may from time to time be set forth in a charter adopted by the
Board of Directors and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Fields, Kroeger, Pennock (Chairman), Robinson and Sklar. The
Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as directors who are not
interested persons as long as any of the Funds maintains a distribution plan
pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the
compensation payable to the disinterested directors, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any committee thereof. Each director
who is not also an officer of the Company is compensated for his services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. Each such director receives
a fee, allocated among the AIM Funds for which he or she serves as a director
or trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued
for each director of the Company:
19
<PAGE> 65
<TABLE>
<CAPTION>
==========================================================================================================
RETIREMENT
AGGREGATE BENEFITS
COMPENSATION ACCRUED TOTAL
FROM THE BY ALL AIM COMPENSATION
DIRECTOR COMPANY(1) FUNDS(2) FROM ALL AIM FUNDS(3)
-------- ------- ----- ------------------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------
Bruce L. Crockett 2,744 38,621 68,000
- ---------------------------------------------------------------------------------------------------------
Owen Daly II 2,755 82,607 68,000
- ---------------------------------------------------------------------------------------------------------
Jack Fields(4) 184 0 0
- ---------------------------------------------------------------------------------------------------------
Carl Frischling 2,774 56,683 68,000 (5)
- ---------------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- ---------------------------------------------------------------------------------------------------------
John F. Kroeger 2,671 83,654 66,000
- ---------------------------------------------------------------------------------------------------------
Lewis F. Pennock 2,712 33,702 67,000
- ---------------------------------------------------------------------------------------------------------
Ian Robinson 2,774 64,973 68,000
- ---------------------------------------------------------------------------------------------------------
Louis S. Sklar 2,712 47,593 66,500
==========================================================================================================
</TABLE>
- ------------------
(1) The total amount of compensation deferred by all Directors of the
Company during the fiscal year ended March 31, 1997, including interest earned
thereon, was $11,985.
(2) During the fiscal year ended March 31, 1997, the total amount of
expenses allocated to the Company in respect of such retirement benefits was
$1,187. Data reflects compensation for the calendar year ended December 31,
1996.
(3) Each Director serves as director or trustee of a total of 11
registered investment companies advised by AIM. Data reflect total
compensation for the calendar year ended December 31, 1996.
(4) Mr. Fields did not serve as a Director during the calendar year ended
December 31, 1996.
(5) See also page 22 regarding fees earned by Mr. Frischling's former law
firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may
be entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible director is entitled to receive an annual benefit
from the Applicable AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
retainer paid or accrued by the Applicable AIM Funds for such director during
the twelve-month period immediately preceding
20
<PAGE> 66
the director's retirement (including amounts deferred under a separate
agreement between the Applicable AIM Funds and the director) for the number of
such Director's years of service (not in excess of 10 years of service)
completed with respect to any of the AIM Funds. Such benefit is payable to
each eligible director in quarterly installments. If an eligible director dies
after attaining the normal retirement date but before receipt of any benefits
under the Plan commences, the director's surviving spouse (if any) shall
receive a quarterly survivor's benefit equal to 50% of the amount payable to
the deceased director for no more than ten years beginning the first day of the
calendar quarter following the date of the director's death. Payments under
the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service as of March 31, 1997, for Messrs. Crockett, Daly, Fields, Frischling,
Kroeger, Pennock, Robinson and Sklar are 10, 10, 0, 19, 19, 15, 10 and 7 years,
respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
===============================================================
Number of Annual Retainer Paid By All AIM Funds
Years of
Service With $80,000
the AIM Funds
===============================================================
<S> <C>
10 $60,000
- ---------------------------------------------------------------
9 $54,000
- ---------------------------------------------------------------
8 $48,000
- ---------------------------------------------------------------
7 $42,000
- ---------------------------------------------------------------
6 $36,000
- ---------------------------------------------------------------
5 $30,000
===============================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of their deferral accounts shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of
five (5) or ten (10) years (depending on the Agreement) beginning on the date
the deferring director's retirement benefits commence under the Plan. The
Company's Board of Directors, in its sole discretion, may accelerate or extend
the distribution of such deferral accounts after the deferring director's
termination of service as a director of the Company. If a deferring director
dies prior to the distribution of amounts in his deferral account, the balance
of the deferral account will be distributed to his designated beneficiary in a
single lump sum payment as soon as practicable after such deferring director's
death. The Agreements are not funded and, with respect to the payments of
amounts held in the deferral accounts, the deferring directors have the status
of unsecured creditors of the Company and of each other AIM Fund from which
they are deferring compensation.
21
<PAGE> 67
Effective September 1994, the firm of Kramer, Levin, Naftalis &
Frankel ("Kramer Levin") (formerly Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel) was appointed counsel to the Board of Directors. During the year
ended March 31, 1997, AIM TAX-EXEMPT CASH FUND paid $3,973 in legal fees to
Kramer Levin. During the year ended March 31, 1997, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT paid $3,997 in legal fees to Kramer Levin. During the year
ended March 31, 1997, the INTERMEDIATE PORTFOLIO paid $4,122 in legal fees to
Kramer Levin. Mr. Frischling, a director of the Company, is a partner in
Kramer Levin.
INVESTMENT ADVISORY AND OTHER SERVICES
AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046. AIM
Management, an indirect subsidiary of AMVESCAP plc, has been engaged in the
financial services business since 1976. AMVESCAP plc and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail fund business in the United States, Europe and the
Pacific Region. Certain of the directors and officers of AIM are also
executive officers of the Company and their affiliations are shown under
"Directors and Officers". AIM Capital, a wholly owned subsidiary of AIM, is
engaged in the business of providing investment advisory services to investment
companies, corporations, institutions and other accounts.
AIM was organized in 1976 and, together with its subsidiaries, advises
or manages 46 investment company portfolios. As of July 15, 1997, the total
assets of the investment company portfolios advised or managed by AIM and its
subsidiaries were approximately $76.0 billion.
AIM and the Company have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear all personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions, (c) to refrain from
personally engaging in (i) short-term trading of a security, (ii) transactions
involving a security within seven days of an AIM Fund transaction involving the
same security, and (iii) transactions involving securities being considered for
investment by an AIM Fund, and (d) to abide by certain other provisions under
the Code of Ethics. The Code of Ethics also prohibits investment personnel and
all other AIM employees from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by AIM, and the
Board of Directors reviews quarterly and annual reports (including information
on any substantial violations of the Code of Ethics). Violations of the Code
of Ethics may include censure, monetary penalties, suspension or termination of
employment.
The Company, on behalf of each Fund, has entered into a Master
Investment Advisory Agreement (the "Advisory Agreement") and a Master
Administrative Services Agreement (the "Administrative Agreement") with AIM,
each dated February 28, 1997.
The Advisory Agreement provides that each Fund will pay or cause to be
paid all expenses of the Fund not assumed by AIM, including, without
limitation: brokerage commissions; taxes, legal, accounting, auditing or
governmental fees; the cost of preparing share certificates; custodian,
transfer and shareholder service agent costs; expenses of issue, sale,
redemption and repurchase of shares; expenses of registering and qualifying
shares for sale; expenses relating to director and shareholder meetings; the
cost of preparing and distributing reports and notices to shareholders; the
fees and other expenses incurred by the Company on behalf of each Fund in
connection with membership in investment company organizations; the cost of
printing copies of prospectuses and statements of additional information
distributed to the Fund's shareholders; and all other charges and costs of the
Fund's operations unless otherwise explicitly provided. The Advisory Agreement
will continue in effect from year to year only if such continuance is
specifically approved at least annually by the Company's Board of Directors and
by the affirmative vote of a majority of the directors who are not parties to
the Advisory Agreement or "interested persons" of any such party (the
"Non-Interested Directors") by votes cast in person at a meeting called for
such purpose. The Advisory Agreement was approved by the Company's Board of
Directors (including the affirmative vote of all the Non-
22
<PAGE> 68
Interested Directors on December 11, 1996, and was approved by the Fund's
shareholders on February 7, 1997. The Advisory Agreement became effective as
of February 28, 1997. Under the Advisory Agreement, AIM is entitled to receive
a fee from AIM TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
at the annual rates of 0.35% and 0.50% of those Funds' average daily net
assets, respectively. The Advisory Agreement also provides that AIM is
entitled to receive a fee from the INTERMEDIATE PORTFOLIO at the following
annual rates based on the Fund's average daily net assets:
INTERMEDIATE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $500 million 0.30%
Next $500 million 0.25%
Amount over $1 billion 0.20%
</TABLE>
Each Fund or AIM may terminate the Advisory Agreement on sixty (60)
days' written notice without penalty. The Advisory Agreement terminates
automatically in the event of its assignment.
The Advisory Agreement provides that if, for any fiscal year, the
total of all ordinary business expenses of a Fund, including all investment
advisory fees, but excluding brokerage commissions and fees, taxes, interest
and extraordinary expenses, such as litigation costs, exceed the applicable
expense limitations imposed by state securities regulations in any state in
which that Fund's shares are qualified for sale, as such limitations may be
raised or lowered from time to time, the aggregate of all such investment
advisory fees paid by such Fund shall be reduced by the amount of such excess.
The amount of any such reduction to be borne by AIM shall be deducted from the
monthly investment advisory fee otherwise payable to AIM during such fiscal
year. If required pursuant to such state securities regulations, AIM will
reimburse a Fund no later than the last day of the first month of the next
succeeding fiscal year for any such annual operating expenses (after reduction
of all investment advisory fees in excess of such limitation).
For the years ended March 31, 1997, 1996 and 1995, AIM received
advisory fees from AIM TAX-EXEMPT CASH FUND of $125,537 $101,649 and $119,085,
respectively.
For the years ended March 31, 1997, 1996 and 1995, AIM received
advisory fees from the INTERMEDIATE PORTFOLIO of $276,828, $232,893 and
$283,990, respectively. For the years ended March 31, 1997, 1996 and 1995,
AIM waived advisory fees from the INTERMEDIATE PORTFOLIO in the amounts of $0,
$0 and $0, respectively.
For the year ended March 31, 1997, AIM received advisory fees from AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT of $194,372. For the years ended March 31,
1996 and 1995, AIM received no advisory fees from AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT, and for the years ended March 31, 1997, 1996 and 1995, AIM waived
fees from the Fund in the amount of $144,775, $198,182 and $195,413,
respectively.
The Administrative Agreement for the Funds provides that AIM may
perform, or arrange for the performance of, certain accounting and other
administrative services to the Funds which are not required to be performed by
AIM under the Advisory Agreement. For such services, AIM would be entitled to
receive from each Fund reimbursement of AIM's costs or such reasonable
compensation as may be approved by the Company's Board of Directors. The
Administrative Agreement provides that such agreement will continue in effect
until June 30, 1998, and shall continue in effect from year to year thereafter
only if such continuance is specifically approved at least annually by the
Company's Board of Directors, including the Non-Interested Directors, by votes
cast in person at a meeting called for such purpose. The Administrative
Agreement was approved by the Company's Board of Directors (including the
Non-Interested Directors) on December 11, 1996, and became effective as of
February 28, 1997.
23
<PAGE> 69
In addition, the Transfer Agency and Service Agreement (the "Transfer
Agency and Service Agreement") between the Company and A I M Fund Services,
Inc. ("AFS"), a registered transfer agent and wholly owned subsidiary of AIM,
will perform certain shareholder services for the Funds for a fee per account
serviced. The Transfer Agency and Service Agreement provides that AFS will
receive a per account fee plus out-of-pocket expenses to process orders for
purchases, redemptions and exchanges of shares, prepare and transmit payments
for dividends and distributions declared by the Funds, maintain shareholder
accounts and provide shareholders with information regarding the Funds and
their accounts. The Transfer Agency and Service Agreement became effective on
November 1, 1994.
For the years ended March 31, 1997, 1996 and 1995, AIM TAX-EXEMPT CASH
FUND reimbursed AIM in the amounts of $34,329, $34,220 and $43,481,
respectively, for administrative services.
For the years ended March 31, 1997, 1996 and 1995, the INTERMEDIATE
PORTFOLIO reimbursed AIM in the amounts of $52,666, $44,054 and $43,890,
respectively, for administrative services.
For the years ended March 31, 1997, 1996 and 1995, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT reimbursed AIM in the amounts of $49,467, $45,950 and
$46,754, respectively, for administrative services.
DISTRIBUTION PLAN
The Company has adopted a Master Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act relating to the Class A shares of AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT (collectively,
the "Covered Funds"). The Plan provides that each Covered Fund pays a fee to
AIM Distributors for distribution-related services performed by AIM
Distributors, including, but not limited to, expenses of organizing and
conducting sales seminars, printing of prospectuses and statements of
additional information (and supplements thereto) and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature and costs of administering the Plan. Under the Plan, AIM
Distributors is entitled to receive a distribution fee, which is accrued daily
and paid monthly, of 0.25% on an annualized basis of the average daily net
assets of each Covered Fund. The Plan does not obligate the Covered Funds to
reimburse AIM Distributors for the actual expenses AIM Distributors may incur
in fulfilling its obligations under the Plan on behalf of the Covered Funds.
Thus, under the Plan, even if AIM Distributors' actual expenses exceed the fees
payable by the Covered Funds thereunder at any given time, the Covered Funds
will not be obligated to pay more than those fees. If AIM Distributors'
expenses are less than the fees it receives, AIM Distributors will retain the
full amount of the fees. Currently, AIM Distributors has voluntarily elected
to waive a portion of its compensation payable by AIM TAX-EXEMPT CASH FUND such
that the compensation paid pursuant to the Plan equals 0.10% per annum of that
Fund's average daily net assets. This waiver may be rescinded by AIM
Distributors at any time and without notice to investors.
AIM Distributors is a wholly owned subsidiary of AIM, which is in turn
a wholly owned subsidiary of AIM Management.
The Plan requires the officers of the Company to provide the Board of
Directors at least quarterly with a written report of the amounts expended
pursuant to the Plan and the purposes for which such expenditures were made.
The Board of Directors reviews these reports in connection with their decisions
with respect to the Plan.
As required by Rule 12b-1 under the 1940 Act, the Plan was approved by
the Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the 1940 Act) of the Company and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan ("Qualified Directors") on May 13, 1997. In
approving the Plan in accordance with the requirements of Rule 12b-1, the
directors considered various factors and determined that there is a reasonable
likelihood that the Plan would benefit the Covered Funds and their respective
shareholders.
24
<PAGE> 70
The Plan became effective on June 30, 1997, and unless terminated
earlier in accordance with its terms, shall continue in effect until June 30,
1998, and each year thereafter as long as such continuance is specifically
approved at least annually by the Board of Directors, including a majority of
the Qualified Directors.
The Plan may be terminated by a vote of a majority of the Qualified
Directors, or, with respect to a Covered Fund, by a vote of a majority of the
holders of the outstanding voting securities of that Covered Fund. Any change
in the Plan that would increase materially the distribution expenses paid by a
Covered Fund requires shareholder approval; otherwise the Plan may be amended
by the Board of Directors, including a majority of the Qualified Directors, by
votes cast in person at a meeting called for the purpose of voting upon such
amendment. As long as the Plan is in effect, the selection or nomination of the
Qualified Directors is committed to the discretion of the Qualified Directors.
For the years ended March 31, 1997, 1996 and 1995, AIM TAX-EXEMPT CASH
FUND paid a total of $35,864, $29,043 and $34,024, respectively, under the
Plan, which constituted 0.10%, 0.10% and 0.10%, respectively, of the Fund's
average daily net assets. For the years ended March 31, 1997, 1996 and 1995,
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT paid a total of $97,186, $99,095 and
$97,706, respectively, under the Plan, which constituted 0.25%, 0.25% and
0.25%, respectively, of the Fund's average daily net assets.
An estimate by category of actual fees paid by each Covered Fund under the Plan
during the year ended March 31, 1997, were allocated as follows:
<TABLE>
<CAPTION>
AIM TAX-EXEMPT
AIM TAX-EXEMPT BOND FUND OF
CASH FUND CONNECTICUT
--------- -----------
<S> <C> <C> <C>
CLASS A
Advertising $ 4,192 $ 1,897
Printing and mailing prospectuses, 1,048 -0-
semi-annual reports and annual
reports (other than to current
shareholders)
Seminars 1,048 -0-
Compensation to Underwriters to -0- -0-
partially offset other marketing
expenses
Compensation to Dealers 29,573 95,291
including finder's fees
Compensation to Sales Personnel -0- -0-
Annual Report Total 35,861 97,188
</TABLE>
Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with such investment dealers
selected from time to time by AIM Distributors to provide distribution
assistance in connection with the sale of the Covered Funds' shares to such
dealers' customers, and to provide continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Covered Funds. The distribution assistance and continuing personal
25
<PAGE> 71
shareholder services to be rendered by dealers under the Shareholder Service
Agreements may include, but shall not be limited to, the following:
distributing sales literature; answering routine customer inquiries concerning
the Covered Funds; assisting customers in changing dividend options, account
designations and addresses, and in enrolling in any of several special
investment plans offered in connection with the purchase of the Covered Funds'
shares; assisting in the establishment and maintenance of customer accounts and
records and in the processing of purchase and redemption transactions;
investing dividends and any capital gains distributions automatically in the
Covered Funds' shares; and providing such other information and services as the
Covered Funds or the customer may reasonably request.
Under the Plan, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plan to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a Covered
Fund and the Company; performing sub-accounting; establishing and maintaining
shareholder accounts and records; processing customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other transactions
and balances in the shareholder's other accounts serviced by the bank;
forwarding applicable prospectuses, proxy statements, reports and notices to
bank clients who hold Covered Fund shares; and such other administrative
services as a Covered Fund reasonably may request, to the extent permitted by
applicable statute, rule or regulation.
Under a Shareholder Service Agreement, a Covered Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement will be calculated at the end of each payment period for each
business day of the Covered Funds during such period at the annual rate of
0.25% of the average daily net asset value of each Covered Fund's shares
purchased or acquired through exchange. Fees calculated in this manner shall
be paid only to those selected dealers or other institutions who are dealers or
institutions of record at the close of business on the last business day of the
applicable payment period for the account in which such Covered Fund's shares
are held. Due to AIM Distributors' waiver of fees payable by AIM TAX-EXEMPT
CASH FUND under the Plan, fees payable under Shareholder Service Agreements
currently are limited to 0.10% of the average daily net asset value of that
Covered Fund's shares purchased or acquired through exchange.
The Plan is subject to any applicable limitations imposed from time to
time by rules of the National Association of Securities Dealers, Inc.
AIM Distributors does not act as principal, but rather as agent for
the Covered Funds, in making dealer incentive and shareholder servicing
payments under the Plan. These payments are an obligation of the Covered Funds
and not of AIM Distributors.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement (the "Distribution Agreement") was approved by
the Board of Directors of the Company on December 11, 1996. The Distribution
Agreement provides that AIM Distributors will bear the expenses of printing
from the final proof and distributing the Funds' prospectuses and statements of
additional information relating to public offerings made by AIM Distributors
pursuant to the Distribution Agreement (other than those prospectuses and
statements of additional information distributed to existing shareholders of
the Funds), and any promotional or sales literature used by AIM Distributors or
furnished by AIM Distributors to dealers in connection with the public offering
of the Funds' shares, including expenses of advertising in connection with such
public offerings. AIM Distributors has not undertaken to sell any specified
number of shares of the Funds.
26
<PAGE> 72
AIM Distributors will make payments to dealers and institutions who
are dealers of record for purchases of $1 million or more at net asset value
and subject to a contingent deferred sales charge for all AIM Funds other than
AIM LIMITED MATURITY TREASURY SHARES and AIM TAX-FREE INTERMEDIATE SHARES as
follows: 1% of the first $2 million of such purchases, plus 0.80% of the next
$1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases.
AIM Distributors will make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more at net asset value and subject to
a contingent deferred sales charge for AIM LIMITED MATURITY TREASURY SHARES
and AIM TAX-FREE INTERMEDIATE SHARES in the amount of 0.10% and 0.25%,
respectively, of such purchases.
Each Fund or AIM Distributors may terminate the Distribution Agreement
on sixty (60) days' written notice without penalty. The Distribution Agreement
will terminate automatically in the event of its assignment.
For the years ended March 31, 1997, 1996 and 1995, the total sales
charges paid in connection with the sale of shares of AIM TAX-FREE INTERMEDIATE
SHARES were $82,414, $69,848 and $71,141, respectively, of which AIM
Distributors retained $21,018, $18,234 and $18,075, respectively.
For the years ended March 31, 1997, 1996 and 1995, the total sales
charges paid in connection with the sale of shares of AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT were $152,493, $183,364 and $132,560, respectively, of which
AIM Distributors retained $27,428, $33,891 and $21,690, respectively.
MISCELLANEOUS INFORMATION
SHAREHOLDER INQUIRIES
The Transfer Agent may impose certain copying charges for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
AUDIT REPORTS
The Board of Directors will issue to shareholders at least
semi-annually the Funds' financial statements. Financial statements, audited
by independent auditors, will be issued annually. The firm of Price Waterhouse
LLP served as the auditors to AIM TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT for the year ended December 31, 1992. The firm of KPMG
Peat Marwick LLP, 700 Louisiana, NationsBank Building, Houston, Texas 77002,
currently serves as the auditors of the Funds.
LEGAL MATTERS
Legal matters for the Company have been passed upon by Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
The Bank of New York (the "Custodian"), 90 Washington Street, 11th
Floor, New York, New York 10286 is custodian of all securities and cash of the
Funds. Under its contract with the Company, the Custodian maintains the
portfolio securities of the Funds, administers the purchases and sales of
portfolio securities, collects interest and dividends and other distributions
made on the securities held in the portfolios of the Funds and performs other
ministerial duties. A I M Fund Services, Inc., a wholly owned subsidiary of
AIM (the "Transfer Agent"), P.O. Box 4739, Houston, Texas 77210-4739, acts as
transfer and dividend disbursing agent for the Funds. These services do not
include any supervisory function over management
27
<PAGE> 73
or provide any protection against any possible depreciation of assets. The
Funds pay the Custodian and the Transfer Agent such compensation as may be
agreed upon from time to time.
Texas Commerce Bank National Association, 712 Main, Houston, Texas
77002, serves as Sub-Custodian for retail purchases of the AIM Funds.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of July 15, 1997, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT. Also as of July 15, 1997, the directors and officers of the
Company as a group owned 23.87% of the outstanding shares of AIM TAX-EXEMPT
CASH FUND. Also as of July 15, 1997, the directors and officers of the Company
as a group owned 38.68% of the outstanding shares of the INTERMEDIATE
PORTFOLIO.
To the best knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding shares of each Fund as of July 15,
1997, and the amount of outstanding shares held of record or beneficially by
such holders are set forth below:
<TABLE>
<CAPTION>
Percent Owned
Name and Address of Percent Owned of Record
Fund Record or Beneficial Owner of Record and Beneficially
- ---- -------------------------- ------------------ -------------------
<S> <C> <C> <C>
Intermediate Portfolio Gary T. Crum 26.58% -0-
11 Greenway Plaza, Suite 1919
Houston, TX 77046
CFP Holdings LTD (Partnership) -0- 8.58%
Attn: Gary Crum
11 Greenway Plaza, Suite 1919
Houston, TX 77046
J. Abbott Sprague and -0- [6.35%*]
Leslie M. Sprague
11 Greenway Plaza, Suite 100
Houston, TX 77046
Jonathan C. Schoolar 6.09% -0-
11 Greenway Plaza, Suite 100
Houston, TX 77046
</TABLE>
* The Company has no knowledge as to whether all or any of the shares owned of
record only are also owned beneficially.
28
<PAGE> 74
<TABLE>
<CAPTION>
Percent Owned
Name and Address of Percent Owned of Record
Fund Record or Beneficial Owner of Record and Beneficially
- ---- -------------------------- ------------------ -------------------
<S> <C> <C> <C>
Tax-Exempt Cash Gary T. Crum -0- 10.32%
Charles Douglas Bauer
Management Trust
11 Greenway Plaza, Suite 1919
Houston, TX 77046
P. Andrews McLane 8.07%* -0-
77 Dean Rd.
Weston, MA 02193
Gary T. Crum 6.56% -0-
11 Greenway Plaza, Suite 1919
Houston, TX 77046
</TABLE>
* The Company has no knowledge as to whether all or any of the shares owned of
record only are also owned beneficially.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which the shares of the Funds
may be purchased appears in the Prospectus under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares of
AIM TAX-FREE INTERMEDIATE SHARES and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT is
used to compensate AIM Distributors and participating dealers for their
expenses incurred in connection with the distribution of such Funds' shares.
Since there is little expense associated with unsolicited orders placed
directly with AIM Distributors by persons who, because of their relationship
with the Funds or with AIM and its affiliates, are familiar with the Funds
(e.g., due to the size of the transaction and shareholder records required),
AIM Distributors believes that it is appropriate and in a Fund's best interest
that such persons, and certain other persons whose purchases result in
relatively low expenses of distribution, be permitted to purchase Class A
shares of AIM TAX-FREE INTERMEDIATE SHARES and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT through AIM Distributors without payment of a sales charge. The
persons who may purchase Class A shares of those Funds without a sales charge
are set forth in the Prospectus.
Complete information concerning the method of exchanging shares of the
Funds for shares of the other AIM Funds is set forth in the Prospectus under
the heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "How to Redeem Shares." In addition to the
Funds' obligation to redeem shares, AIM Distributors may also repurchase shares
as an accommodation to shareholders. To effect a repurchase, those dealers who
have executed Selected Dealer Agreements with AIM Distributors must phone
orders to the order desk of the Funds (Telephone: (800) 959-4246) and guarantee
delivery of all required documents in good order. A repurchase is effected at
the net asset value per share of the applicable Fund next determined after the
repurchase order is received. Such arrangement is subject to timely receipt by
the Transfer Agent of all required documents in good order. If such documents
are not received within a reasonable time after the order is placed, the order
is subject to cancellation. While there is no charge imposed by a Fund or by
AIM
29
<PAGE> 75
Distributors when shares are redeemed or repurchased, dealers may charge a fair
service fee for handling the transaction.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange (the "NYSE") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposition of portfolio securities or the
valuation of the net assets of a Fund not reasonably practicable.
A Fund's net asset value is calculated by dividing the number of
outstanding shares into the net assets of the Fund. Net assets are the excess
of a Fund's assets over its liabilities.
For AIM TAX-EXEMPT CASH FUND: The Fund may use the amortized cost
method to determine its net asset value so long as the Fund does not (a)
purchase any instrument with a remaining maturity greater than 397 days (for
these purposes, repurchase agreements shall not be deemed to involve the
purchase by the Fund of the securities pledged as collateral in connection with
such agreements) or (b) maintain a dollar-weighted average portfolio maturity
in excess of 90 days, and otherwise complies with the terms of rules adopted by
the SEC.
Under the amortized cost method, each investment is valued at its cost
and thereafter any discount or premium is amortized on a constant basis to
maturity. While this method provides certainty of valuation, it may result in
periods in which the amortized cost value of the Fund's investments is higher
or lower than the price that would be received if the investments were sold.
During periods of declining interest rates, use by the Fund of the amortized
cost method of valuing its portfolio may result in a lower value than the
market value of the portfolio, which could be an advantage to new investors
relative to existing shareholders. The converse would apply in a period of
rising interest rates.
The Board of Directors has established procedures designed to
stabilize at $1.00, to the extent reasonably possible, the Fund's net asset
value per share. Such procedures include review of portfolio holdings by the
directors at such intervals as they may deem appropriate to determine whether
net asset value, calculated by using available market quotations, deviates from
$1.00 per share and, if so, whether such deviation may result in material
dilution or is otherwise unfair to investors or existing shareholders. In the
event the directors determine that a deviation having such a result exists,
they intend to take such corrective action as they deem necessary and
appropriate, including the sale of portfolio securities prior to maturity in
order to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redemption of shares in kind; or establishing
a net asset value per share by using available market quotations, in which
case, the net asset value could possibly be more or less than $1.00 per share.
For the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT: Securities held by the INTERMEDIATE PORTFOLIO and AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT are valued using market quotations or at fair value
determined by a pricing service approved by the Board of Directors. Debt
securities with remaining maturities of sixty (60) days or less are valued on
the basis of amortized cost. All variable rate securities held by such Funds,
with an unconditional demand or put feature exercisable within seven (7) days
or less are valued at par, which reflects the market value of such securities.
Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Board of Directors.
The following formula may be used to determine the public offering
price per share of an investment in the INTERMEDIATE PORTFOLIO or AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT:
Net Asset Value / (1 - Sales Charge as % of Offering Price) = Offering Price.
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<PAGE> 76
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is normally determined
daily as of the close of trading of the NYSE (generally 4:00 p.m. Eastern time)
on each business day of the Fund. In the event the NYSE closes early (i.e.,
before 4:00 p.m. Eastern time) on a particular day, the net asset value of a
Fund is determined as of the close of the NYSE on such day. Net asset value
per share is determined by dividing the value of a Fund's securities, cash and
other assets (including interest accrued but not collected) attributable to a
particular class, less all its liabilities (including accrued expenses and
dividends payable) attributable to that class, by the total number of shares
outstanding of that class. Determination of a Fund's net asset value per share
is made in accordance with generally accepted accounting principles.
Generally, trading in foreign securities, corporate bonds, municipal
bonds, U.S. Government securities and money market instruments is substantially
completed each day at various times prior to the close of the NYSE. The values
of such securities used in computing the net asset value of each Fund's shares
are determined at such times. Foreign currency exchange rates are also
generally determined prior the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which such values are determined and the close of the NYSE
which will not be reflected in the computation of a Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Directors.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Net investment income for each Fund is declared as a dividend to the
shareholders of record of such Fund on each business day of the Fund.
Dividends will be paid monthly. Net realized capital gains, if any, are
normally distributed annually, although AIM TAX-EXEMPT CASH FUND may distribute
short-term capital gains more frequently. Dividends and distributions are
reinvested in additional full and fractional shares of the Fund at the net
asset value thereof, unless the shareholder has elected to have dividends and
distributions paid in cash. Dividends and distributions may also be reinvested
in shares of another AIM Fund. See the caption "Dividends, Distributions and
Tax Matters" in the Prospectus.
Dividends with respect to the shares of the INTERMEDIATE PORTFOLIO and
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT begin accruing on the day on which
payment is received for the purchase of shares, and accrue through the day
preceding the date of payment of redemption proceeds. Dividends with respect
to the shares of AIM TAX-EXEMPT CASH FUND begin accruing on the day after which
payment is received, and accrue through the date of payment of redemption
proceeds.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Funds and their shareholders that are
not described in the Funds' Prospectus. No attempt is made to present a
detailed explanation of the tax treatment of the Funds or their shareholders,
and the discussion here and in the Funds' Prospectus is not intended as a
substitute for careful tax planning. Investors are urged to consult their tax
advisors with specific reference to their own tax situation.
Qualification as a Regulated Investment Company. Each Fund intends to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, a Fund is not subject to federal income tax on the portion of its net
investment income (i.e., taxable interest, dividends and other taxable ordinary
income, net of expenses) and capital gain net income (i.e., the excess of
capital gains over capital losses) that it distributes to shareholders,
31
<PAGE> 77
provided that it distributes an amount at least equal to the sum of (a) 90% of
its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) and (b)
90% of its tax-exempt income (net of allocable expenses and amortized bond
premium) for the taxable year (the "Distribution Requirement"), and satisfies
certain other requirements of the Code that are described below. Distributions
by each Fund made during the taxable year or, under specified circumstances,
within twelve months after the close of the taxable year, will be considered
distributions of income and gains of the taxable year and can therefore satisfy
the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities)
and other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
securities or currencies (the "Income Requirement"); and (2) derive less than
30% of its gross income from the sale or other disposition of securities or
foreign currencies that are not directly related to its principal business of
investing in securities (or options, futures or forward contracts thereon) held
for less than three months (the "Short-Short Gain Test"). Because of the
Short-Short Gain Test, a Fund may have to limit the sale of appreciated
securities that it has held for less than three months. However, the
Short-Short Gain Test will not prevent a Fund from disposing of investments at
a loss, since the recognition of a loss before the expiration of the
three-month holding period is disregarded. Interest (including original issue
discount) received by a Fund at maturity or upon the disposition of a security
held for less than three months will not be treated as gross income derived
from the sale or other disposition of such security within the meaning of the
Short-Short Gain Test. However, income that is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose.
At the close of each quarter of a Fund's taxable year, at least 50% of
the value of the Fund's assets must consist of cash and cash items, U.S.
Government securities, securities of other regulated investment companies, and
securities of other issuers (as to which the Fund has not invested more than 5%
of the value of the Fund's total assets in securities of such issuer and as to
which the Fund does not hold more than 10% of the outstanding voting securities
of such issuer), and no more than 25% of the value of its total assets may be
invested in the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two
or more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits. Such distributions will
be eligible for the dividends-received deduction in the case of corporate
shareholders.
Excise Tax on Regulated Investment Companies. A 4% non-deductible
excise tax is imposed on a regulated investment company that fails to
distribute in each calendar year an amount equal to 98% of its ordinary taxable
income for the calendar year plus 98% of its capital gain net income (excess of
capital gains over capital losses) for the one-year period ended on October 31
of such calendar year. The balance of such income must be distributed during
the next calendar year. Undistributed tax-exempt interest on Municipal
Securities (as defined under "Investment Program and Restrictions -- Municipal
Securities") is not subject to the excise tax. For the foregoing purposes, a
regulated investment company is treated as having distributed any amount on
which it is subject to income tax for any taxable year ending in such calendar
year.
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax.
32
<PAGE> 78
However, investors should note that a Fund may in certain circumstances be
required to liquidate portfolio investments if it intends to make sufficient
distributions to avoid excise tax liability.
Tax Treatment of Interest Rate Futures Contracts and Related Options.
Section 1092 of the Code affects the taxation of certain transactions involving
futures or options contracts. If a futures or options contract is part of a
"straddle" (which could include another futures contract or underlying stock or
securities), as defined in Section 1092 of the Code, then, generally, losses
are deferred first to the extent that the modified "wash sale" rules of the
Section 1092 regulations apply, and second to the extent of unrecognized gains
on offsetting positions. Further, a Fund may be required to capitalize, rather
than deduct currently, any interest expense on indebtedness incurred or
continued to purchase or carry any positions that are part of a straddle.
Sections 1092 of the Code and the Treasury Regulations thereunder also suspend
the holding periods for straddle positions with possible adverse effects
regarding long-term capital gain treatment.
Section 1256 of the Code generally requires that futures contracts and
options on futures contracts be "marked- to-market" at the end of each year for
federal income tax purposes. Code Section 1256 further characterizes 60% of
any capital gain or loss with respect to such futures and options contracts as
long-term capital gain or loss and 40% as short-term capital gain or loss. If
such a future or option is held as an offsetting position and can be considered
a straddle under Section 1092 of the Code, such a straddle will constitute a
mixed straddle. A mixed straddle will be subject to both Section 1256 and
Section 1092 unless certain elections are made by a Fund.
Fund Distributions. Each Fund intends to qualify to pay
exempt-interest dividends by satisfying the requirement that at the close of
each quarter of a Fund's taxable year at least 50% of the Fund's total assets
consist of tax-exempt Municipal Securities. Distributions from a Fund will
constitute exempt-interest dividends to the extent of the Fund's tax-exempt
interest income (net of allocable expenses and amortized bond premium).
Exempt-interest dividends distributed to shareholders of a Fund are excluded
from gross income for federal income tax purposes. However, shareholders who
file federal income tax returns will be required to report the receipt of
exempt-interest dividends on such returns. Moreover, while exempt-interest
dividends are excluded from gross income for federal income tax purposes, they
may be subject to alternative minimum tax ("AMT") in certain circumstances and
may have other collateral tax consequences as discussed below. Distributions
by a Fund of any investment company taxable income or of any net capital gain
will be taxable to shareholders as discussed below.
AMT is imposed in addition to, but only to the extent it exceeds, the
regular tax and is computed at a maximum rate of 28% for non-corporate
taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's
alternative minimum taxable income ("AMTI") over an exemption amount.
Exempt-interest dividends derived from certain "private activity" Municipal
Securities issued after August 7, 1986, will generally constitute an item of
tax preference includable in AMTI for both corporate and non-corporate
taxpayers. In addition, exempt-interest dividends derived from all Municipal
Securities, regardless of the date of issue, must be included in adjusted
current earnings, which are used in computing an additional corporate
preference item (i.e., 75% of the excess of a corporate taxpayer's adjusted
current earnings over its AMTI (determined without regard to this item and the
AMT net operating loss deduction)) includable in AMTI.
Exempt-interest dividends must be taken into account in computing the
portion, if any, of social security or railroad retirement benefits that must
be included in an individual shareholder's gross income subject to federal
income tax. Further, a shareholder of a Fund is denied a deduction for
interest on indebtedness incurred or continued to purchase or carry such
shares. Moreover, a shareholder who is (or is related to) a "substantial user"
of a facility financed by industrial development bonds held by a Fund will
likely be subject to tax on dividends paid by the Fund which are derived from
interest on such bonds. Receipt of exempt-interest dividends may result in
other collateral federal income tax consequences to certain taxpayers,
including financial institutions, property and casualty insurance companies and
foreign corporations engaged in a trade or business in the United States.
Prospective investors should consult their own tax advisors as to such
consequences.
33
<PAGE> 79
Each Fund anticipates distributing substantially all of its investment
company taxable income, if any, for each taxable year. Such distributions will
be taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes, but they will not qualify for the 70%
dividends-received deduction for corporations.
Each Fund may either retain or distribute to shareholders its net
capital gain, if any, for each taxable year. Each Fund currently intends to
distribute any such amounts. If net capital gain is distributed and designated
as a capital gain distribution, it will be taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder has held his
shares or whether such gain was recognized by a Fund prior to the date on which
the shareholder acquired his shares. If a Fund does not distribute its net
capital gain in any taxable year, such Fund will be subject to taxes on such
net capital gain at the highest corporate rate. If a Fund elects to retain its
net capital gain, it is expected that the Fund also will elect to have
shareholders treated as if each received a distribution of its pro rata share
of such gain, with the result that each shareholder will be required to report
its pro rata share of such gain on its tax return as long-term capital gain,
will receive a refundable tax credit for its share of tax paid by the Fund on
the gain, and will increase the tax basis for its shares by an amount equal to
the deemed distribution less the tax credit. Realized market discount on
Municipal Securities purchased after April 30, 1993, will be treated as
ordinary income and not as capital gain.
Distributions by a Fund that do not constitute ordinary income
dividends, exempt-interest dividends or capital gain distributions will be
treated as a return of capital to the extent of (and in reduction of) the
shareholder's tax basis in his shares; any excess will be treated as gain from
the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another AIM Fund). Shareholders electing
to reinvest a distribution in additional shares will be treated as receiving a
distribution in an amount equal to the net asset value of the shares acquired,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically would constitute a return of capital
to the shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain
distributions, and the proceeds of redemptions of shares, paid to any
shareholder who (1) has provided either an incorrect tax identification number
or no number at all, (2) is subject to backup withholding by the Internal
Revenue Service for failure to properly report the receipt of interest or
dividend income, or (3) has failed to certify to the Fund that it is not
subject to backup withholding or that it is a corporation or other "exempt
recipient."
Sale or Redemption of Shares. A shareholder will recognize gain or
loss on the sale or redemption of shares of a Fund in an amount equal to the
difference between the proceeds of the sale or redemption and the shareholder's
adjusted tax basis in the shares. All or a portion of any loss so recognized
may be disallowed if the shareholder purchases other shares of the same Fund
within 30 days before or after the sale or redemption. Investors should note
that this rule applies to shares purchased through the reinvestment of
dividends within 30 days before or after a sale or redemption of shares. In
general, any gain or loss arising
34
<PAGE> 80
from (or treated as arising from) the sale or redemption of shares of a Fund
will be considered capital gain or loss and will be long-term capital gain or
loss if the shares were held for longer than one year. However, any capital
loss arising from the sale or redemption of shares held for six months or less
will be disallowed to the extent of the amount of exempt-interest dividends
received on such shares and (to the extent not disallowed) will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such shares. For this purpose, the special holding period rules of
Code Section 246(c)(3) and (4) generally will apply in determining the holding
period of shares. Long-term capital gains of non-corporate taxpayers are
currently taxed at a maximum rate at least 11.6% lower than the maximum rate
applicable to ordinary income. Capital losses in any year are deductible only
to the extent of capital gains plus, in the case of non-corporate taxpayers,
$3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of a
Fund, (ii) disposes of such shares less than 91 days after they are acquired
and (iii) subsequently acquires such shares or shares of another fund at a
reduced sales load pursuant to a right to reinvest at such reduced sales load
acquired in connection with the acquisition of the shares disposed of, then the
sales load on the shares disposed of (to the extent of the reduction in the
sales load on the shares subsequently acquired) shall not be taken into account
in determining gain or loss on the shares disposed of but shall be treated as
incurred on the acquisition of the shares subsequently acquired (unless such
shares also are disposed of less than 91 days after they are acquired).
Foreign Shareholders. Taxation of a shareholder who, as to the United
States, is a nonresident alien individual, foreign trust or estate, foreign
corporation, or foreign partnership ("foreign shareholder"), depends on whether
the income from a Fund is "effectively connected" with a U.S. trade or business
carried on by such shareholder.
If the income from the Fund is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, dividends and
distributions (other than long-term capital gain distributions and
exempt-interest dividends) will be subject to U.S. withholding tax at the rate
of 30% (or lower applicable treaty rate) upon the gross amount of the dividend
or distribution. Such a foreign shareholder would generally be exempt from
U.S. federal income tax on gains realized on the sale of shares of a Fund,
capital gain distributions and exempt-interest dividends.
If the income from a Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain distributions and any gains realized upon the sale of
shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations.
In the case of foreign non-corporate shareholders, a Fund may be
required to withhold U.S. federal income tax at a rate of 31% on distributions
(other than exempt-interest dividends) that are otherwise exempt from
withholding tax (or taxable at a reduced treaty rate) unless such shareholders
furnish the Fund with proper notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Recently proposed regulations may change the information provided
here. Foreign shareholders are urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in a Fund.
Effect of Future Legislation; Local Tax Considerations. The foregoing
general discussion of federal income tax consequences is based on the Code and
the regulations issued thereunder as in effect on July 11, 1997. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions discussed herein.
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<PAGE> 81
Connecticut Tax Considerations. The Connecticut income tax ("CIT") is
imposed on individuals resident in Connecticut and certain non-residents and
partial-year residents with income derived from or connected with sources
located within Connecticut. The CIT is imposed on the federal adjusted gross
income of taxpayers (including married couples who file a joint federal income
tax return) with certain adjustments. The applicable CIT law provides that
distributions by a regulated investment company that qualify as exempt-interest
dividends for federal income tax purposes are not added to federal adjusted
gross income and thus are not subject to CIT to the extent such distributions
are derived from obligations issued by or on behalf of the State of
Connecticut, any political subdivision thereof, or public instrumentality,
state or local authority, district or similar public entity created under the
laws thereof, and certain other U.S. Government obligations and obligations of
certain U.S. Territories. Distributions of the net income of AIM TAX-EXEMPT
BOND FUND OF CONNECTICUT from other sources, including distributions from
Municipal Securities issued by other states or authorities and short-term
capital gains that are treated as ordinary income dividends for federal income
tax purposes are taxable as dividends for CIT purposes.
In addition, the Connecticut corporation business tax ("CCBT") is
imposed on any corporation or association carrying on, or having the right to
carry on, business in Connecticut. Distributions from any source that are
treated as exempt-interest dividends for federal income tax purposes are
includable in gross income for purposes of the CCBT. Moreover, while the CCBT
generally allows a 70% deduction for amounts includable in taxable income for
CCBT purposes that are treated as "dividends" for federal income tax purposes,
such as distributions of taxable net investment income and net short-term
capital gains, the Connecticut Department of Revenue Services has ruled that
the CCBT does not allow this deduction for exempt-interest dividends and
capital gain distributions whose character as "dividends" has been altered for
federal income tax purposes.
Rules of state and local taxation of ordinary income dividends,
exempt-interest dividends and capital gain distributions from regulated
investment companies often differ from the rules for U.S. federal income
taxation described above. Shareholders are urged to consult their tax advisors
as to the consequences of these and other federal, state and local tax rules
affecting investments in the Funds.
DESCRIPTION OF MONEY MARKET INSTRUMENTS (AIM TAX-EXEMPT CASH FUND ONLY)
U.S. Government Obligations consist of marketable securities and
instruments issued or guaranteed by the United States Government or by certain
of its agencies or instrumentalities. Direct obligations are issued by the
United States Treasury and include bills, certificates of indebtedness, notes
and bonds. Obligations of United States Government agencies and
instrumentalities ("Agencies") are issued by government-sponsored agencies and
enterprises acting under authority of Congress. Certain Agencies are backed by
the full faith and credit of the United States Government, and others are not.
MONEY MARKET OBLIGATIONS
The Fund will limit its investments to those securities which at the
time of purchase are "First Tier" securities as defined in Rule 2a-7 under the
1940 Act, as such Rule may be amended from time to time. Rule 2a-7 defines a
"First Tier" security as any "Eligible Security" that:
(i) is rated (or that has been issued by an issuer that is
rated with respect to a class of short-term debt obligations, or any
security within that class, that is comparable in priority and
security with
36
<PAGE> 82
the security) by the Requisite NRSROs* in the highest rating category
for short-term debt obligations (within which there may be
sub-categories or gradations indicating relative standing); or
(ii) is a security described in paragraph (a)(5)(ii) of Rule
2a-7 (i.e. a security that at the time of issuance was a long-term
security but has a remaining maturity of 397 days or less) whose
issuer has received from the Requisite NRSROs a rating, with respect
to a class of short-term debt obligations (or any security within that
class) that now is comparable in priority and security with the
security, in the highest rating category for short-term debt
obligations (within which there may be sub-categories or gradations
indicating relative standing); or
(iii) is an Unrated Security** that is of comparable quality
to a security meeting the requirements of clauses (i) and (ii) above,
as determined by the Board of Directors.
Subsequent to its purchase by the Fund, a security may cease to be a
First Tier security. Subject to certain exceptions set forth in Rule 2a-7,
such an event will not require the disposition of the security by the Fund, but
AIM will consider such an event to be relevant in its determination of whether
the Fund should continue to hold the security. To the extent that the ratings
applied by an NRSRO to a security may change as a result of changes in these
rating systems, the Funds will attempt to use comparable ratings as standards
for its investments in accordance with the investment policies described
herein.
Rule 2a-7 defines an "Eligible Security" as follows:
(i) a security with a remaining maturity of 397 calendar days or
less that has received a short-term rating (or that has been
issued by an issuer that has received a short-term rating with
respect to a class of debt obligations, or any debt obligation
within that class, that is comparable in priority and security
with the security) by the Requisite NRSROs in one of the two
highest short-term rating categories (within which there may
be sub-categories or gradations indicating relative standing);
or
(ii) a security:
(A) that at the time of issuance had a remaining maturity
of more than 397 calendar days but that has a
remaining maturity of 397 calendar days or less; and
- --------------------------
* "Requisite NRSRO" shall mean (a) any two nationally recognized
statistical rating organizations ("NRSROs") that have issued a rating
with respect to a security or class of debt obligations of an issuer,
or (b) if only one NRSRO has issued a rating with respect to such
security or issuer at the time the Fund purchases or rolls over the
security, that NRSRO. At present the NRSROs are: S&P, Moody's, Duff
and Phelps, Inc. ("Duff & Phelps"), Fitch Investors Services, Inc.
("Fitch") and, with respect to certain types of securities, IBCA
Limited and its affiliate, IBCA Inc. Subcategories or gradations in
ratings (such as a "+" or "-") do not count as rating categories.
** An "Unrated Security" is a security (i) issued by an issuer that does
not have a current short-term rating from any NRSRO, either as to the
particular security or as to any other short-term obligations of
comparable priority and security; (ii) that was a long-term security
at the time of issuance and whose issuer has not received from any
NRSRO a rating with respect to a class of short-term obligations now
comparable in priority and security; or (iii) that is rated but which
is the subject of an external credit support agreement not in effect
when the security was assigned its rating, provided that a security is
not an unrated security if any short-term debt obligation issued by
the issuer and comparable in priority and security is rated by any
NRSRO.
37
<PAGE> 83
(B) whose issuer has received from the Requisite NRSROs a
rating with respect to a class of debt
obligations (or any debt obligation within that class)
that is now comparable in priority and security with
the security, in one of the two highest short-term
rating categories (within which there may be
sub-categories or gradations indicating relative
standing); or
(iii) an unrated security that is of comparable quality to a
security meeting the requirements of (i) or (ii) above, as
determined by the Company's Board of Directors; provided,
however, that:
(A) the Board of Directors may base its determination
that a standby commitment that is not a demand
feature is an Eligible Security upon a finding that
the issuer of the commitment presents a minimal risk
of default;
(B) a security that at the time of issuance had a
remaining maturity of more than 397 calendar days but
that has a remaining maturity of 397 calendar days or
less and that is an unrated security is not an
Eligible Security if the security has received a
long-term rating from any NRSRO that is not within
the NRSRO's three highest long-term ratings
categories (within which there may be sub-categories
or gradations indicating relative standing);
(C) an asset backed security shall not be an Eligible
Security unless it has a debt rating from an NRSRO;
and
(D) a security that is subject to a demand feature shall
not be an Eligible Security unless:
(1) the demand feature has received a short-term
rating from an NRSRO (or the issuer of the
demand feature has received from an NRSRO a
short-term rating with respect to a class of
debt obligations or any debt obligation
within that class that is comparable in
priority and security to the demand feature);
and
(2) the issuer of the demand feature, or another
institution, undertakes to notify promptly
the holder of the security in the event that
the demand feature is substituted with a
demand feature provided by another issuer.
RATINGS OF SECURITIES
The following is a description of the factors underlying the
commercial paper and debt ratings of Moody's, S&P and Fitch:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds as follows:
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
38
<PAGE> 84
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium- grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa to B. The modifier 1 indicates that the company
ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the company
ranks in the low end of its generic rating category.
MOODY'S MUNICIPAL BOND RATINGS
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
39
<PAGE> 85
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Those bonds in the Aa, A, Baa and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in bond
risk, long-term secular trends for example, may be less important over the
short run.
A short-term rating may also be assigned on an issue having a demand
feature (i.e., a variable rate demand obligation or VRDO). Such ratings will
be designated as VMIG or, if the demand feature is not rated, as NR.
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. Additionally, the source of payment may be limited to the external
liquidity with no or limited legal recourse to the issuer in the event the
demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such
programs are characterized as having variable short-term maturities but having
neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
40
<PAGE> 86
Gradations of investment quality are indicated by rating symbols, with
each symbol representing a group in which the quality characteristics are
broadly the same.
MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issues
to repay punctually promissory obligations not having an original maturity in
excess of nine months.
PRIME-1 Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well established industries; high rates of return
on funds employed; conservative capitalization structures with moderate
reliance on debt and ample asset protection; broad margins in earning coverage
of fixed financial charges and high internal cash generation; and well
established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2 Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
PRIME-3 Issuers rated Prime-3 (or related supported institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME Issuers rated Not Prime do not fall within any of the Prime
rating categories.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
41
<PAGE> 87
A Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB-B-CCC-CC-C Debt rated BB, B, CCC, CC and C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and
C the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option
or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal
and interest as due, and the second rating addresses only the demand feature.
The long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (e.g.,
AAA/A-1+). With short-term demand debt, the note rating symbols are used with
the commercial paper rating symbols (e.g., SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
A S&P note rating reflects the liquidity factors and market-access
risks unique to notes. Notes maturing in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment: amortization schedule (the larger the final maturity relative
to other maturities, the more likely the issue will be treated as a note); and
source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols and definitions are as follows.
SP-1 Category denotes strong capacity to pay principal and interest.
Issues determined to possess very strong characteristics are given a plus (+)
designation.
SP-2 Rating denotes satisfactory capacity to pay principal and interest,
with some vulnerability to adverse financial and economic changes over the term
of the notes.
SP-3 Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
A S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.
Rating categories are as follows:
42
<PAGE> 88
A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 This rating indicates capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1.
A-3 This rating indicates adequate capacity for timely payment. They are,
however, more vulnerable to the adverse effects of changes in circumstances
than obligations carrying higher designations.
B This rating indicates only a speculative capacity for timely payment.
C This rating indicates, for short-term debt, a doubtful capacity for
payment.
D This rating indicates that payment is in default. The D rating
category is used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired, unless it is
believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be
provided by insurance policies or financial guaranties unless otherwise
indicated.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any
security. Ratings do not comment on the adequacy of market price, the
suitability of any security for a particular investor, or the tax-exempt nature
or taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+".
43
<PAGE> 89
A Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
PLUS (+) MINUS (-) Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs, however, are not used in the "AAA" category.
NR Indicates that Fitch does not rate the specific issue.
CONDITIONAL A conditional rating is premised on the successful completion
of a project or the occurrence of a specific event.
SUSPENDED A rating is suspended when Fitch deems the amount of
information available from the issuer to be inadequate for rating purposes.
WITHDRAWN A rating will be withdrawn when an issue matures or is called
or refinanced, and, at Fitch's discretion, when an issuer fails to furnish
proper and timely information.
FITCHALERT Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the likely direction
of such change. These are designated as "Positive," indicating a potential
upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may
be raised or lowered. FitchAlert is relatively short-term and should be
resolved within 12 months.
CREDIT TREND
Credit trend indicators show whether credit fundamentals are
improving, stable, declining, or uncertain, as follows:
Improving Up arrow
Stable Horizontal double arrow
Declining Down arrow
Uncertain Vertical double arrow
Credit trend indicators are not predictions that any rating change
will occur, and have a longer-term time frame than issues placed on FitchAlert.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or
liquidation.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any
44
<PAGE> 90
guarantor, as well as the economic and political environment that might affect
the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.
CCC Bonds have certain identifiable characteristics that, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D Bonds are in default on interest and/or principal payments.
Such bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D"
represents the lowest potential for recovery.
PLUS (+) MINUS (-) Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs, however, are not used in the "DDD", "DD", or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
Fitch short-term ratings are as follows:
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
F-2 Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned "F-1+" and "F-1" ratings.
45
<PAGE> 91
F-3 Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate,
however, near-term adverse changes could cause these securities to be rated
below investment grade.
F-S Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D Default. Issues assigned this rating are in actual or imminent
payment default.
LOC The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
46
<PAGE> 92
FINANCIAL STATEMENTS
FS
<PAGE> 93
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM Tax-Exempt Cash Fund (a portfolio of
AIM Tax-Exempt Funds, Inc.), including the schedule of
investments, as of March 31, 1997, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years in the three-year period
then ended, the three-month period ended March 31, 1994,
and the year ended December 31, 1993. These financial
statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express
an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of March 31, 1997, by correspondence
with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Tax-Exempt Cash Fund as of March 31, 1997, the results of
its operations for the year then ended, changes in its net
assets for each of the years in the two-year period then
ended and the financial highlights for each of the years
in the three-year period then ended, the three-month
period ended March 31, 1994, and the year ended December
31, 1993, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
Houston, Texas
May 2, 1997
FS-1
<PAGE> 94
SCHEDULE OF INVESTMENTS
MARCH 31, 1997
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MUNICIPAL SECURITIES-81.70%
ALABAMA-2.28%
Alabama Industrial
Development Board
(Industrial Partners
Project); Variable/Fixed
Rate Refunding Series 1989
RB
3.60%, 01/01/07(b)(c) -- VMIG-1 $1,295 $ 1,295,000
- --------------------------------------------------------------------
ALASKA-0.80%
Fairbanks North Star
(Borough of) Alaska; GO
8.00%, 11/01/97(d) AAA Aaa 445 455,065
- --------------------------------------------------------------------
ARIZONA-1.06%
Maricopa (County of) Union
High School District No.
210; Series 1989 B GO
6.55%, 07/01/97 AA Aa 600 604,114
- --------------------------------------------------------------------
COLORADO-7.12%
Colorado Housing Finance
Authority (Grant Plaza
Project); Multifamily
Mortgage Series 1991 A RB
3.525%, 11/01/09(b)(c) -- VMIG-1 800 800,000
- --------------------------------------------------------------------
Denver (City of) (Helen
Bonfils Theatre Complex
Project); Adjustable Rate
Series 1997 A RB
3.61%, 01/01/17(b)(c)(e) -- -- 1,000 1,000,000
- --------------------------------------------------------------------
Eagle (County of) Smith
Creek Metropolitan
District; Variable Rate
Series 1997 RB
3.15%, 10/01/35(b)(c) A-1+ -- 2,250 2,250,000
- --------------------------------------------------------------------
4,050,000
- --------------------------------------------------------------------
DISTRICT OF COLUMBIA-1.93%
District of Columbia;
Georgetown University
Issue Series 1988 B RB
3.40%, 04/01/17(b)(c) A-1+ VMIG-1 1,100 1,100,000
- --------------------------------------------------------------------
FLORIDA-2.49%
Dade (County of) Health
Facilities Authority
Hospital (Baptist Hospital
Miami Project); RB
7.375%, 05/01/97(f)(g) AAA -- 400 409,051
- --------------------------------------------------------------------
Okalusa (County of) School
Board; Sales Tax RB
5.00%, 09/01/97(d) AAA Aaa 1,000 1,005,754
- --------------------------------------------------------------------
1,414,805
- --------------------------------------------------------------------
GEORGIA-9.15%
Dekalb (County of) Private
Hospital Authority
(Egleston Children's
Hospital at Emory
University); Variable Rate
Demand Series 1994 A RAN
3.45%, 03/01/24(b)(c) A-1+ VMIG-1 2,200 2,200,000
- --------------------------------------------------------------------
Elbert & Bowman (Counties
of) (Seaboard Farms of
Elberton); Series 1985 IDR
3.55%, 07/01/05(b)(c) A-1 -- 1,000 1,000,000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GEORGIA-(CONTINUED)
Monroe (County of) Georgia
Development Authority
(Oglethorpe Power Corp.);
Pollution Control Series A
RB
5.35%, 01/01/98(d) AAA Aaa $ 500 $ 505,076
- --------------------------------------------------------------------
Roswell (City of) Georgia
Housing Development
Authority (Azalea
Project); Multifamily
Housing Series 1996 RB
3.45%, 06/15/25(b)(c) A-1+ -- 1,500 1,500,000
- --------------------------------------------------------------------
5,205,076
- --------------------------------------------------------------------
ILLINOIS-9.44%
Illinois Development Finance
Authority (Chicago
Symphony Orchestra
Project); Variable/Fixed
Rate Demand Series 1996 RB
3.50%, 06/01/31(b)(c) A-1+ VMIG-1 2,000 2,000,000
- --------------------------------------------------------------------
Illinois Health Facilities
Authority (Children's
Memorial Hospital
Project); RB
3.50%, 11/01/15(b)(c)(e) -- -- 1,950 1,950,000
- --------------------------------------------------------------------
Illinois Health Facilities
Authority (Franciscan
Eldercare Project);
Adjustable Rate Refunding
Series 1996 C RB
3.50%, 05/15/26(b)(c) A-1+ -- 1,420 1,420,000
- --------------------------------------------------------------------
5,370,000
- --------------------------------------------------------------------
INDIANA-3.69%
Indianapolis (City of)
(Children's Museum
Project); Economic
Development Floating Rate
Series 1995 RB
3.45%, 10/01/25(b)(c) A-1+ -- 1,400 1,400,000
- --------------------------------------------------------------------
Indianapolis (City of)
(Local Public Improvement
Bond Bank Notes); Series
1996 F RB
4.125%, 07/10/97(c) SP-1+ -- 700 701,117
- --------------------------------------------------------------------
2,101,117
- --------------------------------------------------------------------
MARYLAND-1.23%
Maryland Industrial
Development Financing
Authority (Liberty Medical
Center); Variable Rate
Demand/Fixed Rate 1989
Issue Refunding RB
3.55%, 07/01/18(b)(c) -- VMIG-1 700 700,000
- --------------------------------------------------------------------
MICHIGAN-2.73%
Michigan State Hospital
Finance Authority
(Hospital Equipment Loan
Program); Adjustable
Series 1995 A RB
3.55%, 12/01/23(b)(c) -- VMIG-1 800 800,000
- --------------------------------------------------------------------
Michigan (State of) Housing
Development Authority
Rental Housing; Series
1994 C RB
3.45%, 04/01/19(b)(c) A-1+ -- 550 550,000
- --------------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 95
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MICHIGAN-(CONTINUED)
Plymouth (Township of)
Economic Development Corp.
(Key International
Project); Variable Rate
Demand Series 1984 RB
3.60%, 07/01/04(b)(c)(e) -- -- $ 200 $ 200,000
- --------------------------------------------------------------------
1,550,000
- --------------------------------------------------------------------
MINNESOTA-0.88%
Mankato (City of) (Northern
States Power Co. Project);
Floating Collateralized
Series 1985 PCR
3.55%, 03/01/11(c) AA- A1 500 500,000
- --------------------------------------------------------------------
MISSOURI-2.46%
Missouri (State of) Health
and Education Facilities
Authority Washington
University; Series 1996 A
RB
3.80%, 09/01/30(c) A-1+ VMIG-1 1,400 1,400,000
- --------------------------------------------------------------------
MONTANA-1.76%
Missoula (County of)
(Washington Corp.
Project); Floating Rate
Monthly Demand Series 1984
IDR
3.50%, 11/01/04(b)(c)(e) -- -- 1,000 1,000,000
- --------------------------------------------------------------------
NEVADA-4.75%
Clark (County of) (Nevada
Power Co. Project);
Refunding Series 1995 C
IDR
3.45%, 10/01/30(b)(c) A-1+ -- 1,000 1,000,000
- --------------------------------------------------------------------
Clark (County of) Airport
System; Series 1993 A RB
3.45%, 07/01/12(c)(d) A-1+ VMIG-1 1,700 1,700,000
- --------------------------------------------------------------------
2,700,000
- --------------------------------------------------------------------
NEW HAMPSHIRE-2.46%
New Hampshire Higher
Education and Health
Facilities Authority;
Variable Rate Hospital
Series 1985 C RB
3.45%, 12/01/25(c)(d) A-1 -- 1,400 1,400,000
- --------------------------------------------------------------------
NEW YORK-1.76%
New York (City of); General
Obligation Fiscal Series
1997 B RAN
4.50%, 06/30/97(b) SP-1+ MIG-1 1,000 1,002,672
- --------------------------------------------------------------------
NORTH CAROLINA-6.07%
Alamance (County of)
Industrial Facilities and
Pollution Control
Financing Authority
(Science Manufacturing,
Inc. Project); Series 1985
IDR
3.90%, 04/01/15(b)(c) -- P-1 1,400 1,400,000
- --------------------------------------------------------------------
New Hanover (County of)
Industrial Facilities and
Pollution Control
Financing Authority
(Gang-Nail Systems, Inc.
Project); Series 1984 IDR
3.50%, 12/01/99(b)(c) -- P-1 1,300 1,300,000
- --------------------------------------------------------------------
Raleigh Durham Airport
Authority (American
Airlines Project); Series
1995 Refunding RB
3.80%, 11/01/15(b)(c) A-1 -- 750 750,000
- --------------------------------------------------------------------
3,450,000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OHIO-4.92%
Delaware (County of)
(Radiation Sterilizers,
Inc.); Series 1984 IDR
3.60%, 12/01/04(b)(c) A-1 -- $ 300 $ 300,000
- --------------------------------------------------------------------
Lucus (County of) (Lutheran
Homes Society Project);
Adjustable Rate Demand
Health Care Facilities
1996 RB
3.45%, 11/01/19(b)(c) A-1+ -- 2,500 2,500,000
- --------------------------------------------------------------------
2,800,000
- --------------------------------------------------------------------
PENNSYLVANIA-2.20%
Allentown (City of) School
District; Series 1991 GO
6.00%, 08/01/07(d) AAA Aaa 250 251,638
- --------------------------------------------------------------------
Delaware (County of)
Industrial Development
Authority (Scotfoam Corp.
Project); Variable Rate
Demand Series 1985 IDR
3.60%, 10/01/05(b)(c)(e) -- -- 1,000 1,000,000
- --------------------------------------------------------------------
1,251,638
- --------------------------------------------------------------------
RHODE ISLAND-1.76%
Rhode Island (State of)
Industrial Facilities
Authority (Blackstone
Valley Electric Company);
Variable Rate Series 1984
RB
3.50%, 12/01/14(b)(c) A-1 -- 1,000 1,000,000
- --------------------------------------------------------------------
TENNESSEE-2.23%
Industrial Development Board
of the Metropolitan
Government of Nashville &
Davidson County
(Amberwood, Ltd. Project);
Multifamily Housing Series
1993 A RB
3.76%, 07/01/13(b)(c) -- VMIG-1 1,270 1,270,000
- --------------------------------------------------------------------
TEXAS-4.66%
Harris (County of) Sub Lien
Toll Road Series D RB
3.30%, 08/01/15(b)(c) A-1+ VMIG-1 1,000 1,000,000
- --------------------------------------------------------------------
Richardson (City of)
Independent School
District; Series 1993
Refunding GO
4.10%, 08/15/97 AA Aa1 250 250,410
- --------------------------------------------------------------------
Trinity River Industrial
Development Authority
(Radiation Sterilizers,
Inc. Project); Variable
Rate Demand Series 1985 A
IDR
3.60%, 11/01/05(b)(c) A-1 -- 1,400 1,400,000
- --------------------------------------------------------------------
2,650,410
- --------------------------------------------------------------------
UTAH-2.29%
Salt Lake (County of);
Series 1992 GO
5.00%, 06/15/97 AA+ Aaa 500 501,474
- --------------------------------------------------------------------
Salt Lake (County of)
(Service Station Holdings
Inc. Project-The British
Petroleum Co. plc); Series
1994 Refunding RB
3.80%, 02/01/08(c) A-1+ P-1 800 800,000
- --------------------------------------------------------------------
1,301,474
- --------------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 96
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WASHINGTON-0.88%
Industrial Development Corp.
of Port Townsend (Port
Townsend Paper Corp.
Project); Series 1988 A
Refunding RB
3.55%, 03/01/09(b)(c) VMIG-1 $ 500 $ 500,000
- --------------------------------------------------------------------
WISCONSIN-0.70%
Wisconsin (State of); GO
4.50%, 06/16/97 SP-1+ MIG-1 400 400,519
- --------------------------------------------------------------------
Total Municipal
Securities 46,471,890
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) MARKET
S&P Moody's PAR VALUE
<S> <C> <C> <C> <C>
TAXABLE COMMERCIAL PAPER(H)(I)-9.17%
Cargill Financial Services
Corp.-(Food Processing),
5.35%, 08/26/97 A-1+ P-1 $2,000 $ 1,956,308
- --------------------------------------------------------------------
Merrill Lynch & Co.
Inc.-(Broker-Dealer),
5.32%, 08/12/97 A-1+ P-1 1,800 1,764,622
- --------------------------------------------------------------------
Receivables Capital
Corp.-(Receivable Pools),
5.37%, 05/28/97 A-1+ P-1 1,507 1,494,187
- --------------------------------------------------------------------
Total Taxable Commercial Paper 5,215,117
- --------------------------------------------------------------------
REPURCHASE AGREEMENT(i)(j)-6.33%
Goldman, Sachs & Co., Inc.
6.50% 04/01/97(k) 3,598,070
- --------------------------------------------------------------------
TOTAL INVESTMENTS- 97.20% 55,285,077(l)
- --------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.80% 1,595,115
- --------------------------------------------------------------------
NET ASSETS-100.00% $ 56,880,192
- --------------------------------------------------------------------
</TABLE>
ABBREVIATIONS:
<TABLE>
<S> <C>
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue Bonds
PCR -- Pollution Control Revenue Bonds
RAN -- Revenue Anticipation Notes
RB -- Revenue Bonds
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Standard & Poor's Corporation ("S&P") and Moody's
Investors Service, Inc. ("MOODY'S"). Ratings are not covered by Independent
Auditor's Report.
(b) Secured by a letter of credit.
(c) Demand security; payable upon demand by the Fund at specified time intervals
no greater than thirteen months. Interest rate is redetermined periodically.
Rate shown is the rate in effect on 03/31/97.
(d) Secured by bond insurance.
(e) Unrated; determined by the investment advisor to be of comparable quality to
the rated securities in which the Fund may invest, pursuant to guidelines
for the determination of quality adopted by the Board of Directors and
followed by the investment advisor.
(f) Secured by an escrow fund of U.S. Treasury obligations.
(g) Subject to an irrevocable call or mandatory put by the issuer. Maturity date
and value reflect such call or put.
(h) Some commercial paper is traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(i) Interest does not qualify as exempt interest for federal tax purposes.
(j) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(k) Joint repurchase agreement entered into 03/31/97 with a maturing value of
$575,103,819. Collateralized by U.S. Treasury obligations, 0% to 9.25% due
07/24/97 to 02/15/16 with an aggregate market value at March 31, 1997 of
$587,066,889.
(l) Also represents costs for federal income tax purposes.
See Notes to Financial Statements
FS-4
<PAGE> 97
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $ 55,285,077
- ------------------------------------------------------------
Receivables for:
Fund shares sold 1,573,139
- ------------------------------------------------------------
Interest 216,636
- ------------------------------------------------------------
Investment for deferred compensation plan 17,708
- ------------------------------------------------------------
Other assets 15,190
- ------------------------------------------------------------
Total assets 57,107,750
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 2,450
- ------------------------------------------------------------
Deferred compensation 17,708
- ------------------------------------------------------------
Fund shares reacquired 133,479
- ------------------------------------------------------------
Accrued advisory fees 16,004
- ------------------------------------------------------------
Accrued distribution fees 11,162
- ------------------------------------------------------------
Accrued administrative service fees 5,768
- ------------------------------------------------------------
Accrued transfer agent fees 11,718
- ------------------------------------------------------------
Accrued operating expenses 29,269
- ------------------------------------------------------------
Total liabilities 227,558
- ------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 56,880,192
============================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 56,877,041
============================================================
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 1.00
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended March 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $1,370,128
- -----------------------------------------------------------
EXPENSES:
Advisory fees 125,537
- -----------------------------------------------------------
Custodian fees 9,962
- -----------------------------------------------------------
Administrative service fees 34,329
- -----------------------------------------------------------
Directors' fees and expenses 6,846
- -----------------------------------------------------------
Transfer agent fees 71,297
- -----------------------------------------------------------
Distribution fees 89,659
- -----------------------------------------------------------
Registration and filing fees 29,153
- -----------------------------------------------------------
Other 58,376
- -----------------------------------------------------------
Total expenses 425,159
- -----------------------------------------------------------
Less: Fees waived by advisor (53,795)
- -----------------------------------------------------------
Net expenses 371,364
- -----------------------------------------------------------
Net investment income 998,764
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain on sales of investment
securities 7,711
- -----------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities (741)
- -----------------------------------------------------------
Net gain on investment securities 6,970
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $1,005,734
============================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 98
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 998,764 $ 861,666
- ---------------------------------------------------------------------------------------
Net realized gain on sales of investment securities 7,711 12,256
- ---------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (741) (1,694)
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,005,734 872,228
- ---------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (996,476) (838,861)
- ---------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions 26,856,591 (383,580)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets 26,865,849 (350,213)
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 30,014,343 30,364,556
- ---------------------------------------------------------------------------------------
End of period $56,880,192 $30,014,343
=======================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $56,877,041 $30,020,450
=======================================================================================
Undistributed net investment income 34,005 31,717
=======================================================================================
Undistributed realized gain (loss) on sales of investment
securities (30,854) (38,565)
=======================================================================================
Unrealized appreciation of investment securities -- 741
=======================================================================================
$56,880,192 $30,014,343
=======================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Cash Fund (the "Fund") is a series portfolio of AIM Tax-Exempt
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of three separate
portfolios: AIM Tax-Exempt Cash Fund, AIM Tax-Exempt Bond Fund of Connecticut
and the Intermediate Portfolio. Matters affecting each portfolio are voted on
exclusively by the shareholders of such portfolio. The assets, liabilities and
operations of each portfolio are accounted for separately. Information presented
in these financial statements pertains only to the Fund. The Fund's investment
objective is to earn the highest level of current income free from federal
income taxes that is consistent with safety of principal and liquidity.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--The Fund invests only in securities which have
maturities of 397 days or less from the date of purchase. The securities are
valued on the basis of amortized cost which approximates market value. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of premiums or original issue
discounts.
B. Securities Transactions, Investment Income and Distributions--Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date,
adjusted for amortization of premiums and discounts on investments, and is
recorded on the accrual basis. Discounts, other than original issue, are
amortized to unrealized appreciation for financial reporting purposes. It is
the policy of the Fund to declare daily dividends from net investment income.
Such dividends are paid monthly.
C. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward of $33,594
(which may be carried forward to offset future taxable capital gains, if any)
which expires, if not previously utilized, through the year 2004. The Fund
cannot distribute capital gains to shareholders until the tax loss
carryforwards have been utilized.
FS-6
<PAGE> 99
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.35% of the Fund's
average daily net assets.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended March 31, 1997, the Fund
reimbursed AIM $34,329 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended March 31, 1997, the Fund paid AFS
$39,534 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") pursuant to which AIM Distributors
serves as the distributor for the Fund. The Company has also adopted a plan
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with respect to the Fund
whereby the Fund will pay AIM Distributors up to a maximum annual rate of 0.25%
of the Fund's average daily net assets as compensation for services related to
the sale and distribution of the Fund's shares. Currently, AIM Distributors has
voluntarily elected to waive a portion of its compensation payable by the Fund
such that the compensation paid pursuant to the Plan equals 0.10% per annum of
the Fund's average daily net assets. During the year ended March 31, 1997, AIM
Distributors waived $53,795. This waiver may be rescinded by AIM Distributors at
any time without further notice to investors. The Plan provides that of the
aggregate amount payable under the Plan, payments to dealers and other financial
institutions that provide continuing personal shareholder services to their
customers who purchase and own shares of the Fund in amounts of up to 0.25% of
the average daily net assets of the Fund attributable to the customers of such
dealers or financial institutions may be characterized as a service fee, and
that payments to dealers and other financial institutions in excess of such
amount and payments to AIM Distributors would be characterized as an asset-based
sales charge. The Plan also imposes a cap on the total amount of sales charges,
including asset-based sales charges, that may be paid by the Company with
respect to the Fund. As a result of AIM Distributors' waiver of compensation due
from the Fund, payments to dealers and other financial institutions by that Fund
will be limited to 0.10% of the Fund's average daily net assets. During the year
ended March 31, 1997, the Fund paid AIM Distributors $35,864 as compensation
pursuant to the Plan.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors. The Fund paid legal fees of $3,973 for services
rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Fund's Board of
Directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-CAPITAL STOCK
Changes in capital stock outstanding during the years ended March 31, 1997 and
1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold 96,643,811 $ 96,643,811 42,892,892 $ 42,892,892
- ------------------------------------------------------------------------------
Issued as
reinvestment of
dividends 948,679 948,679 808,372 808,372
- ------------------------------------------------------------------------------
Reacquired (70,735,899) (70,735,899) (44,084,844) (44,084,844)
- ------------------------------------------------------------------------------
26,856,591 $ 26,856,591 (383,580) $ (383,580)
==============================================================================
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the three-year period ended March 31,
1997, the three months ended March 31, 1994 and each of the years in the
six-year period ended December 31, 1993.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------------------------------------------- --------------------------------
1997 1996 1995 1994 1993 1992(A) 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.03 0.03 0.03 0.004 0.02 0.02 0.04
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.03) (0.03) (0.03) (0.004) (0.02) (0.02) (0.04)
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Total return 2.82% 2.92% 2.54% 1.73%(b) 1.78% 2.42% 3.91%
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $ 56,880 $ 30,014 $ 30,365 $ 33,658 $ 35,230 $ 41,291 $ 43,366
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Ratio of expenses to average net assets 1.04%(c)(d) 1.05%(d) 1.01%(d) 1.00%(b)(d) 1.00%(d) 0.98%(d) 0.98%
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
Ratio of net investment income to average
net assets 2.78%(c)(e) 2.97%(e) 2.53%(e) 1.75%(b)(e) 1.76%(e) 2.42%(e) 3.87%
- ------------------------------------------ -------- -------- -------- -------- -------- -------- --------
<CAPTION>
DECEMBER 31,
------------------------------
1990 1989 1988
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- --------
Income from investment operations:
Net investment income 0.05 0.05 0.05
- ------------------------------------------ -------- -------- --------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05)
- ------------------------------------------ -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------ -------- -------- --------
Total return 5.17% 5.62% 4.65%
- ------------------------------------------ -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $ 43,302 $ 45,995 $ 51,597
- ------------------------------------------ -------- -------- --------
Ratio of expenses to average net assets 0.99% 0.93% 0.83%
- ------------------------------------------ -------- -------- --------
Ratio of net investment income to average
net assets 5.05% 5.48% 4.54%
- ------------------------------------------ -------- -------- --------
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Annualized.
(c) Ratios are based on average daily net assets of $35,863,626.
(d) After waiver of fees and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of fees and/or expense reimbursements
were 1.19%, 1.20%, 1.16%, 1.14% (annualized), 1.36% and 1.00% for the
periods 1997 - 1992, respectively.
(e) After waiver of fees and/or expense reimbursements. Ratios of income to
average net assets prior to waiver of fees and/or expense reimbursements
were 2.63%, 2.82%, 2.38, 1.61% (annualized), 1.40% and 2.40% for the periods
1997-1992, respectively.
FS-7
<PAGE> 100
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM Tax-Free Intermediate Shares (a
portfolio of AIM Tax-Exempt Funds, Inc.), including the
schedule of investments, as of March 31, 1997, and the
related statement of operations for the year then ended,
the statement of changes in net assets for each of the
years in the two-year period then ended and the financial
highlights for each of the years in the eight-year period
then ended, the eleven-month period ended March 31, 1989,
and the period May 11, 1987 (date operations commenced)
through April 30, 1988. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on
these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of March 31, 1997, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Tax-Free
Intermediate Shares as of March 31, 1997, the results of
its operations for the year then ended, changes in its net
assets for each of the years in the two-year period then
ended and the financial highlights for each of the years
in the eight-year period then ended, the eleven-month
period ended March 31, 1989, and the period May 11, 1987
(date operations commenced) through April 30, 1988, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Houston, Texas
May 2, 1997
FS-8
<PAGE> 101
SCHEDULE OF INVESTMENTS
March 31, 1997
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ALABAMA-0.24%
Alabama State Municipal Electric
Authority; Power Supply
Series A RB
6.30%, 09/01/01(b) AAA Aaa $ 400 $ 422,600
- -------------------------------------------------------------------------
ALASKA-5.77%
Alaska Housing Finance Corp.;
General Mortgage Series A RB
3.45%, 06/01/26(c)(d) AAA VMIG1 8,000 8,000,000
- -------------------------------------------------------------------------
Anchorage (City of); School
Series 1994 GO
5.50%, 07/01/06(b) AAA Aaa 1,950 1,998,087
- -------------------------------------------------------------------------
9,998,087
- -------------------------------------------------------------------------
ARIZONA-2.63%
Arizona (State of); Educational
Loan Marketing Corp.
Series A Refunding RB
6.55%, 03/01/99 -- A 1,000 1,030,980
- -------------------------------------------------------------------------
Cochise (County of);
Series 1990 Certificates of
Participation
4.15%, 08/01/98(b) AAA Aaa 180 179,968
- -------------------------------------------------------------------------
Maricopa County Gilbert Unified
School District #41 (Project of
1988); School Improvement
Series 1992 E GO
6.20%, 07/01/02(e) AAA Aaa 1,250 1,339,137
- -------------------------------------------------------------------------
Mesa Industrial Development
Authority (Western Health
Network-Mesa Lutheran Project);
Health Care Facilities
Refunding
Series 1988 B1 RB
7.50%, 01/01/04(b) AAA Aaa 700 740,922
- -------------------------------------------------------------------------
Mohave County Unified School
District #1; Lake Havasu Series
A GO
5.40%, 07/01/06(b) AAA Aaa 200 202,596
- -------------------------------------------------------------------------
Phoenix (City of); Senior Lien
Street and Highway User
Refunding
Series 1992 RB
6.20%, 07/01/02 AA A1 1,000 1,067,000
- -------------------------------------------------------------------------
4,560,603
- -------------------------------------------------------------------------
ARKANSAS-1.17%
Little Rock (City of) (Baptist
Medical Center); Health
Facility Hospital RB
6.70%, 11/01/04(b) AAA Aaa 1,400 1,509,172
- -------------------------------------------------------------------------
North Little Rock (City of);
Electric System Refunding
Series 1992 A RB
6.00%, 07/01/01(b) AAA Aaa 500 527,260
- -------------------------------------------------------------------------
2,036,432
- -------------------------------------------------------------------------
CALIFORNIA-2.48%
Folsom (City of) (School
Facilities Project);
Series 1994 B GO
6.00%, 08/01/02(b) AAA Aaa 500 527,870
- -------------------------------------------------------------------------
Inglewood (City of) (Daniel
Freeman Hospital Inc.); Insured
Hospital
Series 1991 RB
6.50%, 05/01/01 A -- 400 418,716
- -------------------------------------------------------------------------
Oakland (City of); Housing
Finance
Issue D-1 RB
6.70%, 01/01/98 A+ -- 165 166,983
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
CALIFORNIA-(CONTINUED)
Orange (County of); Refunding
Recovery
Series A RB
5.50%, 06/01/06(b) AAA Aaa $1,000 $ 1,028,910
- -------------------------------------------------------------------------
Parking Authority of the City and
County of San Francisco;
Parking Meter
Series 1994 RB
6.75%, 06/01/05(b) AAA Aaa 500 556,230
- -------------------------------------------------------------------------
Rancho Mirage Joint Powers
Authority (Eisenhower Medical
Center);
Series A Certificate of
Participation
5.10%, 07/01/07(b) AAA Aaa 1,000 984,260
- -------------------------------------------------------------------------
Regents (The) of the University
of California (Multiple Purpose
Projects); Refunding
Series A RB
5.75%, 09/01/97 A A2 250 251,573
- -------------------------------------------------------------------------
State Public Works Board of the
State of California (Department
of Corrections) (State
Prison-Madera County); Lease
Series 1990 A RB
7.00%, 09/01/00 A A 100 107,230
- -------------------------------------------------------------------------
West End Water Development,
Treatment, and Conservation
Joint Powers Authority; 1990
Water Facilities
Certificate of Participation
7.00%, 10/01/00 BBB+ A 250 264,045
- -------------------------------------------------------------------------
4,305,817
- -------------------------------------------------------------------------
COLORADO-0.05%
Colorado Student Obligation Bond
Authority; Student Loan
Series 1985 B RB
6.125%, 12/01/98 -- A 80 81,169
- -------------------------------------------------------------------------
CONNECTICUT-0.07%
Connecticut (State of) Special
Tax Obligation; Second Lien
Transportation and
Infrastructure Purpose S-1 RB
3.40%, 12/01/10(c)(d) AA- VMIG1 130 130,000
- -------------------------------------------------------------------------
DELAWARE-0.45%
Delaware Transportation
Authority; Senior Lien
Transportation System
Series 1991 RB
6.00%, 07/01/01(e)(f) AAA Aaa 750 786,173
- -------------------------------------------------------------------------
DISTRICT OF COLUMBIA-3.35%
District of Columbia; Refunding
Series B GO
6.75%, 06/01/99(b) AAA Aaa 750 778,897
- -------------------------------------------------------------------------
District of Columbia;
Series B GO
6.125%, 06/01/03(b) AAA Aaa 3,020 3,186,523
- -------------------------------------------------------------------------
District of Columbia (Medlantic
Healthcare Group);
Series 1996 A RB
6.00%, 08/15/06(b) AAA Aaa 1,550 1,632,677
- -------------------------------------------------------------------------
District of Columbia (The Howard
University Issue); University
Series 1990 A RB
6.90%, 10/01/00 A+ A3 200 213,098
- -------------------------------------------------------------------------
5,811,195
- -------------------------------------------------------------------------
</TABLE>
FS-9
<PAGE> 102
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
FLORIDA-3.71%
Dade (County of) School District;
Refunding
Series 1996 GO
6.00%, 07/15/06(b) AAA Aaa $1,900 $ 2,035,185
- -------------------------------------------------------------------------
Dade (County of); Water and Sewer
RB
5.00%, 10/01/99(b) AAA Aaa 225 228,049
- -------------------------------------------------------------------------
Palm Beach County Solid Waste
Authority; RB
7.90%, 07/01/97 A A2 100 100,939
- -------------------------------------------------------------------------
Palm Beach County Solid Waste
Authority; Refunding Series
1997 A RB
5.50%, 10/01/06(b) AAA Aaa 4,000 4,068,000
- -------------------------------------------------------------------------
6,432,173
- -------------------------------------------------------------------------
GEORGIA-3.89%
Albany (City of); Sewer System
Series 1992 RB
6.30%, 07/01/02(e) AAA Aaa 500 533,645
- -------------------------------------------------------------------------
Chatham (County of) Hospital
Authority (Memorial Medical
Center); Refunding Series 1996
A RB
5.10%, 01/01/07(b) AAA Aaa 1,000 989,330
- -------------------------------------------------------------------------
Dekalb Private Hospital Authority
(Egleston Children's Hospital
at Emory University, Inc.
Project); Series 1994 A RB
3.45%, 03/01/24(c)(d) AA- VMIG1 800 800,000
- -------------------------------------------------------------------------
Fulton (County of); Water and
Sewer Refunding Series 1992 RB
5.75%, 01/01/02(b) AAA Aaa 715 744,680
- -------------------------------------------------------------------------
Georgia (State of);
Series 1988 D GO
7.10%, 06/01/99 AA- Aaa 2,000 2,105,120
- -------------------------------------------------------------------------
Georgia State Municipal Electric
Authority; Series V RB
6.00%, 01/01/01(b) AAA Aaa 1,000 1,040,240
- -------------------------------------------------------------------------
Metropolitan Atlanta Rapid
Transit Authority; Sales Tax
Refunding
Series M RB
6.15%, 07/01/02 AA- A1 500 532,115
- -------------------------------------------------------------------------
6,745,130
- -------------------------------------------------------------------------
HAWAII-3.05%
Hawaii (State of); Refunding
Series 1997 GO
6.00%, 03/01/07(b) AAA Aaa 5,000 5,281,250
- -------------------------------------------------------------------------
ILLINOIS-5.83%
Chicago (City of) (Central Public
Library Project); Adjustable
Rate
Series 1988 C GO
6.10%, 01/01/99(b) AAA Aaa 500 513,150
- -------------------------------------------------------------------------
Chicago (City of);
Series 1997 GO
6.00%, 01/01/06(b) AAA Aaa 500 525,620
- -------------------------------------------------------------------------
Chicago Park District; Capital
Improvement
Series 1991 GO
5.80%, 01/01/98(e) AA- A1 750 759,585
- -------------------------------------------------------------------------
Illinois Development Finance
Authority Chicago Symphony
Project; RB
3.50%, 06/01/31(c)(d) AA- VMIG1 756 756,000
- -------------------------------------------------------------------------
Illinois Educational Facilities
Authority (Augustana College);
Series 1997 RB
4.80%, 10/01/99(b) AAA -- 375 376,920
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
ILLINOIS-(CONTINUED)
Illinois Health Facilities
Authority (Mercy Hospital and
Medical Center); Refunding
Series 1992 RB
6.20%, 01/01/00 A- Baa1 $ 250 $ 255,013
- -------------------------------------------------------------------------
Illinois Health Facilities
Authority;
Series D RB
3.50%, 08/01/15(c)(d) AA- VMIG1 1,150 1,150,000
- -------------------------------------------------------------------------
Illinois Health Facilities
Authority (Children's Memorial
Hospital Project); Series 1985
B RB
3.50%, 11/01/15(c)(d) AA- VMIG1 2,050 2,050,000
- -------------------------------------------------------------------------
Illinois Regional Transit
Authority; Series B RB
6.30%, 6/01/04(e)(f) AAA Aaa 1,000 1,092,670
- -------------------------------------------------------------------------
Joliet (City of); Waterworks and
Sewer Series 1991 RB
6.95%, 01/01/01(b) AAA Aaa 250 266,785
- -------------------------------------------------------------------------
Kane (County of) Public Building
Commission; Unlimited Tax
Public Building Series B GO
6.20%, 12/01/01 -- Aa 700 725,746
- -------------------------------------------------------------------------
Kankakee County School District
#111; GO
5.40%, 01/01/07(b) -- Aaa 625 628,837
- -------------------------------------------------------------------------
Village of Hoffman Estates (Park
Place Apartment Project);
Series 1996 RB
5.75%, 06/01/06(f) AAA Aaa 1,000 1,000,550
- -------------------------------------------------------------------------
10,100,876
- -------------------------------------------------------------------------
INDIANA-5.65%
Frankfort Middle School Building
Corp.; Refunding Series 1996 RB
5.20%, 01/10/07(b) AAA Aaa 295 295,870
- -------------------------------------------------------------------------
Indiana Transportation Finance
Authority; Airport Facilities
Lease Series A RB
6.00%, 11/01/01 A A2 500 521,660
- -------------------------------------------------------------------------
Indiana Transportation Finance
Authority; Highway Series A RB
5.50%, 06/01/07(b) AAA Aaa 1,000 1,024,160
- -------------------------------------------------------------------------
South Bend Redevelopment
Authority (College Football
Hall of Fame Project); Series
1994 RB
3.45%, 02/01/19(c)(d) AAA VMIG1 7,950 7,950,000
- -------------------------------------------------------------------------
9,791,690
- -------------------------------------------------------------------------
IOWA-4.91%
Iowa Higher Education Loan
Authority; Private College
Facilities Series 1985 RB
3.45%, 12/01/15(c)(d) AAA VMIG1 8,000 8,000,000
- -------------------------------------------------------------------------
Iowa Student Loan Liquidity
Corp.; Student Loan Series 1992
A RB
6.25%, 03/01/00 -- Aa1 500 517,390
- -------------------------------------------------------------------------
8,517,390
- -------------------------------------------------------------------------
KENTUCKY-0.39%
Kentucky State Turnpike Authority
(Economic Development Road
Revitalization Project); RB
7.125%, 05/15/00(e)(f) AAA Aaa 260 281,593
- -------------------------------------------------------------------------
</TABLE>
FS-10
<PAGE> 103
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
KENTUCKY-(CONTINUED)
Western Kentucky University;
Consolidated Educational
Buildings Refunding Series M RB
4.70%, 05/01/99(b) AAA Aaa $ 390 $ 393,510
- -------------------------------------------------------------------------
675,103
- -------------------------------------------------------------------------
LOUISIANA-5.97%
Jefferson Parish School Board;
Sales and Use Tax RB
6.00%, 02/01/04(b) AAA Aaa 1,720 1,803,110
- -------------------------------------------------------------------------
Louisiana (State of); Series A GO
6.00%, 04/15/07(b) AAA Aaa 5,000 5,309,500
- -------------------------------------------------------------------------
Louisiana Offshore Terminal
Authority (Loop, Inc.);
Deepwater Port Refunding Series
1992 RB
6.00%, 09/01/01 A Baa1 1,000 1,042,300
- -------------------------------------------------------------------------
Louisiana Offshore Terminal
Authority (Loop, Inc.);
Deepwater Port Refunding RB
6.20%, 09/01/03 A Baa1 1,000 1,058,330
- -------------------------------------------------------------------------
Louisiana Public Facilities
Authority (Tulane University of
Louisiana); Series 1987 C RB
7.30%, 08/15/99 A A1 270 277,825
- -------------------------------------------------------------------------
Ouachita (Parish of) Hospital
Service District #1 (Glenwood
Regional Medical Center);
Hospital Refunding Series 1996
RB
5.00%, 05/15/99 A -- 850 853,162
- -------------------------------------------------------------------------
10,344,227
- -------------------------------------------------------------------------
MASSACHUSETTS-4.57%
Massachusetts Health &
Educational Facilities
Authority (Harvard University
Issue); Series I RB
3.30%, 08/01/17(c) AAA VMIG1 7,500 7,500,000
- -------------------------------------------------------------------------
New England Education Loan
Marketing Corp.; Student Loan
Refunding Senior Issue 1992 D
RB
6.20%, 09/01/00 -- Aaa 400 417,531
- -------------------------------------------------------------------------
7,917,531
- -------------------------------------------------------------------------
MICHIGAN-8.35%
Dearborn (City of) Economic
Development Corp. (Oakwood
Obligated Group); Hospital
Series 1991 A RB
6.95%, 08/15/01(e)(f) AAA Aaa 1,000 1,102,890
- -------------------------------------------------------------------------
Detroit (City of) School
District; GO
5.60%, 05/01/01 AA Aa2 765 784,821
- -------------------------------------------------------------------------
Grand Rapids Water Supply;
Refunding RB
3.30%, 01/01/20(c)(d) AAA VMIG1 5,400 5,400,000
- -------------------------------------------------------------------------
Michigan State Building
Authority; Refunding Series I
RB
6.40%, 10/01/04 AA- A1 2,000 2,141,820
- -------------------------------------------------------------------------
Michigan State Hospital Finance
Authority; Series A RB
3.55%, 12/01/23(c)(d) -- VMIG1 4,000 4,000,000
- -------------------------------------------------------------------------
Michigan State Strategic Fund;
Refunding Series 1988 PCR
3.65%, 04/15/18(c) -- Aaa 742 741,500
- -------------------------------------------------------------------------
North Muskegon School District;
GO
7.00%, 05/01/98(b) AAA Aaa 200 205,980
- -------------------------------------------------------------------------
Novi Community School District;
GO
5.875%, 05/01/97(b) AAA Aaa 100 100,159
- -------------------------------------------------------------------------
14,477,170
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MINNESOTA-0.44%
Southern Minnesota Municipal
Power Agency; Power Supply
System Series A RB
5.60%, 01/01/04 A+ A2 $ 745 $ 757,889
- -------------------------------------------------------------------------
MISSOURI-0.51%
Cass County School District
#R-02; Missouri Direct Deposit
Program GO
4.30%, 03/01/98 AA -- 375 376,718
- -------------------------------------------------------------------------
State Environmental Improvement
and Energy Resource Authority
(City of Branson Project)
(State Revolving Fund Program);
Water Series 1995 A PCR
5.00%, 07/01/99(b) AAA Aaa 500 503,120
- -------------------------------------------------------------------------
879,838
- -------------------------------------------------------------------------
MONTANA-0.26%
Montana Higher Education
Assistance Corp.; Student Loan
Series 1992 A RB
6.60%, 12/01/00 -- A 425 447,746
- -------------------------------------------------------------------------
NEVADA-0.28%
Clark County Improvement District
No. 65 (Lamb Boulevard III);
Series 1992 GO
6.20%, 12/01/02 AA- A1 120 123,812
- -------------------------------------------------------------------------
Nevada (State of) (Nevada
Municipal Bond Bank Project
Nos. 38-39); Limited Tax Series
1992 A GO
6.00%, 07/01/01(e) AA -- 350 365,512
- -------------------------------------------------------------------------
489,324
- -------------------------------------------------------------------------
NEW JERSEY-1.64%
Gloucester County Utilities
Authority; Sewer Refunding
Series 1991 RB
6.10%, 01/01/00 AA- A-1 225 235,420
- -------------------------------------------------------------------------
Jersey City (City of) (Qualified
School Bond); GO
6.40%, 02/15/00 AA A3 1,000 1,048,580
- -------------------------------------------------------------------------
New Jersey Transportation Trust
Fund Authority; Transportation
System Series 1992 A RB
5.90%, 06/15/99(e) NRR Aaa 1,000 1,030,410
- -------------------------------------------------------------------------
Trenton (City of); Fiscal Year
Adjustment GO
6.10%, 08/15/02(b) AAA Aaa 500 527,015
- -------------------------------------------------------------------------
2,841,425
- -------------------------------------------------------------------------
NEW MEXICO-1.05%
Albuquerque (City of);
Joint Water and Sewer
Series 1990 A RB
6.00%, 07/01/00(e)(f) AAA -- 1,000 1,039,220
- -------------------------------------------------------------------------
Las Cruces (City of) South
Central Solid Waste Authority;
Environmental RB
6.00%, 06/01/97 -- A 260 260,673
- -------------------------------------------------------------------------
Santa Fe (City of); Series 1994 A
RB
5.50%, 06/01/03(e) AAA Aaa 500 514,945
- -------------------------------------------------------------------------
1,814,838
- -------------------------------------------------------------------------
NEW YORK-12.26%
Nassau (County of); GO
5.15%, 03/01/07(b) AAA Aaa 5,000 4,992,050
- -------------------------------------------------------------------------
New York (City of); Refunding
Series D GO
5.60%, 11/01/05 BBB+ Baa1 5,000 4,982,900
- -------------------------------------------------------------------------
New York (City of); Series G GO
5.90%, 02/01/05 BBB+ Baa1 1,150 1,170,056
- -------------------------------------------------------------------------
</TABLE>
FS-11
<PAGE> 104
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
NEW YORK-(CONTINUED)
New York (City of) Municipal
Assistance Corp.; Series I RB
5.25%, 07/01/03 AA- Aa2 $5,500 $ 5,590,200
- -------------------------------------------------------------------------
New York (State of) Dormitory
Authority; Mental Health
Facilities Series A RB
6.00%, 02/15/05 BBB+ Baa1 1,000 1,023,170
- -------------------------------------------------------------------------
6.00%, 08/15/07 BBB+ Baa1 1,775 1,798,075
- -------------------------------------------------------------------------
New York (State of) Medical Care
Facilities Financing Agency;
Hospital & Nursing Home Series
1995 A RB
5.60%, 02/15/05(b) AAA -- 1,665 1,703,112
- -------------------------------------------------------------------------
21,259,563
- -------------------------------------------------------------------------
OHIO-4.42%
Franklin (County of); 1991 Issue
GO
6.30%, 12/01/01(e)(f) NRR -- 1,500 1,621,485
- -------------------------------------------------------------------------
Greene (County of); Water System
Series A RB
5.45%, 12/01/06(b) AAA Aaa 585 597,735
- -------------------------------------------------------------------------
Hilliard City School District;
School Improvement Refunding
Series 1992 GO
6.05%, 12/01/00(b) AAA Aaa 500 526,025
- -------------------------------------------------------------------------
6.15%, 12/01/01(b) AAA Aaa 250 265,103
- -------------------------------------------------------------------------
Lucas County (St. Vincent's
Medical Center); Hospital
Series A RB
6.75%, 08/15/00(b)(f) AAA Aaa 2,000 2,147,380
- -------------------------------------------------------------------------
Lucas County Health Facilities
(Lutheran Homes Society
Project); RB
3.45%, 11/01/19(c)(d) AA -- 390 390,000
- -------------------------------------------------------------------------
Miami County (Upper Valley
Medical Center); Refunding
Hospital Facility Series 1996 B
RB
5.00%, 05/15/98(b) AAA Aaa 585 588,691
- -------------------------------------------------------------------------
Ohio State Public Facilities
Commission; Mental Health
Series A RB
7.00%, 12/01/97 AA- Aa3 1,500 1,526,385
- -------------------------------------------------------------------------
7,662,804
- -------------------------------------------------------------------------
OKLAHOMA-5.17%
Grand River Dam Authority;
Refunding Series 1987 RB
6.45%, 06/01/97(e)(f) AAA Aaa 500 512,010
- -------------------------------------------------------------------------
Norman (City of) Hospital
Authority; Refunding Series A
RB
5.20%, 09/01/06(b) AAA Aaa 310 308,388
- -------------------------------------------------------------------------
5.30%, 09/01/07(b) AAA Aaa 1,090 1,088,212
- -------------------------------------------------------------------------
Norman (City of) Utilities
Authority; RB
5.10%, 11/01/06 AAA Aaa 500 493,645
- -------------------------------------------------------------------------
Oklahoma Housing Finance Agency;
Single Family Mortgage Series A
RB
6.55%, 03/01/00(b) AAA Aaa 130 134,961
- -------------------------------------------------------------------------
Oklahoma State Turnpike
Authority; RB
7.875%, 01/01/99(e)(f) AAA -- 4,780 5,145,766
- -------------------------------------------------------------------------
Southern Oklahoma Memorial
Hospital Authority; Hospital
Series 1993 A RB
5.60%, 02/01/00 A A 1,250 1,280,037
- -------------------------------------------------------------------------
8,963,019
- -------------------------------------------------------------------------
OREGON-1.51%
Oregon (State of) Department of
Transportation (Westside Light
Rail Project); Series 1994 RB
5.00%, 06/01/97(b) AAA Aaa 1,000 1,001,940
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
OREGON-(CONTINUED)
Portland (City of); Sewer System
Series 1994 A RB
5.45%, 06/01/03 A+ A1 $1,065 $ 1,100,315
- -------------------------------------------------------------------------
5.55%, 06/01/04 A+ A1 500 519,390
- -------------------------------------------------------------------------
2,621,645
- -------------------------------------------------------------------------
PENNSYLVANIA-3.09%
Pennsylvania Industrial
Development Authority; Economic
Development Series 1991 A RB
6.50%, 01/01/98(e) NRR NRR 100 101,623
- -------------------------------------------------------------------------
6.50%, 07/01/98(e) NRR NRR 150 153,852
- -------------------------------------------------------------------------
York (City of); Pooled Financing
RB
3.50%, 09/01/26(c)(d) A+ -- 5,100 5,100,000
- -------------------------------------------------------------------------
5,355,475
- -------------------------------------------------------------------------
RHODE ISLAND-0.62%
Rhode Island (State of);
Refunding Series 1992 A GO
6.10%, 06/15/03(b) AAA Aaa 1,000 1,063,950
- -------------------------------------------------------------------------
SOUTH DAKOTA-1.14%
Rapid City (City of); Sales Tax
Series 1995 A RB
5.60%, 06/01/05(b) AAA Aaa 255 264,093
- -------------------------------------------------------------------------
South Dakota Health and Education
Facility McKennan Hospital;
Refunding Series 1996 RB
5.40%, 07/01/06(b) AAA Aaa 1,680 1,703,033
- -------------------------------------------------------------------------
1,967,126
- -------------------------------------------------------------------------
TENNESSEE-1.42%
Knoxville (City of); Refunding
Series B GO
4.85%, 05/01/99 AA- A1 700 710,885
- -------------------------------------------------------------------------
Nashville and Davidson (County
of) Health and Education
Facilities Board (Meharry
Medical College); RB
7.875%, 12/01/04(e) NRR Aaa 1,100 1,205,963
- -------------------------------------------------------------------------
Tennessee School Board Authority
(College and University
Improvement); RB
5.75%, 05/01/06 AA A1 550 551,545
- -------------------------------------------------------------------------
2,468,393
- -------------------------------------------------------------------------
TEXAS-9.48%
Alamo Community College District;
Series 1990 GO
6.90%, 02/15/00(e)(f) AA Aaa 500 529,415
- -------------------------------------------------------------------------
Austin (City of); Combined
Utility System Refunding Series
1986 RB
7.20%, 05/15/98(e) NRR NRR 25 25,828
- -------------------------------------------------------------------------
Series 1986 RB
7.20%, 05/15/98 A A 175 177,361
- -------------------------------------------------------------------------
Clint Independent School
District; Unlimited Tax
Refunding Series 1991 GO
6.30%, 03/01/00(b) -- Aaa 185 191,434
- -------------------------------------------------------------------------
Comal County Industrial
Development Authority (The
Coleman Company, Inc. Project);
Series 1980 IDR
9.25%, 08/01/00(e) NRR NRR 665 719,038
- -------------------------------------------------------------------------
Conroe (City of) Independent
School District; Unlimited
School Tax GO
7.375%, 02/01/01(b) AAA Aaa 115 125,525
- -------------------------------------------------------------------------
</TABLE>
FS-12
<PAGE> 105
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TEXAS-(CONTINUED)
Dallas (City of); Waterwork &
Sewer System Series A RB
5.50%, 10/01/05 AA Aa $1,000 $ 1,004,970
- -------------------------------------------------------------------------
Gatesville Independent School
District; Unlimited Tax School
Building and Refunding Series
1995 RB
5.80%, 02/01/03(b) -- Aaa 485 508,610
- -------------------------------------------------------------------------
Harris (County of); Port of
Houston Authority RB
5.75%, 05/01/02 A A 1,565 1,596,926
- -------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (Memorial
Hospital System Project);
Hospital Series 1992 RB
6.70%, 06/01/00(e) A- A2 1,000 1,057,130
- -------------------------------------------------------------------------
Harris County Health Facilities
Development Corp. (School
Health Care System Project);
Series B RB
4.00%, 07/01/98 AA Aa3 840 838,942
- -------------------------------------------------------------------------
5.10%, 07/01/06 AA Aa3 1,000 985,440
- -------------------------------------------------------------------------
Hays (County of); Series 1995 GO
7.75%, 08/15/97(b) AAA Aaa 175 177,396
- -------------------------------------------------------------------------
Keller (City of) Independent
School District; Series 1994
Certificates of Participation
5.75%, 08/15/01(b) AAA Aaa 915 953,201
- -------------------------------------------------------------------------
Kerrville (City of); Electric
System Refunding Series 1991 RB
6.375%, 11/01/01(b) AAA Aaa 185 196,137
- -------------------------------------------------------------------------
La Marque Independent School
District; Unlimited Schoolhouse
Tax Series 1992 GO
7.50%, 08/15/99(b) AAA Aaa 575 616,204
- -------------------------------------------------------------------------
7.50%, 08/15/02(b) AAA Aaa 750 845,497
- -------------------------------------------------------------------------
Plano Independent School
District; GO
5.80%, 02/15/05(b) AAA Aaa 2,025 2,109,665
- -------------------------------------------------------------------------
San Antonio (City of); Electric
and Gas System Refunding Series
1989 A RB
7.00%, 02/01/01 AA Aa1 400 421,696
- -------------------------------------------------------------------------
Temple (City of) (Bell County);
Refunding Series 1992 GO
5.80%, 02/01/01(b) AAA Aaa 250 259,690
- -------------------------------------------------------------------------
Texarkana (City of); Water and
Sewer Utility Improvement
Series 1996 GO
6.75%, 02/15/98(b) AAA Aaa 280 286,740
- -------------------------------------------------------------------------
Texas (State of); Refunding
Series A GO
6.00%, 10/01/06 AA Aa 1,000 1,070,170
- -------------------------------------------------------------------------
Texas Municipal Power Agency; RB
5.75%, 09/01/02(e)(f) AAA Aaa 1,000 1,040,880
- -------------------------------------------------------------------------
Texas Turnpike Authority (Addison
Airport Toll Tunnel Project);
Dallas North Tollway Series
1994 RB
6.30%, 01/01/05(b) AAA Aaa 500 538,605
- -------------------------------------------------------------------------
Texas Water Resources Finance
Authority; Series 1989 A RB
7.25%, 08/15/97 A A 140 141,372
- -------------------------------------------------------------------------
University of Texas System;
General Tuition Series 1986
Refunding RB
7.75%, 08/15/98(e) AA+ Aa1 10 10,482
- -------------------------------------------------------------------------
16,428,354
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
UTAH-1.22%
Salt Lake (City of) Municipal
Building Authority; Series A RB
6.50%, 10/15/00 A+ A1 $ 570 $ 593,142
- -------------------------------------------------------------------------
Utah (State of) (Board of Water
Resources Program); Revolving
Fund Recapitalization Series
1992 B RB
6.10%, 04/01/02 AA -- 500 529,470
- -------------------------------------------------------------------------
Utah Municipal Finance
Cooperative (Pooled Capital
Improvement Financing Program)
(University Hospital Project);
Local Government Series August
1, 1991 RB
6.50%, 05/15/99 AA -- 475 496,090
- -------------------------------------------------------------------------
Utah Water Financing Agency;
Series A RB
4.40%, 10/01/99(b) AAA Aaa 500 497,665
- -------------------------------------------------------------------------
2,116,367
- -------------------------------------------------------------------------
VIRGINIA-1.44%
Henrico (County of) Industrial
Development Authority
(Hermitage Project); Health
Facilities RB
3.80%, 05/01/24(c)(d) -- VMIG1 30 29,500
- -------------------------------------------------------------------------
Medical College of Hampton Roads;
General Refunding Series 1991 A
RB
6.00%, 11/15/99 A- -- 605 623,065
- -------------------------------------------------------------------------
Norfolk (City of) Redevelopment
and Housing Authority (State
Board for Community
Colleges-Tidewater);
Educational Facility Series
1995 RB
5.30%, 11/01/04 AA Aa 535 545,331
- -------------------------------------------------------------------------
5.40%, 11/01/05 AA Aa 500 513,085
- -------------------------------------------------------------------------
Portsmouth (City of); Port
Improvement Unlimited Tax
Refunding GO
6.40%, 11/01/03 AA- A 300 323,046
- -------------------------------------------------------------------------
Portsmouth (City of); Public
Utility Refunding Series 1992
GO
5.90%, 11/01/01 AA- A 450 470,669
- -------------------------------------------------------------------------
2,504,696
- -------------------------------------------------------------------------
WASHINGTON-3.90%
King (County of); Series A RB
5.80%, 01/01/05 AA+ Aa1 1,000 1,050,100
- -------------------------------------------------------------------------
Seattle (City of) (West Seattle
Bridge); Limited Tax Refunding
Series 1991 GO
6.40%, 10/01/01 AA+ Aa1 250 266,830
- -------------------------------------------------------------------------
Seattle (Port of); Series 1992 A
RB
6.00%, 11/01/01 AA- A-1 500 522,910
- -------------------------------------------------------------------------
Snohomish (County of) Public
Utilities District # 1; RB
5.70%, 01/01/06(b) AAA Aaa 4,000 4,148,240
- -------------------------------------------------------------------------
Washington Health Care Facility
Authority (Our Lady of Lourdes
Health Center); Refunding RB
7.35%, 12/01/97(d) A -- 500 508,575
- -------------------------------------------------------------------------
Washington Public Power Supply
System (Nuclear Project #3);
Refunding Series B RB
6.80%, 07/01/97 AA- Aa1 250 251,725
- -------------------------------------------------------------------------
6,748,380
- -------------------------------------------------------------------------
</TABLE>
FS-13
<PAGE> 106
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
WISCONSIN-3.62%
Middleton (City of); GO
4.00%, 03/01/99 -- Aa2 $1,000 $ 995,420
- -------------------------------------------------------------------------
Sturgeon Bay (City of); Series
1996 A Bond Anticipation Notes
4.30%, 10/01/97 -- MIG-1 1,000 1,000,390
- -------------------------------------------------------------------------
Wisconsin (State of); Series A GO
5.75%, 05/01/99 AA Aa 1,000 1,027,480
- -------------------------------------------------------------------------
Wisconsin Health and Educational
Facilities Authority
(Marshfield Clinic); RB
5.20%, 02/15/07(b) AAA Aaa 3,310 3,247,242
- -------------------------------------------------------------------------
6,270,532
- -------------------------------------------------------------------------
TOTAL INVESTMENTS-116.00% 201,075,980
- -------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(16.00%) (27,734,200)
- -------------------------------------------------------------------------
NET ASSETS-100.00% $173,341,780
=========================================================================
</TABLE>
Investment Abbreviations:
<TABLE>
<S> <C>
GO - General Obligation Bonds
IDR - Industrial Development Revenue Bonds
NRR - Not re-rated
PCR - Pollution Control Revenue Bonds
RB - Revenue Bonds
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Moody's Investors Service, Inc. ("MOODY'S") and Standard
& Poor's Corporation ("S&P"). NRR indicates a security that is not re-rated
subsequent to funding of an escrow fund (consisting of U.S. Treasury
obligations); this funding is pursuant to an advance refunding of the
security. Ratings are not covered by Independent Auditors' Report.
(b) Secured by bond insurance.
(c) Payable on demand by the Fund at specified frequencies no greater than
thirteen months. Interest rate is redetermined periodically. Rate shown is
the rate in effect on March 31, 1997.
(d) Secured by a letter of credit.
(e) Secured by an escrow fund of U.S. Treasury obligations.
(f) Security has an outstanding irrevocable call or mandatory put by the
issuer. Market value and maturity date reflect such call or put.
See Notes to Financial Statements.
FS-14
<PAGE> 107
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$199,440,470) $ 201,075,980
- ---------------------------------------------------------
Receivables for:
Capital stock sold 220,266
- ---------------------------------------------------------
Interest 2,171,711
- ---------------------------------------------------------
Investment for deferred compensation plan 12,379
- ---------------------------------------------------------
Other assets 44,562
- ---------------------------------------------------------
Total assets 203,524,898
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 29,476,663
- ---------------------------------------------------------
Capital stock reacquired 242,356
- ---------------------------------------------------------
Dividends 349,164
- ---------------------------------------------------------
Deferred compensation plan 12,379
- ---------------------------------------------------------
Accrued advisory fees 43,785
- ---------------------------------------------------------
Accrued administrative service fees 11,154
- ---------------------------------------------------------
Accrued directors' fees 2,400
- ---------------------------------------------------------
Accrued transfer agent fees 10,750
- ---------------------------------------------------------
Accrued operating expenses 34,467
- ---------------------------------------------------------
Total liabilities 30,183,118
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 173,341,780
=========================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- ---------------------------------------------------------
Outstanding 16,154,571
=========================================================
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 10.73
- ---------------------------------------------------------
OFFERING PRICE PER SHARE:
(Net asset value of $10.73 divided by
99.00%) $ 10.84
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended March 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 4,790,956
- --------------------------------------------------------
EXPENSES:
Advisory fees 276,828
- --------------------------------------------------------
Custodian fees 7,156
- --------------------------------------------------------
Transfer agent fees 61,732
- --------------------------------------------------------
Registration and filing fees 35,266
- --------------------------------------------------------
Administrative service fees 52,666
- --------------------------------------------------------
Directors' fees 7,508
- --------------------------------------------------------
Other 77,082
- --------------------------------------------------------
Total expenses 518,238
- --------------------------------------------------------
Net investment income 4,272,718
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain on sales of investment
securities 7,036
- --------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities (1,085,090)
- --------------------------------------------------------
Net gain (loss) on investment
securities (1,078,054)
- --------------------------------------------------------
Net increase in net assets resulting from
operations $ 3,194,664
========================================================
</TABLE>
See Notes to Financial Statements.
FS-15
<PAGE> 108
STATEMENT OF CHANGES IN NET ASSETS
For the years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,272,718 $ 3,731,756
- -----------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities 7,036 (5,848)
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (1,085,090) 836,452
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,194,664 4,562,360
- -----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (4,406,557) (3,712,690)
- -----------------------------------------------------------------------------------------
Distributions from capital (21,485) --
- -----------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions 91,508,711 (137,887)
- -----------------------------------------------------------------------------------------
Net increase in net assets 90,275,333 711,783
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 83,066,447 82,354,664
- -----------------------------------------------------------------------------------------
End of period $173,341,780 $83,066,447
- -----------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $172,821,545 $81,353,865
- -----------------------------------------------------------------------------------------
Undistributed net investment income (10,946) 103,347
- -----------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (1,104,329) (1,111,365)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,635,510 2,720,600
- -----------------------------------------------------------------------------------------
$173,341,780 $83,066,447
=========================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax Exempt Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Company is organized as a Maryland corporation
consisting of three separate portfolios; the Intermediate Portfolio, AIM
Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut. Matters
affecting each portfolio are voted on exclusively by the shareholders of such
portfolio. The assets, liabilities, and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the Intermediate Portfolio (the "Fund"). The Fund currently
offers one class of shares, AIM Tax-Free Intermediate Shares (the "Shares"). The
investment objective of the Fund is to generate as high a level of tax-exempt
income as is consistent with preservation of capital by investing in high
quality, intermediate-term municipal securities having a maturity of ten and
one-half years or less.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations -- Portfolio securities are valued based on market
quotations or at fair value determined by a pricing service approved by the
Company's Board of Directors, provided that securities with a demand feature
exercisable within one to seven days are valued at par. Prices provided by
the pricing service represent valuations of the mean between current bid and
asked market prices which may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other market
data. Portfolio securities for which prices are not provided by the pricing
service are valued at the mean between the last available bid and asked
prices, unless the Board of Directors or its designees determines that the
mean between the last available bid and asked prices does not accurately
reflect the current market value of the security. Securities for which market
quotations either are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Company's officers in accordance with methods which are specifically
authorized by the Board of Directors. Notwithstanding the above, short-term
obligations with maturities of sixty days or less are valued at amortized
cost.
FS-16
<PAGE> 109
B. Securities Transactions and Investment Income -- Securities transactions are
recorded on a trade date basis. Realized gains and losses are computed on the
basis of specific identification of the securities sold. Interest income,
adjusted for amortization of premiums and original issue discounts, is earned
from settlement date and is recorded on the accrual basis. On March 31, 1997
$21,485, was reclassified from undistributed net investment income to
paid-in-capital due to distributions in excess of net investment income. In
addition, $19,546 was reclassified from net investment income to paid in
capital due to permanent book/tax differences. Net assets of the Fund were
unaffected by the reclassifications discussed above.
C. Dividends and Distributions to Shareholders -- It is the policy of the Fund
to declare daily dividends from net investment income. Such dividends are
paid monthly. Net realized capital gains (including net short-term capital
gains and market discounts), if any, are distributed annually.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward (which may be carried forward to offset future taxable capital
gains, if any) of $1,118,055, which expires, if not previously utilized, in
the year 2004. The Fund cannot distribute capital gains to shareholders until
the tax loss carryforwards have been utilized. In addition, the Fund intends
to invest in such municipal securities to allow it to qualify to pay "exempt
interest dividends," as defined in the Internal Revenue Code.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.30% of
the first $500 million of the Fund's average daily net assets, plus 0.25% of the
Fund's average daily net assets in excess of $500 million, but not in excess of
$1 billion, plus 0.20% of the Fund's average daily net assets in excess of $1
billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain costs incurred in providing accounting
services to the Fund. During the year ended March 31, 1997, the Fund reimbursed
AIM $52,666 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Fund. During the year ended March 31, 1997, the Fund
paid AFS $38,819 for such services.
Under the terms of a master distribution agreement between the Company and the
Fund, A I M Distributors, Inc. ("AIM Distributors") acts as the exclusive
distributor of the Shares. AIM Distributors received commissions of $21,018 from
sales of capital stock during the year ended March 31, 1997. Such commissions
are not an expense of the Company. They are deducted from, and are not included
in, the proceeds from sales of capital stock. Certain officers and directors of
the Company are officers of AIM, AFS and AIM Distributors.
During the year ended March 31, 1997, the Fund paid legal fees of $4,122 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board
of Directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the year ended March 31, 1997, the Fund did not borrow under the line of
credit agreement. The funds which are parties to the line of credit are charged
a commitment fee of 0.08% on the unused balance of the committed line. The
commitment fee is allocated among such funds based on their respective average
net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended March 31, 1997 was $94,982,995 and
$22,629,475, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of March 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $2,095,498
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (459,988)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $1,635,510
=========================================================
Investments have the same cost for tax and financial
statement purposes.
</TABLE>
NOTE 6-CAPITAL STOCK
Changes in capital stock outstanding for the years ended March 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 11,037,256 $119,260,028 2,173,832 $ 23,604,635
- --------------------- ---------- ------------ ---------- ------------
Issued as
reinvestment of
dividends 277,497 2,985,870 232,136 2,517,616
- --------------------- ---------- ------------ ---------- ------------
Reacquired (2,855,695) (30,737,187) (2,428,661) (26,260,138)
- --------------------- ---------- ------------ ---------- ------------
8,459,058 $ 91,508,711 (22,693) $ (137,887)
========== ============ ========== ============
</TABLE>
FS-17
<PAGE> 110
NOTE 7- FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the eight-year period ended March 31,
1997, the eleven months ended March 31, 1989 and the period May 11, 1987 (date
operations commenced) through April 30, 1988.
<TABLE>
<CAPTION>
MARCH 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $10.79 $10.67 $10.62 $10.74 $10.27
- ---------------------------- -------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.50 0.52 0.49 0.48 0.53
- ---------------------------- -------- ------- ------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) (0.04) 0.12 0.04 (0.10) 0.47
============================ ======== ======= ======= ======= =======
Total from
investment
operations 0.46 0.64 0.53 0.38 1.00
============================ ======== ======= ======= ======= =======
Less distributions:
Dividends from net
investment income (0.52) (0.52) (0.48) (0.48) (0.53)
- ---------------------------- -------- ------- ------- ------- -------
Distributions from net
realized capital gains -- -- -- (0.02) --
- ---------------------------- -------- ------- ------- ------- -------
Total distributions (0.52) (0.52) (0.48) (0.50) (0.53)
- ---------------------------- -------- ------- ------- ------- -------
Net asset value, end of
period $10.73 $10.79 $10.67 $10.62 $10.74
============================ ======== ======= ======= ======= =======
Total return(a) 4.33% 6.06% 5.17% 3.47% 10.01%
============================ ======== ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $173,342 $83,066 $82,355 $99,757 $70,120
============================ ======== ======= ======= ======= =======
Ratio of expenses to average
net assets 0.56%(b) 0.65% 0.59% 0.61%(c) 0.38%(c)
============================ ======== ======= ======= ======= =======
Ratio of net investment
income to average net
assets 4.63%(b) 4.81% 4.65% 4.37%(c) 5.00%(c)
============================ ======== ======= ======= ======= =======
Portfolio turnover rate 26% 32% 75% 26% 29%
============================ ======== ======= ======= ======= =======
<CAPTION>
----------------------------------------- APRIL 30,
1992 1991 1990 1989 1988
------- ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $10.07 $9.89 $9.69 $9.88 $10.00
- ---------------------------- ------- ------ ------ ------ ---------
Income from investment
operations:
Net investment income 0.62 0.63 0.62 0.56 0.55
- ---------------------------- ------- ------ ------ ------ ---------
Net gains (losses) on
securities (both
realized and
unrealized) 0.20 0.18 0.20 (0.19) (0.12)
============================ ======= ====== ====== ====== =========
Total from
investment
operations 0.82 0.81 0.82 0.37 0.43
============================ ======= ====== ====== ====== =========
Less distributions:
Dividends from net
investment income (0.62) (0.63) (0.62) (0.56) (0.55)
- ---------------------------- ------- ------ ------ ------ ---------
Distributions from net
realized capital gains -- -- -- -- --
- ---------------------------- ------- ------ ------ ------ ---------
Total distributions (0.62) (0.63) (0.62) (0.56) (0.55)
- ---------------------------- ------- ------ ------ ------ ---------
Net asset value, end of
period $10.27 $10.07 $9.89 $9.69 $9.88
============================ ======= ====== ====== ====== =========
Total return(a) 8.39% 8.39% 8.66% 3.85% 4.46%
============================ ======= ====== ====== ====== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $38,773 $6,184 $5,231 $4,413 $5,594
============================ ======= ====== ====== ====== =========
Ratio of expenses to average
net assets 0.02%(c) 0.50%(c) 0.50%(c) 0.53%(c)(d) 0.50%(c)(d)
============================ ======= ====== ====== ====== =========
Ratio of net investment
income to average net
assets 5.78%(c) 6.29%(c) 6.27%(c) 6.74%(c)(d) 5.86%(c)(d)
============================ ======= ====== ====== ====== =========
Portfolio turnover rate 15% 0% 12% 31% 80%
============================ ======= ====== ====== ====== =========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(b) Ratios are based on average net assets of $92,275,955.
(c) After waiver of advisory fees and/or expense reimbursements. The ratios of
expenses and net investment income prior to waivers and/or expense
reimbursements were as follows:
<TABLE>
<CAPTION>
Net Investment
Period ended Expenses Income
------------ -------- --------------
<S> <C> <C>
1994 0.64% 4.35%
1993 0.66% 4.71%
1992 0.98% 4.81%
1991 1.79% 5.00%
1990 1.91% 4.86%
1989 2.09% 5.18%
1988 1.57% 4.79%
</TABLE>
(d) Annualized.
FS-18
<PAGE> 111
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Tax-Exempt Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM Tax-Exempt Bond Fund of Connecticut (a
portfolio of AIM Tax-Exempt Funds, Inc.), including the
schedule of investments, as of March 31, 1997, and the
related statement of operations for the year then ended,
the statement of changes in net assets for each of the
years in the two-year period then ended and the financial
highlights for each of the years in the three-year period
then ended, the three-month period ended March 31, 1994,
and the year ended December 31, 1993. These financial
statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express
an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of March 31, 1997, by correspondence
with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Tax-Exempt Bond Fund of Connecticut as of March 31, 1997,
the results of its operations for the year then ended,
changes in its net assets for each of the years in the
two-year period then ended and the financial highlights
for each of the years in the three-year period then ended,
the three-month period ended March 31, 1994, and for the
year ended December 31, 1993, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
Houston, Texas
May 2, 1997
FS-19
<PAGE> 112
SCHEDULE OF INVESTMENTS
MARCH 31, 1997
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS-97.91%
EDUCATION-11.44%
Connecticut Health and
Education Facilities
Authority (Fairfield
University); Series F RB
6.875%, 07/01/09 BBB+ Baa1 $1,475 $ 1,548,013
- -------------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Quinnipiac College); RB
4.90%, Series D, 07/01/98 BBB- - 150 149,292
- -------------------------------------------------------------------
7.25%, Series 1989 B,
07/01/99(b)(c) AAA NRR 450 484,942
- -------------------------------------------------------------------
Connecticut Regional School
District No. 5;
Series 1992 GO
6.00%, 03/01/12(d) AAA Aaa 335 346,893
- -------------------------------------------------------------------
Connecticut Regional School
District No. 5
(Towns of Bethany, Orange
and Woodbridge); 1993
Issue GO
5.50%, 02/15/07(d) AAA Aaa 500 513,760
- -------------------------------------------------------------------
Connecticut State Higher
Education Supplemental
Loan Authority (Family
Education Loan Program);
Series 1990 A RB
7.50%, 11/15/10(e) - A1 1,265 1,317,080
- -------------------------------------------------------------------
4,359,980
- -------------------------------------------------------------------
ELECTRIC-4.47%
Connecticut Development
Authority (New England
Power Co.); Series 1985
Fixed Rate PCR
7.25%, 10/15/15 A+ A2 1,600 1,702,608
- -------------------------------------------------------------------
GENERAL OBLIGATION-12.08%
Bridgeport (Town of),
Connecticut; Series A
Unlimited GO
6.00%, 09/01/06(d) AAA Aaa 875 929,871
- -------------------------------------------------------------------
Brooklyn (City of),
Connecticut; Unlimited
Tax GO
5.50%, 05/01/06(d) AAA Aaa 250 255,905
- -------------------------------------------------------------------
5.70%, 05/01/08(d) AAA Aaa 250 258,310
- -------------------------------------------------------------------
Chester (Town of),
Connecticut; Series 1989
GO
7.00%, 10/01/05 - A 190 201,292
- -------------------------------------------------------------------
Connecticut (State of);
Series 1991 A GO
6.75%, 03/01/01(b)(c) NRR NRR 480 521,323
- -------------------------------------------------------------------
Connecticut (State of)
(General Purpose Public
Improvement); GO
6.75%, Series 1991 A,
03/01/01(b)(c) NRR NRR 200 217,218
- -------------------------------------------------------------------
6.50%, Series 1992 A,
03/15/02(b)(c) NRR NRR 300 325,860
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
GENERAL OBLIGATION-(CONTINUED)
Mansfield (City of),
Connecticut; Series 1990
GO
6.00%, 06/15/07 - A1 $ 100 $ 105,855
- ------------------------------------------------------------------
6.00%, 06/15/08 - A1 100 104,983
- ------------------------------------------------------------------
6.00%, 06/15/09 - A1 100 105,760
- ------------------------------------------------------------------
New Britain (City of),
Connecticut; Series 1992
Various Purpose GO
6.00%, 02/01/11(d) AAA Aaa 400 418,364
- ------------------------------------------------------------------
North Canaan (City of),
Connecticut;
Series 1991 GO
6.50%, 01/15/08 - A 125 137,080
- ------------------------------------------------------------------
6.50%, 01/15/09 - A 125 136,744
- ------------------------------------------------------------------
6.50%, 01/15/10 - A 125 136,234
- ------------------------------------------------------------------
6.50%, 01/15/11 - A 125 135,566
- ------------------------------------------------------------------
Somers (City of),
Connecticut; Series 1990
Various Purpose GO
6.00%, 12/01/10 - A1 190 200,146
- ------------------------------------------------------------------
Westbrook (City of),
Connecticut; Series 1992
GO
6.40%, 03/15/10(d) AAA Aaa 380 416,176
- ------------------------------------------------------------------
4,606,687
- ------------------------------------------------------------------
HEALTH CARE-13.22%
Connecticut Health and
Education Facilities
Authority
(Bridgeport Hospital);
1992 Series A RB
6.625%, 07/01/18(d) AAA Aaa 500 528,595
- ------------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Capital Asset); Series
1989 B RB
7.00%, 01/01/00(f) A A1 200 209,856
- ------------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Danbury Hospital); 1991
Series E RB
6.50%, 07/01/14(d) AAA Aaa 750 786,278
- ------------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(Middlesex Hospital);
1992 Series G RB
6.25%, 07/01/12(d) AAA Aaa 1,100 1,142,647
- ------------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority
(New Britain Memorial
Hospital); Series 1991 A
RB
7.75%, 07/01/22 BBB- - 500 533,325
- ------------------------------------------------------------------
Connecticut Health and
Education Facilities
Authority (Stamford
Hospital); Series F RB
5.40%, 07/01/09(d) AAA Aaa 1,000 993,720
- ------------------------------------------------------------------
</TABLE>
FS-20
<PAGE> 113
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
HEALTH CARE-(CONTINUED)
Connecticut Health and
Education Facilities
Authority (Yale-New Haven
Hospital); Series 1990 F
RB
7.10%, 07/01/00(b)(c) AAA Aaa $ 775 $ 845,339
- ------------------------------------------------------------------
5,039,760
- ------------------------------------------------------------------
HOUSING-13.45%
Connecticut Housing
Development Authority
(Housing Mortgage Finance
Program); RB
7.55%, Series 1990 B-1,
11/15/08 AA Aa 345 358,010
- ------------------------------------------------------------------
7.00%, Series 1991 A-1,
11/15/09 AA Aa 450 471,240
- ------------------------------------------------------------------
6.55%, Series 1991 C,
Sub-Series C-3,
11/15/13 AA Aa 310 322,576
- ------------------------------------------------------------------
7.00%, Series C,
11/15/99(e) AA Aa 320 331,363
- ------------------------------------------------------------------
Connecticut (State of)
(Housing Mortgage Finance
Program); RB
6.00%, Series 1993 E-1,
05/15/17 AA Aa 675 676,289
- ------------------------------------------------------------------
5.95%, Series E-1,
05/15/17 AA Aa 500 498,795
- ------------------------------------------------------------------
6.30%, Series C-1,
11/15/17 AA Aa 1,270 1,289,152
- ------------------------------------------------------------------
6.25%, Series C-2,
11/15/18 AA Aa 750 756,510
- ------------------------------------------------------------------
6.70%, Series C-2,
11/15/22(e) AA Aa 415 424,125
- ------------------------------------------------------------------
5,128,060
- ------------------------------------------------------------------
LEASE RENTAL-1.11%
Connecticut (State of)
(Middletown Courthouse
Facilities Project); 1991
Issue Lease-Rental
Revenue Certificates of
Participation
6.25%, 12/15/10(d) AAA Aaa 400 422,772
- ------------------------------------------------------------------
RESOURCE RECOVERY-5.93%
Connecticut State Resource
Recovery Authority
(American Ref-Fuel Co.-
Southeastern Connecticut
Project); Series 1988 A
RB
8.00%, 11/15/15(e) AA- Baa1 500 536,335
- ------------------------------------------------------------------
Connecticut State Resource
Recovery Authority
(Bridgeport Resco
Corp.-Ltd. Partners);
1985 Issue RB
8.625%, Project B,
01/01/04 A A 670 687,052
- ------------------------------------------------------------------
7.625%, Project A,
01/01/09 A A 1,000 1,035,610
- ------------------------------------------------------------------
2,258,997
- ------------------------------------------------------------------
TRANSPORTATION-19.05%
Connecticut State Special
Tax Obligation
(Transportation
Infrastructure); RB
5.10%, Series 1992 B,
09/01/99 AA- A1 1,000 1,010,330
- ------------------------------------------------------------------
6.25%, Series 1991 B,
10/01/01(b)(c) NRR Aaa 1,000 1,077,100
- ------------------------------------------------------------------
6.80%, Series A,
06/01/03(b)(c) NRR NRR 1,250 1,372,788
- ------------------------------------------------------------------
6.50%, Series 1991 B,
10/01/10 AA- A1 530 586,969
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
TRANSPORTATION-(CONTINUED)
Connecticut State Special
Tax Obligation
(Transportation
Infrastructure Sales and
Excise Tax); RB
5.90%, Series 1991 B,
10/01/99 AA- A1 $1,000 $ 1,030,060
- ------------------------------------------------------------------
6.80%, Series 1989 C,
12/01/99(b)(c) AAA NRR 500 537,640
- ------------------------------------------------------------------
6.50%, Series 1991 B,
10/01/12 AA- A1 1,500 1,645,155
- ------------------------------------------------------------------
7,260,042
- ------------------------------------------------------------------
WATER & SEWER-9.47%
Connecticut Development
Authority (Pfizer Inc.);
Series 1982 Refunding PCR
6.55%, 02/15/13 AAA Aaa 250 269,158
- ------------------------------------------------------------------
Connecticut Development
Authority Water Facility
(Bridgeport Hydraulic Co.
Project); Refunding RB
7.25%, Series 1990,
06/01/20 A+ - 800 858,336
- ------------------------------------------------------------------
6.15%, 04/01/35(e) A+ - 250 247,495
- ------------------------------------------------------------------
Connecticut State Clean
Water Fund; Series 1991
Clean Water RB
7.00%, 01/01/11 AA+ Aa2 1,100 1,203,125
- ------------------------------------------------------------------
Manchester (City of)
Connecticut Eighth
Utilities Fire District;
Series 1991 GO
6.75%, 08/15/06 - A1 180 199,760
- ------------------------------------------------------------------
South Central Connecticut
Regional Water Authority;
Eighth Series 1990 A
Water System RB
6.60%, 08/01/00(b)(c) NRR NRR 250 268,898
- ------------------------------------------------------------------
South Central Connecticut
Regional Water Authority;
Series 1988 Water System
RB
6.80%, 08/01/98(b)(c) NRR NRR 535 563,718
- ------------------------------------------------------------------
3,610,490
- ------------------------------------------------------------------
MISCELLANEOUS-7.69%
Connecticut Development
Authority (Economic
Development Projects);
1992 Series Refunding
Bonds
6.00%, 11/15/08 AA- Aa 500 520,500
- ------------------------------------------------------------------
Guam (Government of);
Series 1995 A GO
4.90%, 09/01/97 BBB - 500 500,930
- ------------------------------------------------------------------
5.25%, 09/01/99 BBB - 250 250,345
- ------------------------------------------------------------------
5.375%, 09/01/00 BBB - 250 250,458
- ------------------------------------------------------------------
</TABLE>
FS-21
<PAGE> 114
<TABLE>
<CAPTION>
RATING(a) PAR MARKET
S&P MOODY'S (000) VALUE
<S> <C> <C> <C> <C>
MISCELLANEOUS-(CONTINUED)
Guam (Government of);
Series 1994 A GO
5.50%, 08/15/97 BBB - $ 500 $ 501,885
- ------------------------------------------------------------------
Puerto Rico Commonwealth
(Highway and
Transportation
Authority); Series X RB
5.20%, 07/01/03 A Baa1 500 505,800
- ------------------------------------------------------------------
Puerto Rico Electric Power
Authority; Series W RB
5.00%, 07/01/98 BBB+ Baa1 400 402,944
- ------------------------------------------------------------------
2,932,862
- ------------------------------------------------------------------
TOTAL INVESTMENTS-97.91% 37,322,258
- ------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.09% 796,217
- ------------------------------------------------------------------
NET ASSETS-100.00% $38,118,475
==================================================================
</TABLE>
ABBREVIATIONS:
GO General Obligation Bonds
NRR Not re-rated
PCR Pollution Control Revenue Bonds
RB Revenue Bonds
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P"). NRR indicates a security that
is not re-rated subsequent to funding of an escrow fund (consisting
of U.S. Treasury obligations); this funding is pursuant to an advance
refunding of the security. Ratings are not covered by Independent
Auditors' Report.
(b) Secured by an escrow fund of U.S. Treasury obligations.
(c) Subject to an irrevocable call or mandatory put. Market value and
maturity date reflect such call or put.
(d) Secured by bond insurance.
(e) Security subject to alternative minimum tax.
(f) Secured by a letter of credit.
See Notes to Financial Statements.
FS-22
<PAGE> 115
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$35,730,336) $ 37,322,258
- ---------------------------------------------------------
Receivables for:
Investments sold 1,023,000
- ---------------------------------------------------------
Capital stock sold 41,043
- ---------------------------------------------------------
Interest 692,735
- ---------------------------------------------------------
Investment for deferred compensation plan 12,601
- ---------------------------------------------------------
Other assets 3,258
- ---------------------------------------------------------
Total assets 39,094,895
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Amount due to custodian bank 836,124
- ---------------------------------------------------------
Dividends 64,157
- ---------------------------------------------------------
Deferred compensation 12,601
- ---------------------------------------------------------
Accrued advisory fees 4,968
- ---------------------------------------------------------
Accrued administrative service fees 8,538
- ---------------------------------------------------------
Accrued distribution fees 24,260
- ---------------------------------------------------------
Accrued transfer agent fees 1,076
- ---------------------------------------------------------
Accrued operating expenses 24,696
- ---------------------------------------------------------
Total liabilities 976,420
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 38,118,475
=========================================================
Capital stock, $.001 par value per share:
Authorized 1,000,000,000
- ---------------------------------------------------------
Outstanding 3,539,857
=========================================================
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 10.77
=========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.77 divided
by 95.25%) $ 11.31
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $2,295,751
- --------------------------------------------------------
EXPENSES:
Advisory fees 194,372
- --------------------------------------------------------
Custodian fees 3,545
- --------------------------------------------------------
Transfer agent fees 25,300
- --------------------------------------------------------
Directors' fees 6,401
- --------------------------------------------------------
Distribution fees 97,186
- --------------------------------------------------------
Administrative services fees 49,467
- --------------------------------------------------------
Other 48,860
- --------------------------------------------------------
Total expenses 425,131
- --------------------------------------------------------
Less fees waived by advisor (144,775)
- --------------------------------------------------------
Net expenses 280,356
- --------------------------------------------------------
Net investment income 2,015,395
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Net realized gain (loss) on sales of
investment securities (111,639)
- --------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (75,618)
- --------------------------------------------------------
Net gain (loss) on investment securities (187,257)
- --------------------------------------------------------
Net increase in net assets resulting from
operations $1,828,138
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-23
<PAGE> 116
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,015,395 $ 2,046,631
- -----------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (111,639) (39,012)
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (75,618) 362,769
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,828,138 2,370,388
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (1,983,768) (2,032,807)
- -----------------------------------------------------------------------------------------
Net increase (decrease) from capital stock transactions (1,081,336) 729,185
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,236,966) 1,066,766
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 39,355,441 38,288,675
- -----------------------------------------------------------------------------------------
End of period $38,118,475 $39,355,441
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $36,742,486 $37,823,822
- -----------------------------------------------------------------------------------------
Undistributed net investment income 36,704 5,077
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities (252,637) (140,998)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,591,922 1,667,540
- -----------------------------------------------------------------------------------------
$38,118,475 $39,355,441
=========================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Tax-Exempt Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Company is organized as a Maryland corporation
consisting of three separate portfolios; AIM Tax-Exempt Bond Fund of
Connecticut, AIM Tax-Exempt Cash Fund and the Intermediate Portfolio. Matters
affecting each portfolio are voted on exclusively by the shareholders of such
portfolio. The assets, liabilities and operations of each portfolio are
accounted for separately. Information presented in these financial statements
pertains only to the AIM Tax-Exempt Bond Fund of Connecticut (the "Fund"). The
investment objective of the Fund is to earn a high level of income free from
federal taxes and Connecticut taxes by investing at least 80% of its net assets
in municipal bonds and other municipal securities.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--Portfolio securities are valued based on market
quotations or at fair value determined by a pricing service approved by the
Board of Directors, provided that securities with a demand feature
exercisable within one to seven days are valued at par. Prices provided by
the pricing service represent valuations of the mean between current bid and
asked market prices which may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, individual trading characteristics and other market
data. Portfolio securities for which prices are not provided by the pricing
service are valued at the mean between the last available bid and asked
prices, unless the Board of Directors or its designees determines that the
mean between the last available bid and asked prices does not accurately
reflect the current market value of the security. Securities for which market
quotations either are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Company's officers in accordance with methods which are specifically
authorized by the Board of Directors. Notwithstanding the above, short-term
obligations with maturities of sixty days or less are valued at amortized
cost.
B. Securities Transactions and Investment Income--Securities transactions are
recorded on a trade date basis. Realized gains and losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of premiums and original issue
discounts, is recorded as earned from settlement date and is recorded on the
accrual basis.
C. Dividends and Distributions to Shareholders--It is the policy of the Fund to
declare daily dividends from net investment
FS-24
<PAGE> 117
income. Such dividends are paid monthly. Net realized capital gains
(including net short-term capital gains and market discounts), if any, are
distributed annually.
D. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward (which may
be carried forward to offset future taxable gains, if any) of $229,538, which
expires, if not previously utilized, through the year 2005. The Fund cannot
distribute capital gains to shareholders until the tax loss carryforwards
have been utilized. In addition, the Fund intends to invest in such municipal
securities to allow it to qualify to pay to shareholders "exempt interest
dividends," as defined in the Internal Revenue Code.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.50% of
the Fund's average daily net assets. During the year ended March 31, 1997, AIM
voluntarily waived advisory fees of $144,775.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain costs incurred in providing accounting
services to the Fund. During the year ended March 31, 1997, the Fund reimbursed
AIM $49,467 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Fund. During the year ended March 31, 1997, the Fund
paid AFS $16,224 for such services.
Under the terms of a master distribution agreement between the Company and the
Fund, A I M Distributors, Inc. ("AIM Distributors") acts as the exclusive
distributor of the Fund's shares. The Company has also adopted a plan pursuant
to Rule 12b-1 under the 1940 Act (the "Plan") with respect to the Fund, whereby
the Fund pays to AIM Distributors compensation at an annual rate of 0.25% of the
Fund's average daily net assets. The Plan is designed to compensate AIM
Distributors for certain promotional and other sales related costs and provides
for periodic payments to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
shares of the Fund. Any amounts not paid as a service fee under such plan would
constitute an asset-based sales charge. The Plan also imposes a cap on the total
sales charges, including asset-based sales charges, that may be paid by the
Fund. During the year ended March 31, 1997, the Fund paid AIM Distributors
$97,186 as compensation under the Plan. Certain officers and directors of the
Company are officers of AIM, AFS and AIM Distributors.
AIM Distributors received commissions of $27,428 from sales of shares of the
Fund's capital stock during the year ended March 31, 1997. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of capital stock.
During the year ended March 31, 1997, the Fund paid legal fees of $3,997 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board
of Directors. A member of that firm is a director of the Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the year ended March 31, 1997, the Fund did not borrow under the line of
credit agreement. The funds which are parties to the line of credit are charged
a commitment fee of 0.08% on the unused balance of the committed line. The
commitment fee is allocated among such funds based on their respective average
net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended March 31, 1997 were $6,435,125 and
$6,950,383, respectively. The amount of unrealized appreciation (depreciation)
of investment securities as of March 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,599,717
- --------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (7,795)
- --------------------------------------------------------
Net unrealized appreciation of investment
securities $1,591,922
========================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 6-CAPITAL STOCK
Changes in capital stock outstanding for the years ended March 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
1997 1996
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold 522,830 $ 5,656,859 555,351 $ 6,036,362
- --------------------------------------------- ------------------------
Issued as
reinvestment of
dividends 115,643 1,250,693 116,353 1,264,613
- --------------------------------------------- ------------------------
Reacquired (739,882) (7,988,888) (603,962) (6,571,790)
- --------------------------------------------- ------------------------
(101,409) $(1,081,336) 67,742 $ 729,185
============================================= ========================
</TABLE>
FS-25
<PAGE> 118
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the three-year period ended March 31,
1997, the three months ended March 31, 1994, each of the years in the four-year
period ended December 31, 1993 and the period October 3, 1989 (date operations
commenced) through December 31, 1989.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------------------------- --------------------
1997 1996 1995 1994 1993 1992(a)
------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.81 $ 10.71 $ 10.69 $ 11.29 $ 10.65 $ 10.52
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.56 0.56 0.56 0.15 0.60 0.66
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) (0.05) 0.10 0.04 (0.61) 0.65 0.17
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Total from investment operations 0.51 0.66 0.60 (0.46) 1.25 0.83
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.55) (0.56) (0.57) (0.14) (0.60) (0.66)
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Distributions from net realized capital gains -- -- -- -- (0.01) (0.04)
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Returns of capital -- -- (0.01) -- --
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Total distributions (0.55) (0.56) (0.58) (0.14) (0.61) (0.70)
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.77 $ 10.81 $ 10.71 $ 10.69 $ 11.29 $ 10.65
- ----------------------------------------------------- ------- -------- -------- -------- -------- --------
Total return(b) 4.84% 6.24% 5.78% (4.06)% 11.99% 8.22%
===================================================== ======= ======== ======== ======== ======== ========
Ratio/supplemental data:
Net assets, end of period (000s omitted) $38,118 $ 39,355 $ 38,289 $ 42,361 $ 46,224 $ 33,110
===================================================== ======= ======== ======== ======== ======== ========
Ratio of expenses to average net assets(c) 0.72%(d) 0.66% 0.55% 0.50%(e) 0.34% 0.25%
===================================================== ======= ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets(c) 5.18%(d) 5.16% 5.37% 5.32%(e) 5.42% 6.25%
===================================================== ======= ======== ======== ======== ======== ========
Portfolio turnover rate 17% 17% 7% 2% 5% 43%
===================================================== ======= ======== ======== ======== ======== ========
<CAPTION>
DECEMBER 31,
--------------------------------
1991 1990 1989
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.07 $ 10.19 $ 10.00
- ----------------------------------------------------- -------- -------- -------
Income from investment operations:
Net investment income 0.69 0.67 0.14
- ----------------------------------------------------- -------- -------- -------
Net gains (losses) on securities (both realized
and unrealized) 0.50 (0.10) 0.16
- ----------------------------------------------------- -------- -------- -------
Total from investment operations 1.19 0.57 0.30
- ----------------------------------------------------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.69) (0.69) (0.11)
- ----------------------------------------------------- -------- -------- -------
Distributions from net realized capital gains (0.05) -- --
- ----------------------------------------------------- -------- -------- -------
Returns of capital -- -- --
- ----------------------------------------------------- -------- -------- -------
Total distributions (0.74) (0.69) (0.11)
- ----------------------------------------------------- -------- -------- -------
Net asset value, end of period $ 10.52 $ 10.07 $ 10.19
- ----------------------------------------------------- -------- -------- -------
Total return(b) 12.23% 5.88% 3.06%
===================================================== ======== ======== =======
Ratio/supplemental data:
Net assets, end of period (000s omitted) $ 27,298 $ 16,685 $ 6,556
===================================================== ======== ======== =======
Ratio of expenses to average net assets(c) 0.25% 0.25% 0.25%(e)
===================================================== ======== ======== =======
Ratio of net investment income to average net
assets(c) 6.73% 6.82% 6.21%(e)
===================================================== ======== ======== =======
Portfolio turnover rate 43% 57% 63%
===================================================== ======== ======== =======
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After waiver of advisory fees and expense reimbursements. Ratios of expenses
to average net assets prior to waiver of advisory fees and expense
reimbursements are 1.09%, 1.16%, 1.13%, 1.23% (annualized), 1.30%, 1.12%,
1.26%, 1.33%, and 1.99% (annualized) for the period 1997-89, respectively.
Ratios of net investment income to average net assets prior to waiver of
advisory fees and expense reimbursements are 4.81%, 4.66%, 4.79%, 4.59%
(annualized), 4.45%, 5.38%, 5.72%, 5.74%, and 4.48% (annualized) for the
period 1997-89, respectively.
(d) Ratios are based on average daily net assets of $38,874,455.
(e) Annualized.
FS-26
<PAGE> 119
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
(1) AIM Tax-Exempt Cash Fund
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of March 31, 1997
(3) Statement of Assets and Liabilities as of
March 31, 1997
(4) Statement of Operations for the year ended
March 31, 1997
(5) Statement of Changes in Net Assets for the
years ended March 31, 1997 and 1996
(2) Intermediate Portfolio - AIM Tax-Free Intermediate Shares
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of March 31, 1997
(3) Statement of Assets and Liabilities as of
March 31, 1997
(4) Statement of Operations for the year ended
March 31, 1997
(5) Statement of Changes in Net Assets for the
years ended March 31, 1997 and 1996
(3) AIM Tax-Exempt Bond Fund of Connecticut
In Part A: Financial Highlights
In Part B: (1) Independent Auditors' Report
(2) Schedule of Investments as of March 31, 1997
(3) Statement of Assets and Liabilities as of
March 31, 1997
(4) Statement of Operations for the year ended
March 31, 1997
(5) Statement of Changes in Net Assets for the
years ended March 31, 1997 and 1996
(b) Exhibits
Exhibit
Number Description
(1) (a) - Articles of Incorporation of Registrant, dated April 30, 1993,
were filed as an Exhibit to Registrant's Registration Statement
on July 19, 1993, and were filed electronically as an Exhibit
to Post-Effective Amendment No. 4 on July 26, 1996, and are
hereby incorporated by reference.
C-1
<PAGE> 120
(b) - Articles of Amendment, dated July 27, 1993, were filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 1 on October
12, 1993, and were filed electronically as an Exhibit to
Post-Effective Amendment No. 4 on July 26, 1996, and are hereby
incorporated by reference.
(c) - Articles of Amendment, dated September 10, 1993, were filed as
an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
October 12, 1993, and were filed electronically as an Exhibit to
Post-Effective Amendment No. 4 on July 26, 1996, and are hereby
incorporated by reference.
(d) - Articles of Amendment, dated June 18, 1997, are filed herewith
electronically.
(2) (a) - By-Laws of Registrant were filed as an Exhibit to Registrant's
Registration Statement on July 19, 1993, and were electronically
filed as an Exhibit to Post- Effective Amendment No. 3 on July
27, 1995.
(b) - First Amendment, dated March 14, 1995, to the By-Laws of
Registrant was electronically filed as an Exhibit to
Post-Effective Amendment No. 3 on July 27, 1995.
(c) - Amended and Restated By-Laws of Registrant, dated December 11,
1996, are filed herewith electronically.
(3) - Voting Trust Agreements - None.
(4) (a) - Specimen share certificate for AIM Tax-Exempt Cash Fund of
Registrant (transfer agent change) was electronically filed as
an Exhibit to Post-Effective Amendment No. 3 on July 27, 1995,
and is hereby incorporated by reference.
(b) - Specimen share certificate for Intermediate Portfolio - AIM
Tax-Free Intermediate Shares of Registrant (transfer agent
change) was electronically filed as an Exhibit to Post-Effective
Amendment No. 3 on July 27, 1995, and is hereby incorporated by
reference.
(c) - Specimen share certificate for AIM Tax-Exempt Bond Fund of
Connecticut of Registrant (transfer agent change) was
electronically filed as an Exhibit to Post-Effective Amendment
No. 3 on July 27, 1995, and is hereby incorporated by reference.
(5) (a) - Master Investment Advisory Agreement, dated as of August 6,
1993, between Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
October 12, 1993.
(b) - Master Investment Advisory Agreement, dated October 18, 1993,
between Registrant and A I M Advisors, Inc. was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on April
28, 1994 and was filed electronically as an Exhibit to
Post-Effective Amendment No. 4 on July 26, 1996.
C-2
<PAGE> 121
(c) - Master Investment Advisory Agreement, dated February 28, 1997,
between Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(6) (a) - (1) Master Distribution Agreement, dated as of August 6, 1993,
between Registrant and A I M Distributors, Inc. was filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 1 on October
12, 1993.
(2) Master Distribution Agreement, dated October 18, 1993,
between Registrant and A I M Distributors, Inc. was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on April
28, 1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 4 on July 26, 1996.
(3) Master Distribution Agreement, dated February 28, 1997,
between Registrant and A I M Distributors, Inc. is filed
herewith electronically.
(4) Form of Amendment No. 1 to Master Distribution Agreement,
dated February 28, 1997, between Registrant and A I M
Distributors, Inc., is filed herewith electronically.
(b) - Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers is filed herewith electronically.
(c) - Form of Bank Agreement between A I M Distributors, Inc. and
selected banks is filed herewith electronically.
(7) (a) - Retirement Plan for Registrant's Non-Affiliated Directors was
filed as an Exhibit to Registrant's Post-Effective Amendment No.
2 on July 26, 1994.
(b) - AIM Funds Retirement Plan for Eligible Directors/Trustees
dated effective March 8, 1994, as restated September 18, 1995,
was filed electronically as an Exhibit to Post-Effective
Amendment No. 4 on July 26, 1996, and is hereby incorporated by
reference.
(c) - Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 2 on July 26, 1994.
(d) - Form of Deferred Compensation Plan for Eligible
Directors/Trustees was filed electronically as an Exhibit to
Post-Effective Amendment No.4 on July 26, 1996, and is hereby
incorporated by reference.
(8) (a) - Custodian Agreement, dated October 15, 1993, between
Registrant and State Street Bank and Trust Company was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1 on
April 28, 1994.
(b) - Custody Agreement, dated October 19, 1995, between Registrant
and The Bank of New York was filed electronically as an Exhibit
to Post-Effective Amendment No. 4 on July 26, 1996, and is
hereby incorporated by reference.
C-3
<PAGE> 122
(c) - Subcustodian Agreement, dated September 9, 1994, between
Registrant and Texas Commerce Bank National Association was
electronically filed as an Exhibit to Post-Effective Amendment
No. 3 on July 27, 1995, and is hereby incorporated by reference.
(9) (a) - (1) Assignment and Acceptance of Assignment of Transfer Agency
and Registrar Agreement, dated as of October 15, 1993, among
Registrant (on behalf of its Intermediate Portfolio - AIM
Tax-Free Intermediate Shares), Tax-Free Investments Co. (on
behalf of its Intermediate Portfolio - AIM Tax-Free Intermediate
Shares) and First Data Investor Services Group (formerly The
Shareholder Services Group, Inc.) was filed as an Exhibit to
Registrant's Post- Effective Amendment No. 2 on July 26, 1994.
(2) Amendment No. 1, dated October 15, 1993, to the Transfer
Agency and Registrar Agreement between Registrant and First Data
Investor Services Group (formerly The Shareholder Services
Group, Inc.) was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 2 on July 26, 1994.
(3) Transfer Agency and Service Agreement, dated November 1,
1994, between Registrant and A I M Fund Services, Inc. was
electronically filed as an Exhibit to Post-Effective Amendment
No. 3 on July 27, 1995, and is hereby incorporated by reference.
(4) Remote Access and Related Services Agreement, dated as
December 23, 1994, between Registrant and First Data Investor
Services Group, Inc. (formerly The Shareholder Services Group,
Inc.) was electronically filed as an Exhibit to Post-Effective
Amendment No. 3 on July 27, 1995, and is hereby incorporated by
reference.
(5) Amendment No. 1, dated October 4, 1995, to the Remote Access
and Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.) was filed
electronically as an Exhibit to Post-Effective Amendment No. 4
on July 26, 1996, and is hereby incorporated by reference.
(6) Addendum No. 2, dated October 12, 1995, to the Remote Access
and Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
(formerly The Shareholder Services Group, Inc.) was filed
electronically as an Exhibit to Post-Effective Amendment No. 4
on July 26, 1996, and is hereby incorporated by reference.
(7) Amendment No. 3, dated February 1, 1997, to the Remote
Access and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group, Inc.
(formerly The Shareholder Services Group, Inc.) is filed
herewith electronically.
(b) - (1) Master Administrative Services Agreement, dated as of
August 6, 1993, between Registrant and A I M Advisors, Inc. was
filed as an Exhibit to Registrant's Pre-Effective Amendment No.
1 on October 12, 1993.
C-4
<PAGE> 123
(2) Master Administrative Services Agreement, dated October 18,
1993, between Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1 on
April 28, 1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 4 on July 26, 1996.
(3)(i) Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc., on behalf of Registrant's
portfolios, and A I M Fund Services, Inc. was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on April
28, 1994.
(3)(ii) Amendment No. 1 to the Administrative Services
Agreement, dated October 18, 1993, between A I M Advisors, Inc.,
on behalf of Registrant's portfolios and classes, and A I M Fund
Services, Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 2 on July 26, 1994.
(3)(iii) Amendment No. 2, dated July 1, 1994, to the
Administrative Services Agreement dated October 18, 1993,
between A I M Advisors, Inc. on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc., is filed
herewith electronically.
(3)(iv) Amendment No. 3, dated September 16, 1994, to the
Administrative Services Agreement dated October 18, 1993,
between A I M Advisors, Inc. on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc., is filed
herewith electronically.
(3)(v) Amendment No. 4, dated November 1, 1994, to the
Administrative Services Agreement dated October 18, 1993,
between A I M Advisors, Inc. on behalf of Registrant's
portfolios and classes, and A I M Fund Services, Inc., is filed
herewith electronically.
(4) Master Administrative Services Agreement, dated February 28,
1997, between Registrant and A I M Advisors, Inc. is filed
herewith electronically.
(10) - Opinion of Ballard Spahr Andrews & Ingersoll was filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 1 on October
12, 1993, and is hereby incorporated by reference.
(11) (a) - Consent of Ballard Spahr Andrews & Ingersoll is filed herewith
electronically.
(b) - Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(c) - Consent of Price Waterhouse LLP is filed herewith
electronically.
(12) - Financial Statements - None.
(13) - Agreements Concerning Initial Capitalization - None.
(14) - Retirement Plan Documents - None.
C-5
<PAGE> 124
(15) (a) - (1) Distribution Plan for Registrant's AIM Tax-Exempt Cash
Fund and AIM Tax-Exempt Bond Fund of Connecticut, and related
forms of agreements were filed as an Exhibit to Registrant's
Post-Effective Amendment No. 1 on April 28, 1994.
(2) Amended Distribution Plan, dated as of September 10, 1994,
for Registrant's AIM Tax-Exempt Cash Fund and AIM Tax-Exempt
Bond Fund of Connecticut, and related forms of agreement were
electronically filed as an Exhibit to Post-Effective Amendment
No. 3 on July 27, 1995.
(3) Amended and Restated Master Distribution Plan, dated as of
June 30, 1997, for Registrant's AIM Tax-Exempt Cash Fund and AIM
Tax-Exempt Bond Fund of Connecticut is filed herewith
electronically.
(4) Form of Second Amended and Restated Master Distribution Plan
for Registrant's AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond
Fund of Connecticut is filed herewith electronically.
(b) - Form of Shareholder Service Agreement to be used in connection
with Registrant's Master Distribution Plan is filed herewith
electronically.
(c) - Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan is filed
herewith electronically.
(d) - Form of Agency Pricing Agreement to be used in connection with
Registrant's Master Distribution Plan is filed herewith
electronically.
(e) - Forms of Service Agreement for Bank Trust Department and for
Brokers for Bank Trust Departments to be used in connection with
Registrant's Master Distribution Plan are filed herewith
electronically.
(16) - Schedule of Sample Performance Quotation Calculations was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 2 on
July 26, 1994 and was filed electronically as an Exhibit to
Post-Effective Amendment No. 4 on July 26, 1996 and is hereby
incorporated by reference.
(18) - Rule 18f-3 Amended and Restated Multiple Class Plan is filed
herewith electronically.
(27) - Financial Data Schedule is filed herewith electronically.
Item 25. Persons Controlled by or Under Common Control with Registrant
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to each such
person indicate (1) if a company, the state or other sovereign power under the
laws of which it is organized, and (2) the percentage of voting securities
owned or other basis of control by the person, if any, immediately controlling
it.
Not Applicable.
C-6
<PAGE> 125
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a specified
date within 90 days prior to the date of filing, the number of record holders
of each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders as
Title of Class of July 15, 1997
-------------- ---------------------------
<S> <C>
AIM Tax-Exempt Cash Fund 1,957
Intermediate Portfolio -
AIM Tax-Free Intermediate Shares 1,956
AIM Tax-Exempt Bond Fund of Connecticut 904
</TABLE>
Item 27. Indemnification
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any director,
officer, affiliated person or underwriter for their own protection.
Pursuant to the Maryland General Corporation Law and the Registrant's
Charter and By-Laws, the Registrant may indemnify any person who was or
is a director, officer, employee or agent of the Registrant to the
maximum extent permitted by the Maryland General Corporation Law. The
specific terms of such indemnification are reflected in the Registrant's
Charter and By-Laws, which are incorporated herein as part of this
Registration Statement. No indemnification will be provided by the
Registrant to any director or officer of the Registrant for any
liability to the Registrant or shareholders to which such director or
officer would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of duty.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered hereby, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy and will be
governed by the final adjudication of such issue. Insurance coverage is
provided under a joint Mutual Fund and Investment Advisory Professional
C-7
<PAGE> 126
Directors & Officers Liability Policy, issued by ICI Mutual Insurance
Company, with a $15,000,000 limit of liability.
Item 28. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and each
director, officer or partner of any such investment advisor, is or has been, at
any time during the past two fiscal years, engaged for his own account or in
the capacity of director, officer, employee, partner, or trustee.
The only employment of a substantial nature of the Advisor's directors
and officers is with the Advisor and its affiliated companies. Reference
is also made to the discussion under the captions "Management" of the
Prospectus which comprises Part A of this Registration Statement, and to
the discussion under the caption "Investment Advisory and Other
Services" of the Statement of Additional Information which comprises
Part B of this Registration Statement, and to Item 29(b) of Part C of
this Registration Statement.
Item 29. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal underwriter,
also acts as principal underwriter to the following investment
companies:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds (AIM Limited Maturity Treasury
Shares)
AIM Summit Fund, Inc.
AIM Variable Insurance Funds, Inc.
(b) The following table sets forth information with respect to each
director, officer or partner of A I M Distributors, Inc.
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President & Director President & Director
</TABLE>
- ----------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-8
<PAGE> 127
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
James L. Salners Senior Vice President & Director None
William G. Littlepage Senior Vice President & Director None
John Caldwell Senior Vice President None
Gordan J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
Marilyn M. Miller First Vice President None
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Mary Kay Coleman Vice President None
Melville B. Cox Vice President & Chief Compliance Vice President
Officer
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
Carol F. Relihan Vice President Senior Vice President
& Secretary
Kamala C. Sachidinandan Vice President None
Frank V. Serebrin Vice President None
B.J. Thompson Vice President None
Robert D. Van Sant, Jr. Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
</TABLE>
- ----------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-9
<PAGE> 128
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Luke P. Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri L. Fiedler Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer &
Controller
Jeffrey L. Horne Assistant Vice President None
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Wayne W. LaPlante Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neil Assistant Vice President None
Terri L. Ransdell Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Christopher T. Simutis Assistant Vice President None
Gary K. Wendler Assistant Vice President None
Nicholas D. White Assistant Vice President None
Norman W. Woodson Assistant Vice President None
David L. Kite Assistant General Counsel & Assistant Secretary
Assistant Secretary
</TABLE>
- ----------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-10
<PAGE> 129
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
(c) Not Applicable.
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, maintains physical possession of each such account, book or
other document of the Registrant at its principal executive offices,
except for those maintained by the Registrant's Custodian, The Bank of
New York, 90 Washington Street, 11th Floor, New York, New York 10286,
and the Registrant's Transfer Agent and Dividend Paying Agent, A I M
Fund Services, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173.
Item 31. Management Services
Furnish a summary of the substantive provisions of any
management-related service contract not discussed in Part A or Part B of this
Form (because the contract was not believed to be of interest to a purchaser of
securities of the Registrant) under which services are provided to the
Registrant, indicating the parties to the contract, the total dollars paid and
by whom, for the last three fiscal years.
Not Applicable.
Item 32. Undertakings
The Registrant undertakes to furnish each person to whom a prospectus is
delivered a copy of the applicable Fund's latest annual report to
shareholders, upon request and without charge.
- -------------
*11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-11
<PAGE> 130
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the city of Houston, Texas on the 29th day of July,
1997.
Registrant: AIM TAX-EXEMPT FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
----------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ CHARLES T. BAUER Chairman & Director July 29, 1997
- ------------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Director & President July 29, 1997
- ------------------------------ (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Director July 29, 1997
- ------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Director July 29, 1997
- ------------------------------
(Owen Daly II)
/s/ JACK FIELDS Director July 29, 1997
- ------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Director July 29, 1997
- ------------------------------
(Carl Frischling)
/s/ JOHN F. KROEGER Director July 29, 1997
- ------------------------------
(John F. Kroeger)
/s/ LEWIS F. PENNOCK Director July 29, 1997
- ------------------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Director July 29, 1997
- ------------------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Director July 29, 1997
- ------------------------------
(Louis S. Sklar)
Senior Vice President &
/s/ JOHN J. ARTHUR Treasurer (Principal Financial July 29, 1997
- ------------------------------ and Accounting Officer)
(John J. Arthur)
</TABLE>
<PAGE> 131
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
1(d) Articles of Amendment, dated June 18, 1997
2(c) Amended and Restated By-Laws of Registrant, dated December 11, 1996
5(c) Master Investment Advisory Agreement, dated February 28, 1997,
between Registrant and A I M Advisors, Inc.
6(a)(3) Master Distribution Agreement, dated February 28, 1997, between
Registrant and A I M Distributors, Inc.
6(a)(4) Form of Amendment No. 1 to Master Distribution Agreement, dated February
28, 1997, between Registrant and A I M Distributors, Inc.
6(b) Form of Selected Dealer Agreement between A I M Distributors, Inc. and
selected dealers
6(c) Form of Bank Agreement between A I M Distributors, Inc. and selected banks
9(a)(7) Amendment No. 3, dated February 1, 1997, to the Remote Access and Related
Services Agreement, dated December 23, 1994, between Registrant and First
Data Investor Services Group, Inc. (formerly The Shareholder Services Group,
Inc.)
9(b)(3)(iii) Amendment No. 2, dated July 1, 1994, to the Administrative Services
Agreement dated October 18, 1993, between A I M Advisors, Inc. on behalf of
Registrant's portfolios and classes, and A I M Fund Services, Inc.
9(b)(3)(iv) Amendment No. 3, dated September 16, 1994, to the Administrative Services
Agreement dated October 18, 1993, between A I M Advisors, Inc. on behalf of
Registrant's portfolios and classes, and A I M Fund Services, Inc.
9(b)(3)(v) Amendment No. 4, dated November 1, 1994, to the Administrative Services
Agreement dated October 18, 1993, between A I M Advisors, Inc. on behalf of
Registrant's portfolios and classes, and A I M Fund Services, Inc.
9(b)(4) Master Administrative Services Agreement, dated February 28,
1997, between Registrant and A I M Advisors, Inc.
11(a) Consent of Ballard Spahr Andrews & Ingersoll
</TABLE>
<PAGE> 132
<TABLE>
<S> <C>
11(b) Consent of KPMG Peat Marwick LLP
11(c) Consent of Price Waterhouse LLP
15(a)(3) Amended and Restated Master Distribution Plan, dated as of June
30, 1997, for Registrant's AIM Tax-Exempt Cash Fund and AIM
Tax-Exempt Bond Fund of Connecticut
15(a)(4) Form of Second Amended and Restated Master Distribution Plan for
Registrant's AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond
Fund of Connecticut
15(b) Form of Shareholder Service Agreement to be used in connection with
Registrant's Master Distribution Plan
15(c) Form of Bank Shareholder Service Agreement to be used in connection with
Registrant's Master Distribution Plan
15(d) Form of Agency Pricing Agreement to be used in connection with Registrant's
Master Distribution Plan
15(e) Forms of Service Agreement for Bank Trust Department and for
Brokers for Bank Trust Departments to be used in connection with
Registrant's Master Distribution Plan
18 Rule 18f-3 Amended and Restated Multiple Class Plan
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1(d)
AIM TAX-EXEMPT FUNDS, INC.
ARTICLES OF AMENDMENT
AIM Tax-Exempt Funds, Inc., a Maryland corporation having its principal
office in the State of Maryland in Baltimore City (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Article Fifth (a) is hereby amended in its entirety to read as
follows:
"The total number of shares of common stock which the
Corporation shall have the authority to issue is 5,000,000,000
shares, of which 1,000,000,000 shares are classified as AIM
Tax-Exempt Cash Fund Class A Shares, 1,000,000,000 shares are
classified AIM Tax Exempt Bond Fund of Connecticut Class A
Shares, 1,000,000,000 shares are classified as Intermediate
Portfolio Shares (of which 1,000,000,000 shares are classified
as AIM Tax-Free Intermediate Class A Shares) and the balance of
which are unclassified. The par value of common stock is $.001,
and the aggregate par value of all authorized shares of common
stock is $5,000,000. Unissued shares of common stock may be
classified and reclassified by the Board of Directors in the
Maryland General Corporation Law."
SECOND: The Corporation is registered as an open-end company under the
Investment Company Act of 1940. The foregoing amendment to the charter was
approved by a majority of the board of directors. No stock entitled to be voted
on the matter was outstanding or subscribed for at the time of approval. The
amendment is limited to a change expressly permitted by Section 2.605 of the
Maryland General Corporation Law to be made without action by the stockholders.
The undersigned President acknowledges these Articles of Amendment to
be the corporate act of the Corporation and states to the best of his
knowledge, information and belief that the matters and facts set forth in these
Articles with respect to authorization and approval are true in all material
respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, AIM Tax-Exempt Funds, Inc. has caused these
Articles of Amendment to be signed in its name and on its behalf by its
President and witnessed by its Assistant Secretary on June 18, 1997.
AIM Tax-Exempt Funds, Inc.
By /s/ ROBERT H. GRAHAM
---------------------------
Robert H. Graham, President
WITNESS:
/s/ P. Michelle Grace
- ---------------------
Assistant Secretary
<PAGE> 1
EXHIBIT 2(c)
AMENDED AND RESTATED BYLAWS
OF
AIM TAX-EXEMPT FUNDS, INC.,
A MARYLAND CORPORATION
ADOPTED EFFECTIVE DECEMBER 11, 1996
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 1. Time and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 4. Notice of Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
Section 5. Closing of Transfer Books, Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
Section 6. Quorum, Adjournment of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
Section 7. Voting and Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
Section 8. Conduct of Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
Section 9. Validity of Proxies and Ballots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
Section 10. Nominations and Stockholder Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
ARTICLE II
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 1. Number and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 2. Increase or Decrease in Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 3. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 4. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
Section 5. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 7. Telephonic Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 8. Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 9. Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 10. Informal Action by Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
Section 11. Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
ARTICLE III
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 1. Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 2. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 3. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 4. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 5. Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
Section 6. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 7. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
ARTICLE IV
STOCK . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 1. Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 3. Stock Ledgers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
Section 4. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
ARTICLE V
CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . - 8 -
</TABLE>
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ARTICLE VI
FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . - 8 -
ARTICLE VII
INDEMNIFICATION AND ADVANCES FOR EXPENSES . . . . . . . . . . . . . . . - 8 -
Section 1. Indemnification of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
Section 2. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
Section 3. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
Section 4. Indemnification of Employees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
Section 5. Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
Section 6. Subsequent Changes to Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
ARTICLE VIII
AMENDMENT OF BYLAWS . . . . . . . . . . . . . . . . . . . . . - 9 -
</TABLE>
- ii -
<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
AIM TAX-EXEMPT FUNDS, INC.,
A MARYLAND CORPORATION
ARTICLE I
STOCKHOLDERS
Section 1. Time and Place of Meetings. Meetings of the
stockholders of the Corporation need not be held except as required under the
general laws of the State of Maryland, as the same may be amended from time to
time. Meetings of the stockholders shall be held at places within the United
States designated by the Board of Directors and set forth in the notice of the
meeting.
Section 2. Annual Meetings. If a meeting of the
stockholders of the Corporation is required by the Investment Company Act of
1940, as amended, to take action with respect to the election of directors,
then such matter shall be submitted to the stockholders at a special meeting
called for such purpose, which shall be deemed the annual meeting of
stockholders for that year. In years in which no such action by stockholders
is so required, no annual meeting of stockholders need be held.
Section 3. Special Meetings. Special meetings of the
stockholders for any purpose or purposes may be called by the Chairman of the
Board of Directors, if any, by the President or by a majority of the Board of
Directors. In addition, such special meetings shall be called by the Secretary
upon receipt of a request in writing, signed by stockholders entitled to cast
at least ten percent (10%) of all the votes entitled to be cast at the meeting,
which states the purpose of the meeting and the matters proposed to be acted on
at the meeting. Unless requested by stockholders entitled to cast a majority
of all the votes entitled to be cast at the meeting, a special meeting need not
be called to consider any matter which is substantially the same as a matter
voted on at a special meeting of the stockholders held during the preceding
twelve (12) months.
Section 4. Notice of Meeting of Stockholders. Written
or printed notice of every meeting of stockholders, stating the time and place
thereof (and the purpose of any special meeting), shall be given, not less than
ten (10) days nor more than ninety (90) days before the date of the meeting, to
each stockholder entitled to vote at the meeting and each other stockholder
entitled to notice, by delivering such notice personally, or leaving such
notice at each stockholder's residence or usual place of business, or by
mailing such notice, postage prepaid, addressed to each stockholder at such
stockholder's address as it appears upon the books of the Corporation. Each
person who is entitled to notice of any meeting shall be deemed to have waived
notice if present at the meeting in person or by proxy or if such person signs
a waiver of notice (either before or after the meeting) which is filed with the
records of stockholders meetings.
- 1 -
<PAGE> 5
Section 5. Closing of Transfer Books, Record Dates. The
Board of Directors may set a record date for the purpose of making any proper
determination with respect to stockholders, including determining which
stockholders are entitled to notice of and to vote at a meeting, receive a
dividend or be allotted other rights. The record date may not be prior to the
close of business on the day the record date is fixed and shall be not more
than ninety (90) days before the date on which the action requiring the
determination is taken. In the case of a meeting of stockholders, the record
date shall be at least ten (10) days before the date of the meeting. Only
stockholders of record on such date shall be entitled to notice of and to vote
at such meeting, or to receive such dividends or rights, as the case may be.
Section 6. Quorum, Adjournment of Meeting. The presence
in person or by proxy of stockholders entitled to cast thirty percent (30%) of
all votes entitled to be cast at the meeting shall constitute a quorum at all
meetings of the stockholders, except with respect to any matter which by law or
the charter of the Corporation requires the separate approval of one or more
classes or series of the capital stock of the Corporation, in which case the
holders of one-third of the shares of each such class or series (or of such
classes or series voting together as a single class) entitled to vote on the
matter shall constitute a quorum; and a majority, or with respect to the
election of Directors, a plurality, of all votes cast at a meeting (or cast by
the holders of shares of any such classes or series whose separate approval on
a matter is required) at which a quorum is present shall be sufficient to
approve any matter which properly comes before the meeting, unless otherwise
provided by applicable law, the Charter of the Corporation or these Bylaws. If
at any meeting of the stockholders there shall be less than a quorum present,
the stockholders present at such meeting may, by a majority of all votes cast
and without further notice, adjourn the same from time to time (but not more
than 120 days after the original record date for such meeting) until a quorum
shall attend, but no business shall be transacted at any such adjourned meeting
except business which might have been lawfully transacted had the meeting not
been adjourned.
Section 7. Voting and Inspectors.
(a) At all meetings of the stockholders, every
stockholder of record entitled to vote thereat shall be entitled to vote at
such meeting either in person or by written proxy signed by the stockholder or
by his duly authorized attorney in fact. A stockholder may duly authorize such
attorney in fact through written, electronic, telephonic, computerized,
facsimile, telecommunication, telex or oral communication or by any other form
of communication. Unless a proxy provides otherwise, such proxy shall not be
valid more than eleven (11) months after its date.
(b) At any meeting of stockholders considering
the election of directors, the Board of Directors prior to the convening of
such meeting may, or, if the Board has not so acted, the Chairman of the
meeting may, appoint two (2) inspectors of election, who shall first subscribe
an oath or affirmation to execute faithfully the duties of inspectors at such
election in strict impartiality and according to the best of their ability, and
shall after the election certify the result of the vote taken. No candidate
for election as a director shall be appointed to act as an inspector of
election.
(c) The Chairman of the meeting may cause a vote
by ballot to be taken with respect to any election or matter.
- 2 -
<PAGE> 6
Section 8. Conduct of Stockholders Meetings.
(a) The meetings of the stockholders shall be
presided over by the Chairman of the Board, or if the Chairman shall not be
present or if there is no Chairman, by the President, or if the President shall
not be present, by a Vice President, or if no Vice President is present, by a
chairman elected for such purpose at the meeting. The Secretary of the
Corporation, if present, shall act as Secretary of such meetings, or if the
Secretary is not present, an Assistant Secretary of the Corporation shall so
act, and if no Assistant Secretary is present, then a person designated by the
Secretary of the Corporation shall so act, and if the Secretary has not
designated a person, then the meeting shall elect a secretary for the meeting.
(b) The Board of Directors of the Corporation
shall be entitled to make such rules and regulations for the conduct of
meetings of stockholders as it shall deem necessary, appropriate or convenient.
Subject to such rules and regulations of the Board of Directors, if any, the
chairman of the meeting shall have the right and authority to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment
of such chairman, are necessary, appropriate or convenient for the proper
conduct of the meeting, including, without limitation, establishing: an agenda
or order of business for the meeting; rules and procedures for maintaining
order at the meeting and the safety of those present; limitations on
participation in such meeting to stockholders of record of the corporation and
their duly authorized and constituted proxies, and such other persons as the
chairman shall permit; restrictions on entry to the meeting after the time
fixed for the commencement thereof; limitations on the time allotted to
questions or comments by participants; and regulation of the opening and
closing of the polls for balloting on matters which are to be voted on by
ballot, unless and to the extent the Board of Directors or the chairman of the
meeting determines that meetings of stockholders shall not be required to be
held in accordance with the rules of parliamentary procedure.
Section 9. Validity of Proxies and Ballots. At every
meeting of the stockholders, all proxies shall be received and maintained by,
and all ballots shall be received and canvassed by, the secretary of the
meeting, who shall decide all questions concerning the qualification of voters,
the validity of proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed, in which case the inspectors
of election shall decide all such questions.
Section 10. Nominations and Stockholder Business.
(a) Annual Meetings of Stockholders.
(1) Nominations of individuals for election
to the board of directors shall be made by the Board of Directors or a
nominating committee of the Board of Directors, if one has been established
(the "Nominating Committee"). Any stockholder of the Corporation may submit
names of individuals to be considered by the Nominating Committee or the Board
of Directors, as applicable, provided, however, (i) that such person was a
stockholder of record at the time of submission of such names and is entitled
to vote at the meeting, and (ii) that the Nominating Committee or the Board of
Directors, as applicable, shall make the final determination of persons to be
nominated.
(2) The business to be considered by the
stockholders at an annual meeting shall be determined by the Board of Directors
of the Corporation.
- 3 -
<PAGE> 7
(b) Special Meetings of Stockholders. Only such
business shall be conducted at a special meeting of stockholders as shall have
been brought before the meeting pursuant to the corporation's notice of
meeting.
(c) General.
(1) Only such persons who are nominated
in accordance with the provisions of this Section 10 shall be eligible to serve
as directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the provisions of this Section 10. The presiding officer of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
provisions of this Section 10 and, if any proposed nomination or business is
not in compliance with this Section 10, to declare that such defective
nomination or proposal be disregarded.
(2) Notwithstanding the foregoing provisions
of this Section 10, a stockholder shall also comply with all applicable
requirements of state law and of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder with
respect to the matters set forth in this Section 10. Nothing in this Section
10 shall be deemed to affect any rights of stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The business and
affairs of the Corporation shall be managed under the direction of a Board of
Directors initially consisting of three (3) directors, which number may be
increased or decreased as herein provided. Directors shall hold office until
their respective successors have been duly elected and qualify. Directors need
not be stockholders.
Section 2. Increase or Decrease in Number of Directors.
The Board of Directors, by the vote of a majority of the entire Board, may
increase the number of directors to a number not exceeding fifteen (15), and
may appoint directors to fill the vacancies created by any increase in the
number of directors, and such appointed directors shall hold office until their
successors have been duly elected and qualify. The Board of Directors, by the
vote of a majority of the entire Board, may decrease the number of directors to
a number not less than three (3) or the number of stockholders, whichever is
less, but any such decrease shall not affect the term of office of any
director. Vacancies occurring other than by reason of any increase in the
number of directors shall be filled as provided by the Maryland General
Corporation Law.
Section 3. Place of Meetings. The directors may hold
their meetings and keep the books of the Corporation outside the State of
Maryland, at any office or offices of the Corporation or at any other place as
they may from time to time determine; and in the case of meetings, as shall be
specified in the respective notices of such meetings.
Section 4. Regular Meetings. Regular meetings of the
Board of Directors shall be held at such time and on such notice, if any, as
the directors may from time to time determine.
- 4 -
<PAGE> 8
Section 5. Special Meetings. Special meetings of the
Board of Directors may be held from time to time upon call of the Chairman of
the Board of Directors, if any, the President, or any two (2) or more of the
directors, by oral, telegraphic, telephonic or written notice duly given to
each director not less than one (1) business day before such meeting or, sent
or mailed to each director, not less than three (3) business days before such
meeting. Each director who is entitled to notice shall be deemed to have
waived notice if such director is present at the meeting or, either before or
after the meeting, such director signs a waiver of notice which is filed with
the minutes of the meeting. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
Section 6. Quorum. One third (1/3) of the directors
then in office (but in no event less than two (2) directors) shall constitute a
quorum of the Board of Directors for the transaction of business. If at any
meeting of the Board there shall be less than a quorum present, a majority of
those directors present may adjourn the meeting from time to time until a
quorum shall have been attained. The action of a majority of the directors
present at any meeting at which there is a quorum shall be the action of the
Board of Directors, except as may be otherwise specifically provided by
applicable law, the Charter or these Bylaws.
Section 7. Telephonic Meetings. The members of the
Board of Directors, or any committee of the Board of Directors, may participate
in a meeting by means of a conference telephone call or similar communications
equipment if all persons participating in such meeting can simultaneously hear
each other, and participation in a meeting by these means constitutes presence
in person at such meeting.
Section 8. Executive Committee. The Board of Directors
may appoint an Executive Committee consisting of two (2) or more directors.
Between meetings of the Board of Directors, the Executive Committee, if any,
shall have and may exercise any or all of the powers of the Board of Directors
with respect to the management of the business and affairs of the Corporation,
except (a) as otherwise provided by law, and (b) the power to increase or
decrease the size of, or fill vacancies on, the Board of Directors. The
Executive Committee may determine its own rules of procedure, and may meet when
and as the Executive Committee determines, or when directed by resolution of
the Board of Directors. The presence of a majority of the Executive Committee
shall constitute a quorum. The Board of Directors shall have the power at any
time to change the members and powers of, to fill vacancies on, and to dissolve
the Executive Committee. In the absence of any member of the Executive
Committee, the members present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of such absent member.
Section 9. Other Committees. The Board of Directors may
appoint other nominees which shall in each case consist of such number of
directors (not less than two (2)), which shall have and may exercise such
powers as the Board may from time to time determine, subject to applicable law.
A majority of all members of any such committee may determine its action, and
the time and place of its meetings, unless the Board of Directors shall provide
otherwise. The Board of Directors shall have the power at any time to change
the members and powers of, to fill vacancies on, and to dissolve any such
committee. In the absence of any member of such committee, the members present
at any meeting, whether or not they constitute a quorum, may appoint a director
to act in the place of such absent member.
Section 10. Informal Action by Directors. Except to the
extent otherwise specifically prohibited by applicable law, any action required
or permitted to be taken at any
- 5 -
<PAGE> 9
meeting of the Board of Directors or any committee thereof may be taken without
a meeting, if a written consent to such action is signed by all members of the
Board or such committee, and such consent is filed with the minutes of
proceedings of the Board or such committee.
Section 11. Compensation of Directors. Directors shall
be entitled to receive such compensation from the Corporation for their
services as directors as the Board of Directors may from time to time
determine.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive
officers of the Corporation shall be elected by the Board of Directors as soon
as practicable after the incorporation of the Corporation. The executive
officers may include a Chairman of the Board, and shall include a President,
one or more Vice Presidents (the number thereof to be determined by the Board
of Directors), a Secretary and a Treasurer. The Chairman of the Board, if any,
shall be selected from among the directors. The Board of Directors may also in
its discretion appoint Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers, and other officers, agents and employees, who shall have
such authority and perform such duties as the Board may determine. The Board
of Directors may fill any vacancy which may occur in any office. Any two (2)
offices, except those of President and Vice President, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument on
behalf of the Corporation in more than one (1) capacity, if such instrument is
required by law or by these Bylaws to be executed, acknowledged or verified by
two (2) or more officers.
Section 2. Term of Office. Unless otherwise
specifically determined by the Board of Directors, the officers shall serve at
the pleasure of the Board of Directors. If the Board of Directors in its
judgment finds that the best interests of the Corporation will be served, the
Board of Directors may remove any officer of the Corporation at any time with
or without cause.
Section 3. President. The President shall be the chief
executive officer of the Corporation and, subject to the Board of Directors,
shall generally manage the business and affairs of the Corporation. If there
is no Chairman of the Board, or if the Chairman of the Board has been appointed
but is absent, the President shall, if present, preside at all meetings of the
stockholders and the Board of Directors.
Section 4. Chairman of the Board. The Chairman of the
Board, if any, shall preside at all meetings of the stockholders and the Board
of Directors, if the Chairman of the Board is present. The Chairman of the
Board shall have such other powers and duties as shall be determined by the
Board of Directors, and shall undertake such other assignments as may be
requested by the President.
Section 5. Other Officers. The Chairman of the Board or
one or more Vice Presidents shall have and exercise such powers and duties of
the President in the absence or inability to act of the President, as may be
assigned to them, respectively, by the Board of Directors or, to the extent not
so assigned, by the President. In the absence or inability to act of the
President, the powers and duties of the President not otherwise assigned by the
Board of
- 6 -
<PAGE> 10
Directors or the President shall devolve upon the Chairman of the Board, or in
the Chairman's absence, the Vice Presidents in the order of their election.
Section 6. Secretary. The Secretary shall have custody
of the seal of the Corporation, and shall keep the minutes of the meetings of
the stockholders, Board of Directors and any committees thereof, and shall
issue all notices of the Corporation. The Secretary shall have charge of the
stock records and such other books and papers as the Board may direct, and
shall perform such other duties as may be incidental to the office or which are
assigned by the Board of Directors. The Secretary shall also keep or cause to
be kept a stock book, which may be maintained by means of computer systems,
containing the names, alphabetically arranged, of all persons who are
stockholders of the Corporation, showing their places of residence, the number
and class or series of any class of shares of stock held by them, respectively,
and the dates when they became the record owners thereof, and such book shall
be open for inspection as prescribed by the laws of the State of Maryland.
Section 7. Treasurer. The Treasurer shall have the care
and custody of the funds and securities of the Corporation and shall deposit
the same in the name of the Corporation in such bank or banks or other
depositories, subject to withdrawal in such manner as these Bylaws or the Board
of Directors may determine. The Treasurer shall, if required by the Board of
Directors, give such bond for the faithful discharge of duties in such form as
the Board of Directors may require.
ARTICLE IV
STOCK
Section 1. Stock Certificates. Each stockholder of the
Corporation shall be entitled to a certificate or certificates for the full
number of shares of each class or series of stock of the Corporation owned by
such stockholder, in such form as the Board of Directors may from time to time
determine, subject to applicable law.
Section 2. Transfer of Shares. Shares of the
Corporation shall be transferable on the books of the Corporation by the
holder(s) thereof, in person or by such holder's duly authorized attorney or
legal representative, upon surrender and cancellation of certificates, if any,
for the same number of shares, duly endorsed or accompanied by proper
instruments of assignment and transfer, with such proof of the authenticity of
the signature(s) as the Corporation or its agents may reasonably require. In
the case of shares not represented by certificates, the same or similar
requirements may be imposed by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the
Corporation, containing the names and addresses of the stockholders and the
number of shares held by them, respectively, shall be kept at the principal
offices of the Corporation, or if the Corporation has appointed a transfer
agent, at the offices of such transfer agent.
Section 4. Lost, Stolen or Destroyed Certificates. The
Board of Directors may determine the conditions upon which a new stock
certificate of any class or series may be issued in place of a certificate
which is alleged to have been lost, stolen or destroyed. The Board of
Directors may in its discretion require the owner of such certificate to give
bond, with sufficient surety to the Corporation and the transfer agent, if any,
to indemnify the Corporation and such
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<PAGE> 11
transfer agent against any and all losses or claims which may arise by reason
of the issuance of a replacement certificate.
ARTICLE V
CORPORATE SEAL
The Board of Directors may provide for a suitable corporate
seal, in such form and bearing such inscriptions as it may determine. In lieu
of fixing the Corporation's seal to a document, it is sufficient to meet the
requirements of any law, rule or regulation relating to a corporate seal to
place the word ("seal") adjacent to the signature of the person authorized to
sign the document on behalf of the Corporation.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the Board of
Directors.
ARTICLE VII
INDEMNIFICATION AND ADVANCES FOR EXPENSES
Section 1. Indemnification of Directors and Officers.
The Corporation shall indemnify its directors to the fullest extent that
indemnification of directors is permitted by the Maryland General Corporation
Law. The Corporation shall indemnify its officers to the same extent as its
directors and to such further extent as is consistent with law. The
Corporation shall indemnify its directors and officers who while serving as
directors or officers also serve at the request of the Corporation as a
director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the fullest extent consistent with law. The indemnification
and other rights provided for by this Article shall continue as to a person who
has ceased to be a director or officer, and shall inure to the benefit of the
heirs, executors and administrators of such a person. This Article shall not
protect any such person against any liability to the Corporation or any
stockholder thereof to which such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such person's office ("disabling
conduct").
Section 2. Advances. The Corporation shall advance
payment to any current or former director or officer of the Corporation for
reasonable expenses incurred in connection with any proceeding in which the
individual is made a party by reason of service as a director or officer in the
manner and to the fullest extent permissible under the Maryland General
Corporation Law. Upon receipt by the Corporation of a written affirmation of
his or her good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance if it should ultimately be determined that the requisite
standard of conduct has not been met. In addition, at least one of the
following
- 8 -
<PAGE> 12
conditions must be satisfied: (a) the individual shall provide security in form
and amount acceptable to the Corporation for the foregoing undertaking, (b) the
Corporation shall be insured against losses arising by reason of the advance,
or (c) a majority of a quorum of directors of the Corporation who are neither
interested persons, as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended, nor parties to the proceeding ("disinterested
non-party directors"), or independent legal counsel in a written opinion, shall
have determined, based on a review of facts readily available to the
Corporation at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to meet the requisite standard of conduct.
Section 3. Procedure. At the request of any person
claiming indemnification under this Article, the Board of Directors shall
determine, or cause to be determined, in a manner consistent with the Maryland
General Corporation Law, whether the standards required by this Article have
been met. Indemnification shall be made only following: (a) a final decision
on the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of disabling
conduct, or (b) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the person to be indemnified was not
liable by reason of disabling conduct by, (i) the vote of a majority of a
quorum of disinterested non-party directors, or (ii) an independent legal
counsel in a written opinion.
Section 4. Indemnification of Employees and Agents.
Employees and agents who are not officers or directors of the Corporation may
be indemnified, and reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of Directors or by contract,
subject to any limitations imposed by the Investment Company Act of 1940, as
amended.
Section 5. Other Rights. The Board of Directors may
make further provision consistent with law for indemnification and advancement
of expenses to directors, officers, employees and agents by resolution,
agreement or otherwise. The indemnification provided for by this Article shall
not be deemed exclusive of any other right, with respect to indemnification or
otherwise, to which those seeking indemnification may be entitled under any
insurance, other agreement, resolution of stockholders or disinterested
directors, or otherwise.
Section 6. Subsequent Changes to Law. References in
this Article are to the Maryland General Corporation Law and to the Investment
Company Act of 1940 as from time to time amended. No amendment of these Bylaws
shall affect any right of any person under this Article based on any event,
omission or proceeding occurring prior to such amendment.
ARTICLE VIII
AMENDMENT OF BYLAWS
These Bylaws may be altered, amended or repealed at any
meeting of the Board of Directors without prior notice that such alteration,
amendment or repeal will be considered at such meeting.
- 9 -
<PAGE> 1
EXHIBIT 5(c)
AIM TAX-EXEMPT FUNDS, INC.
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, by and between
AIM Tax-Exempt Funds, Inc., a Maryland corporation (the "Company"), with
respect to its series of shares shown on the Appendix A attached hereto, as the
same may be amended from time to time, and A I M Advisors, Inc., a Delaware
corporation (the "Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), as an investment advisor and engages
in the business of acting as an investment advisor;
WHEREAS, the Company's charter authorizes the Board of Directors of
the Company to classify or reclassify authorized but unissued shares of the
Company, and as of the date of this Agreement, the Company's Board of Directors
has authorized the issuance of three series of shares representing interests in
three investment portfolios (such portfolios and any other portfolios hereafter
added to the Company being referred to individually herein as a "Fund,"
collectively as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement
to provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor
for the Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Company's Board of Directors. The Advisor shall
give the Company and the Funds the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its
obligations under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally or the Funds, and whether concerning the individual issuers
whose securities are included in the assets of the Funds or the
activities in which such issuers
-1-
<PAGE> 2
engage, or with respect to securities which the Advisor considers
desirable for inclusion in the Funds' assets;
(c) determine which issuers and securities shall be
represented in the Funds' investment portfolios and regularly report
thereon to the Company's Board of Directors; and
(d) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and regularly
report thereon to the Company's Board of Directors;
and take, on behalf of the Company and the Funds, all actions which appear to
the Company and the Funds necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including but not limited to
the placing of orders for the purchase and sale of securities for the Funds.
3. Delegation of Responsibilities. Subject to the approval of the
Board of Directors and the shareholders of the Funds, the Advisor may delegate
to a sub-advisor certain of its duties enumerated in Section 2 hereof, provided
that the Advisor shall continue to supervise the performance of any such
sub-advisor.
4. Control by Board of Directors. Any investment program undertaken
by the Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Advisor on behalf of the Funds, shall at all times be subject
to any directives of the Board of Directors of the Company.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the
Advisers Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the
Company, as the same may be amended from time to time under the
Securities Act of 1933 and the 1940 Act;
(c) the provisions of the corporate charter of the Company,
as the same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same
may be amended from time to time; and
(e) any other applicable provisions of state, federal or
foreign law.
6. Broker-Dealer Relationships. The Advisor is responsible for
decisions to buy and sell securities for the Funds, broker-dealer selection,
and negotiation of brokerage commission rates. The Advisor's primary
consideration in effecting a security transaction will be to obtain execution
at the most favorable price. In selecting a broker-dealer to execute each
particular transaction, the Advisor will take the following into consideration:
the best net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and the difficulty in executing the
order; and the value of the expected contribution of the broker-dealer to the
investment performance of the Funds on a continuing basis. Accordingly, the
price to the Funds in any transaction may be less favorable than that available
from another broker-dealer if the difference is reasonably justified by other
aspects of the portfolio execution services offered. Subject to such policies
as the Board of Directors may from time to time determine, the Advisor shall
not be deemed to have acted unlawfully
-2-
<PAGE> 3
or to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Funds to pay a broker or dealer that provides
brokerage and research services to the Advisor an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Advisor's overall responsibilities with
respect to a particular Fund, other Funds of the Company, and to other clients
of the Advisor as to which the Advisor exercises investment discretion. The
Advisor is further authorized to allocate the orders placed by it on behalf of
the Funds to such brokers and dealers who also provide research or statistical
material, or other services to the Funds, to the Advisor, or to any
sub-advisor. Such allocation shall be in such amounts and proportions as the
Advisor shall determine and the Advisor will report on said allocations
regularly to the Board of Directors of the Company indicating the brokers to
whom such allocations have been made and the basis therefor. In making
decisions regarding broker-dealer relationships, the Advisor may take into
consideration the recommendations of any sub-advisor appointed to provide
investment research or advisory services in connection with the Funds, and may
take into consideration any research services provided to such sub-advisor by
broker-dealers.
7. Compensation. The Company shall pay the Advisor as compensation
for services rendered to a Fund hereunder an annual fee, payable monthly, based
upon the average daily net assets of such Fund as the same is set forth in
Appendix A attached hereto. Such compensation shall be paid solely from the
assets of such Fund. The average daily net asset value of the Funds shall be
determined in the manner set forth in the corporate charter and registration
statement of the Company, as amended from time to time.
8. Additional Services. Upon the request of the Company's Board of
Directors, the Advisor may perform certain accounting, shareholder servicing or
other administrative services on behalf of the Funds which are not required by
this Agreement. Such services will be performed on behalf of the Funds and the
Advisor may receive from the Funds such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and
the Company's Board of Directors based on a finding by the Board of Directors
that the provision of such services by the Advisor is in the best interests of
the Company and its shareholders. Payment or assumption by the Advisor of any
Fund expense that the Advisor is not otherwise required to pay or assume under
this Agreement shall not relieve the Advisor of any of its obligations to the
Funds nor obligate the Advisor to pay or assume any similar Fund expense on any
subsequent occasions. Such services may include, but are not limited to:
(a) the services of a principal financial officer of the
Company (including applicable office space, facilities and equipment)
whose normal duties consist of maintaining the financial accounts and
books and records of the Company and the Funds, including the review
and calculation of daily net asset value and the preparation of tax
returns; and the services (including applicable office space,
facilities and equipment) of any of the personnel operating under the
direction of such principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Advisor; changing account designations or changing addresses;
assisting in the purchase or redemption of shares; supervising the
operations of the custodian, transfer agent(s) or dividend disbursing
agent(s) for the Funds; or otherwise providing services to
shareholders of the Funds; and
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<PAGE> 4
(c) such other administrative services as may be furnished
from time to time by the Advisor to the Company or the Funds at the
request of the Company's Board of Directors.
9. Expenses of the Funds. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by
the Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.
10. Expense Limitation. If, for any fiscal year of the Company, the
total of all ordinary business expenses of the Funds, including all investment
advisory fees, but excluding brokerage commissions and fees, taxes, interest
and extraordinary expenses, such as litigation costs, would exceed the
applicable expense limitations imposed by state securities regulations in any
state in which the Funds' shares are qualified for sale, as such limitations
may be raised or lowered from time to time, the aggregate of all such
investment advisory fees shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by the Advisor shall be deducted from
the monthly investment advisory fee otherwise payable to the Advisor during
such fiscal year. If required pursuant to such state securities regulations,
the Advisor will, not later than the last day of the first month of the next
succeeding fiscal year, reimburse the Funds for any such annual operating
expenses (after reduction of all investment advisory fees in excess of such
limitation). For the purposes of this paragraph, the term "fiscal year" shall
exclude the portion of the current fiscal year which shall have elapsed prior
to the date hereof and shall include the portion of the then current fiscal
year which shall have elapsed at the date of termination of this Agreement.
The application of expense limitations shall be applied to each Fund of the
Company separately unless the laws or regulations of any state shall require
that the expense limitations be imposed with respect to the Company as a whole.
11. Non-Exclusivity. The services of the Advisor to the Company and
the Funds are not to be deemed to be exclusive, and the Advisor shall be free
to render investment advisory and administrative or other services to others
(including other investment companies) and to engage in other activities. It
is understood and agreed that officers or directors of the Advisor may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
12. Term and Approval. This Agreement shall become effective with
respect to a Fund if approved by the shareholders of such Fund, and if so
approved, this Agreement shall thereafter continue in force and effect until
February 28, 1999, and may be continued from year to year thereafter, provided
that the continuation of the Agreement is specifically approved at least
annually;
(a) (i) by the Company's Board of Directors or (ii) by the
vote of "a majority of the outstanding voting securities" of such Fund
(as defined in Section 2(a)(42) of the 1940 Act); and
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<PAGE> 5
(b) by the affirmative vote of a majority of the directors
who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of a party to this Agreement (other than as
Company directors), by votes cast in person at a meeting specifically
called for such purpose.
13. Termination. This Agreement may be terminated as to the Company
or as to any one or more of the Funds at any time, without the payment of any
penalty, by vote of the Company's Board of Directors or by vote of a majority
of the outstanding voting securities of the applicable Fund, or by the Advisor,
on sixty (60) days' written notice to the other party. The notice provided for
herein may be waived by the party entitled to receipt thereof. This Agreement
shall automatically terminate in the event of its assignment, the term
"assignment" for purposes of this paragraph having the meaning defined in
Section 2(a)(4) of the 1940 Act.
14. Liability of Advisor and Indemnification. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Advisor or any of its
officers, directors or employees, the Advisor shall not be subject to liability
to the Company or to the Funds or to any shareholder of the Funds for any act
or omission in the course of, or connected with, rendering services hereunder
or for any losses that may be sustained in the purchase, holding or sale of any
security.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company shall be and that of the Advisor shall be
Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046.
16. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act or the Advisers Act shall be
resolved by reference to such term or provision of the 1940 Act or the Advisers
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued pursuant
to said Acts. In addition, where the effect of a requirement of the 1940 Act
or the Advisers Act reflected in any provision of the Agreement is revised by
rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
17. License Agreement. The Company shall have the non-exclusive
right to use the name "AIM" to designate any current or future series of shares
only so long as A I M Advisors, Inc. serves as investment manager or advisor to
the Company with respect to such series of shares.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective officers on the day and year first
written above.
AIM TAX-EXEMPT FUNDS, INC.
(a Maryland corporation)
Attest:
/s/ DAVID L. KITE By:/s/ ROBERT H. GRAHAM
- ----------------------------------- -----------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest:
/s/ OFELIA M. MAYO By:/s/ ROBERT H. GRAHAM
- ----------------------------------- -----------------------------
Assistant Secretary President
(SEAL)
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<PAGE> 7
APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
AIM TAX-EXEMPT FUNDS, INC.
The Company shall pay the Advisor, out of the assets of a Fund, as
full compensation for all services rendered and all facilities furnished
hereunder, a management fee for such Fund set forth below. Such fee shall be
calculated by applying the following annual rates to the average daily net
assets of such Fund for the calendar year computed in the manner used for the
determination of the net asset value of shares of such Fund.
INTERMEDIATE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $500 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.30%
Over $500 million to and including $1 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.25%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.20%
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
NET ASSETS ANNUAL RATE
- ---------- -----------
All Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50%
AIM TAX-EXEMPT CASH FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
All Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35%
</TABLE>
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<PAGE> 1
EXHIBIT 6(a)(3)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM TAX-EXEMPT FUNDS, INC.
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT is made this 28th day of February, 1997, by and between
AIM TAX-EXEMPT FUNDS, INC., a Maryland corporation (the "Company"), and A I M
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged,
the parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of shares set forth in Appendix A attached hereto
(collectively, the "Funds" and each separately a "Fund"), and any applicable
classes thereof, to the public directly and through investment dealers and
financial institutions in the United States and throughout the world in
accordance with the terms of the Company's current prospectus applicable to the
Funds.
SECOND: The Company shall not sell any shares of a Fund except through
the Distributor and under the terms and conditions set forth in paragraph
FOURTH below. Notwithstanding the provisions of the foregoing sentence,
however:
(A) the Company may issue shares of a Fund to any other investment
company or personal holding company, or to the shareholders thereof, in
exchange for all or a majority of the shares or assets of any such company; and
(B) the Company may issue shares of a Fund at their net asset value in
connection with certain classes of transactions or to certain categories of
persons, in accordance with Rule 22d-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), provided that any such category is specified
in the then current prospectus of the Funds.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the shares of the Funds and agrees that it will use its best
efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
each Fund shall, suspend its efforts to effectuate such sales at any time when,
in the opinion of the Distributor or of the Company, no sales should be made
because of market or other economic considerations or abnormal circumstances of
any kind; and
(B) the Company may withdraw the offering of the shares of a Fund (i)
at any time with the consent of the Distributor, or (ii) without such consent
when so required by the provisions of any statute or of any order, rule or
regulation of any governmental body having jurisdiction. It is mutually
understood and agreed that the Distributor does not undertake to sell any
specific amount of the
<PAGE> 2
shares of a Fund. The Company shall have the right to
specify minimum amounts for initial and subsequent orders for the purchase of
Fund shares.
FOURTH:
(A) The public offering price of shares of a Fund (the "offering
price") shall be the net asset value per share plus a sales charge, if any.
Net asset value per share shall be determined in accordance with the provisions
of the then current prospectus and statement of additional information of the
Funds. The sales charge shall be established by the Distributor, may reflect
scheduled variations in, or the elimination of, sales charges on sales of a
Fund's shares either generally to the public, or to any specified class of
investors or in connection with any specified class of transactions, in
accordance with Rule 22d-1 and as set forth in the then current prospectus and
statement of additional information of the Funds. The Distributor shall apply
any scheduled variation in, or elimination of, the selling commission uniformly
to all offerees in the class specified.
(B) The Funds shall allow directly to investment dealers and other
financial institutions through whom shares of each Fund are sold such portion
of the sales charge as may be payable to them and specified by the Distributor
up to but not exceeding the amount of the total sales charge. The difference
between any commissions so payable and the total sales charges included in the
offering price shall be paid to the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by a Fund to the Distributor or by a Fund or the Distributor to
investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
on behalf of each Fund pursuant to Rule 12b-1 under the 1940 Act.
FIFTH: The Distributor shall act as agent of the Company on behalf of
each Fund in connection with the sale and repurchase of shares of a Fund.
Except with respect to such sales and repurchases, the Distributor shall act as
principal in all matters relating to the promotion of the sale of shares of the
Funds and shall enter into all of its own engagements, agreements and contracts
as principal on its own account. The Distributor shall enter into agreements
with investment dealers and financial institutions selected by the Distributor,
authorizing such investment dealers and financial institutions to offer and
sell shares of each Fund to the public upon the terms and conditions set forth
therein, which shall not be inconsistent with the provisions of this Agreement.
Each agreement shall provide that the investment dealer and financial
institution shall act as a principal, and not as an agent, of the Company on
behalf of the Funds.
SIXTH: The Funds shall bear:
(A) the expenses of qualification of shares of a Fund for sale in
connection with such public offerings in such states as shall be selected by
the Distributor, and of continuing the qualification therein until the
Distributor notifies the Company that it does not wish such qualification
continued; and
(B) all legal expenses in connection with the foregoing.
<PAGE> 3
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the Funds' prospectuses and statements of additional
information (including supplements thereto) relating to public offerings made
by the Distributor pursuant to this Agreement (which shall not include those
prospectuses and statements of additional information, and supplements thereto,
to be distributed to shareholders of each Fund), and any other promotional or
sales literature used by the Distributor or furnished by the Distributor to
dealers in connection with such public offerings, and expenses of advertising
in connection with such public offerings.
(B) The Distributor may be reimbursed for all or a portion of such
expenses, or may receive reasonable compensation for distribution related
services, to the extent permitted by a distribution plan adopted by the Company
on behalf of the Funds pursuant to Rule 12b-1 under the 1940 Act.
EIGHTH: The Distributor will accept orders for the purchase of shares
of each Fund only to the extent of purchase orders actually received and not in
excess of such orders, and it will not avail itself of any opportunity of
making a profit by expediting or withholding orders. It is mutually understood
and agreed that the Company may reject purchase orders where, in the judgment
of the Company, such rejection is in the best interest of the Company.
NINTH: The Company, on behalf of the Funds, and the Distributor shall
each comply with all applicable provisions of the 1940 Act, the Securities Act
of 1933 and of all other federal and state laws, rules and regulations
governing the issuance and sale of shares of each Fund.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company on behalf of the Funds agrees to indemnify the
Distributor against any and all claims, demands, liabilities and expenses which
the Distributor may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Funds, or any omission to state a material fact therein, the omission of which
makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company or Fund in connection therewith by or on behalf of the
Distributor. The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds may incur arising out of or based upon any act or deed of the
Distributor or its sales representatives which has not been authorized by the
Company or the Funds in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the Funds
against any and all claims, demands, liabilities and expenses which the Company
or the Funds may incur under the Securities Act of 1933, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Funds, or any omission to state a material fact therein if such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company or the Funds in connection therewith by or on behalf
of the Distributor.
<PAGE> 4
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the Funds' transfer agent(s),
or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Articles of Incorporation, or to
any applicable statute or regulation.
TWELFTH: This Agreement shall become effective as of the date hereof,
shall continue in force and effect until February 28, 1999, and shall continue
in force and effect from year to year thereafter, provided, that such
continuance is specifically approved at least annually (a)(i) by the Board of
Directors of the Company or (ii) by the vote of a majority of the Funds'
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act),
and (b) by vote of a majority of the Company's directors who are not parties to
this Agreement or "interested persons" (as defined in Section 2(a)(19) of the
1940 Act) of any party to this Agreement cast in person at a meeting called for
such purpose.
THIRTEENTH:
(A) This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Directors of the Company or by vote of
a majority of the outstanding voting securities of each Fund, or by the
Distributor, on sixty (60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be Eleven Greenway Plaza, Suite 1919,
Houston, Texas 77046.
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM TAX-EXEMPT FUNDS, INC.
By: /s/ ROBERT H. GRAHAM
------------------------------------
Name: Robert H. Graham
Title: President
Attest:
/s/ DAVID L. KITE
- ----------------------------
Name: DAVID L. KITE
Title: ASSISTANT SECRETARY
A I M DISTRIBUTORS, INC.
By: /s/ MICHAEL J. CEMO
------------------------------------
Name: Michael J. Cemo
Title: President
Attest:
/s/ OFELIA M. MAYO
- ----------------------------
Name: OFELIA M. MAYO
Title: ASSISTANT SECRETARY
<PAGE> 6
APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
AIM Tax-Free Intermediate Shares
<PAGE> 1
EXHIBIT 6(a)(4)
AMENDMENT NO. 1
MASTER DISTRIBUTION AGREEMENT
The Master Distribution Agreement (the "Agreement"), dated February
28, 1997, by and between AIM Tax-Exempt Funds, Inc., a Maryland corporation and
A I M Distributors, Inc., a Delaware Corporation shall hereby be amended as
follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM TAX-EXEMPT FUNDS, INC.
Class A Shares
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
AIM Tax-Free Intermediate Shares"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: , 1997
---------------------------
AIM TAX-EXEMPT FUNDS, INC.
Attest: By:
------------------------- -----------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
AIM DISTRIBUTORS, INC.
Attest: By:
------------------------- -----------------------------
Assistant Secretary Michael J. Cemo
President
(SEAL)
<PAGE> 1
EXHIBIT 6(b)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SELECTED DEALER AGREEMENT
FOR INVESTMENT COMPANIES MANAGED
BY A I M ADVISORS, INC.
TO THE UNDERSIGNED SELECTED DEALER:
Gentlemen:
A I M Distributors, Inc., as the exclusive national distributor of shares of
the common stock (the "Shares") of the registered investment companies listed
on Schedule A attached hereto which may be amended from time to time by us (the
"Funds"), understands that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"), or, if a foreign dealer, that
you agree to abide by all of the rules and regulations of the NASD for purposes
of this Agreement (which you confirm by your signature below). In consideration
of the mutual covenants stated below, you and we hereby agree as follows:
1 Sales of Shares through you will be at the public offering price of such
Shares (the net asset value of the Shares plus any sales charge applicable
to such Shares), as determined in accordance with the then effective
prospectus used in connection with the offer and sale of Shares
(the "Prospectus"), which public offering price may reflect scheduled
variations in, or the elimination of, the Sales Charge on sales of the
Funds' Shares either generally to the public or in connection with special
purchase plans, as described in the Prospectus. You agree that you will
apply any scheduled variation in, or elimination of, the Sales Charge
uniformly to all offerees in the class specified in the Prospectus.
2 You agree to purchase Shares solely through us and only for the purpose of
covering purchase orders already received from customers or for your own
bona fide investment. You agree not to purchase for any other securities
dealer unless you have an agreement with such other dealer or broker to
handle clearing arrangements and then only in the ordinary course of
business for such purpose and only if such other dealer has executed a
Selected Dealer Agreement with us. You also agree not to withhold any
customer order so as to profit therefrom.
3 The procedures relating to the handling of orders shall be subject to
instructions which we will forward from time to time to all selected
dealers with whom we have entered into a Selected Dealer Agreement. The
minimum initial order shall be specified in the Funds' then current
prospectuses. All purchase orders are subject to receipt of Shares by us
from the Funds concerned and to acceptance of such orders by us. We reserve
the right in our sole descretion to reject any order.
4 With respect to the Funds the Shares of which are indicated on the attached
Schedule as being sold with a Sales Charge (the "Load Funds"), you will be
allowed the concessions from the public offering price provided in the
Load Funds' prospectus. With respect to the Funds, the Shares of which are
indicated on the attached Schedule A as being sold with a contingent
deferred sales charge (the "CDSC Funds"), you will be paid a commission or
consession as disclosed in the CDSC Fund's then current prospectus. With
respect to the Funds whose Shares are indicated on the attached Schedule as
being sold without a Sales Charge or a contingent deferred sales charge
(the "No-Load Funds"), you may charge a reasonable administrative fee. For
the purpose of this Agreement the terms "Sales Charge" and "Dealer
Commission" apply only to the Load Funds and the CDSC Funds. All commissions
and concessions are subject to change without notice by us and will comply
with any changes in regulatory requirements. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purpose
whatsoever unless authorized by the Prospectus or by us in writing.
5 You agree that your transactions in shares of the Funds will be limited to
(a) the purchase of Shares from us for resale to your customers at the
public offering price then in effect or for your own bona fide investment,
(b) exchanges of Shares between Funds, as permitted by the Funds' then
current registration statement (which includes the Prospectus) and in
accordance with procedures as they may be modified by us from time to time,
and (c) transactions involving the redemption of Shares by a Fund or the
repurchase of Shares by us as an accommodation to shareholders. Redemptions
by a Fund and repurchases by us will be effected in the manner and upon the
terms described in the Prospectus. We will, upon your request, assist you
in processing such orders for redemptions or repurchases. To facilitate
prompt payment following a redemption or repurchase of Shares, the owner's
signature shall appear as registered on the Funds' records and, as
described in the Prospectus, it may be required to be guaranteed by a
commercial bank, trust company or a member of a national securities
exchange.
7/97
<PAGE> 2
6 Sales and exchages of Shares may only be made in those states and
jurisdictions where the Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for sale,
and you agree to indemnify us and/or the Funds for any claim, liability,
expense or loss in any way arising out of a sale of Shares in any state or
jurisdiction in which such Shares are not so registered or qualified.
7 We shall accept orders only on the basis of the then current offering
price. You agree to place orders in respect of Shares immediately upon the
receipt of orders from your customers for the same number of shares. Orders
which you receive from your customers shall be deemed to be placed with us
when received by us. Orders which you receive prior to the close of
business, as defined in the Prospectus, and placed with us within the time
frame set forth in the Prospectus shall be priced at the offering price
next computed after they are received by you. We will not accept from you
a conditional order on any basis. All orders shall be subject to
confirmation by us.
8 Your customer will be entitled to a reduction in the Sales Charge on
purchases made under a Letter of Intent or Right of Accumulation described
in the Prospectus. In such case, your Dealer's Concession will be based
upon such reduced Sales Charge; however, in the case of a Letter of Intent
signed by your customer, an adjustment to a higher Dealer's Concesssion
will thereafter be made to reflect actual purchases by your customer if he
should fail to fulfil his Letter of Intent. When placing wire trades, you
agree to advise us of any Letter of Intent signed by your customer or of
any Right of Accumulation available to him of which he has made you aware.
If you fail to so advise us, you will be liable to us for the return of
any commissions plus interest thereon.
9 You and we agree to abide by the Rules of Fair Practice of the NASD and all
other federal and state rules and regulations that are now or may become
applicable to transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or a violation by you of applicable state and federal laws and
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon notice received by you from us. You agree that it
is your responsibility to determine the suitability of any Shares as
investments for your customers, and that AIM Distributors has no
responsibility for such determination.
10 With respect to the Load Funds and the CDSC Funds, and unless otherwise
agreed, settlement shall be made at the offices of the Funds' transfer
agent within three (3) business days after our acceptance of the order. With
respect to the No-Load Funds, settlement will be made only upon receipt by
the Fund of payment in the form of federal funds. If payment is not so
received or made within ten (10) business days of our acceptance of the
order, we reserve the right to cancel the sale or, at our option, to sell
the Shares to the Funds at the then prevailing net asset value. In this
event, or in the event that you cancel the trade for any reason, you agree
to be responsible for any loss resulting to the Funds or to us from your
failure to make payments as aforesaid. You shall not be entitled to any
gains generated thereby.
11 If any Shares of any of the Load Funds sold to you under the terms of this
Agreement are redeemed by the Fund or repurchased for the account of the
Funds or are tendered to the Funds for redemption or repurchase within
seven (7) business days after the date of our confirmation to you of your
original purchase order therefore, you agree to pay forthwith to us the
full amount of the concession allowed to you on the original sale and we
agree to pay such amount to the Fund when received by us. We also agree to
pay to the Fund the amount of our share of the Sales Charge on the original
sale of such Shares.
12 Any order placed by you for the repurchase of Shares of a Fund is subject
to the timely receipt by the Fund's transfer agent of all required
documents in good order. If such documents are not received within a
reasonable time after the order is placed, the order is subject to
cancellation, in which case you agree to be responsible for any loss
resulting to the Fund or to us from such cancellation.
13 We reserve the right in our discretion without notice to you to suspend
sales or withdraw any offering of Shares entirely, to change the offering
prices as provided in the Prospecutus or, upon notice to you, to amend or
cancel this Agreement. You agree that any order to purchase Shares of the
Funds placed by you after notice of any amendment to this Agreement has
been sent to you shall constitute your agreement to any such amendment.
14 In every transaction, we will act as agent for the Fund and you will act as
principal for your own account. You have no authority whatsoever to act as
our agent or as agent for the Funds, any other Selected Dealer or the
Funds' transfer agent and nothing in this Agreement shall serve to appoint
you as an agent of any of the foregoing in connection with transactions
with your customers or otherwise.
15 No person is authorized to make any representations concerning the Funds or
their Shares except those contained in the Prospectus and any such
information as may be released by us as information supplemental to the
Prospectus. If you should make such unauthorized representaion, you agree
to indemnify the Funds and us from and against any and all claims,
liability, expense or loss in any way arising out of or in any way
connected with such representation.
7/97
<PAGE> 3
16 We will supply you with copies of the Prospectuses and Statements of
Additional Information of the Funds (including any amendments thereto) in
reasonable quantities upon request. You will provide all customers with a
Prospectus prior to or at the time such customer purchases Shares. You will
provide any customer who so requests a copy of the Statement of Additional
Information on file with the U.S. Securities and Exchange Commission.
17 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
18 No advertising or sales literature, as such terms are defined by the NASD,
of any kind whatsoever will be used by you with respect to the Funds or us
unless first provided to you by us or unless you have obtained our prior
written approval.
19 All expenses incurred in connection with your activities under this
Agreement shall be borne by you.
20 This Agreement shall not be assignable by you. This Agreement shall be
constructed in accordance with the laws of the State of Texas.
21 Any notice to you shall be duly given if mailed or telegraphed to you at
your address as registered from time to time with the NASD.
22 This Agreement constitutes the entire agreement between the undersigned and
supersedes all prior oral or written agreements between the parties hereto.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned accepts your invitation to become a Selected Dealer and agrees
to abide by the foregoing terms and conditions. The undersigned acknowledges
receipt of prospectuses for use in connection with offers and sales of the
Funds.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 4
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
SELECTED DEALER AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
7/97
<PAGE> 5
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Fund, AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Shares.
**For all Funds sold with CDSC (includes Class B and Class C shares) except for
AIM Constellation Fund, which offers only Class C shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 1
EXHIBIT 6(c)
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
BANK ACTING AS AGENT
FOR ITS CUSTOMERS
Agreement Relating to Shares
of AIM Family of Mutual Funds
(Confirmation and Prospectus to be sent by A I M Distributors,
Inc. to Customer)
A I M Distributors, Inc. is the exclusive national distributor of the shares of
the registered investment companies listed on Schedule A hereto which may be
amended from time to time by us (the "Funds"). As exclusive agent for the
Funds, we are offering to make available shares of common stock or of
beneficial interest, as the case may be, of the Funds (the "Shares") for
purchase by your customers on the following terms:
1 In all sales of Shares you shall act as agent for your customers, and in no
transaction shall you have any authority to act as agent for any Fund or
for us.
2 The customers in question are, for all purposes, your customers and not
customers of A I M Distributors, Inc. In receiving orders from your
customers who purchase Shares, A I M Distributors, Inc. is not soliciting
such customers and, therefore, has no responsibility for determining
whether Shares are suitable investments for such customers.
3 It is hereby understood that in all cases in which you place orders with us
for the purchase of Shares (a) you are acting as agent for the customer;
(b) the transactions are without recourse against you by the customer; (c)
as between you and the customer, the customer will have full beneficial
ownership of the securities; (d) each such transaction is initiated solely
upon the order of the customer; and (e) each such transaction is for the
account of the customer and not for your account.
4 Orders received from you will be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts (defined
below) provided in such Prospectus. Following receipt from you of any order
to purchase Shares for the account of a customer, we shall confirm such
order to you in writing. We shall be responsible for sending your customer
a written confirmation of the order with a copy of the appropriate Fund's
current Prospectus. We shall send you a copy of such confirmation.
Additional instructions may be forwarded to you from time to time. All
orders are subject to acceptance or rejection by us in our sole discretion.
5 Members of the general public, including your customers, may purchase
Shares only at the public offering price determined in the manner described
in the current Prospectus of the appropriate Fund. With respect to the
Funds, the Shares of which are indicated on the attached Schedule A as
being sold with a sales charge (i.e. the "Load Funds"), you will be allowed
to retain a commission or concession from the public offering price
provided in such Load Funds' current Prospectus. With respect to the Funds,
the Shares of which are indicated on the attached Schedule A as being sold
with a contingent deferred sales charge (the "CDSC Funds"), you will be
paid a commission or concession as disclosed in the CDSC Fund's then
current prospectus. With respect to the Funds whose Shares are indicated on
the attached Schedule as being sold without a sales charge or a contingent
deferred sales charge, (i.e. the "No-Load Funds"), you will not be allowed
to retain any commission or concession. All commissions or concessions set
forth in any of the Load Funds' or CDSC Funds' Prospectus are subject to
change without notice by us and will comply with any changes in regulatory
requirements.
6 The tables of sales charges and discounts set forth in the current
Prospectus of each Fund are applicable to all purchases made at any one
time by any "purchaser", as defined in the current Prospectus. For this
purpose, a purchaser may aggregate concurrent purchases of securities of
any of the Funds.
7 Reduced sales charges may also be available as a result of quantity
discounts, rights of accumulation or letters of intent. Further information
as to such reduced sales charges, if any, is set forth in the appropriate
Fund Prospectus. In such case, your discount will be based upon such
reduced sales charge; however, in the case of a letter of intent signed by
your customer, an adjustment to a higher discount will thereafter be made
to reflect actual purchases by your customer if he should fail to fulfill
his letter of intent. You agree to advise us promptly as to the amounts of
any sales made by you to your customers qualifying for reduced sales
charges. If you fail to so advise us of any letter of intent signed by your
customer or of any right of accumulation available to him of which he has
made you aware, you will be liable to us for the return of any discount
plus interest thereon.
8 By accepting this Agreement you agree:
a. that you will purchase Shares only from us;
b. that you will purchase Shares from us only to cover purchase orders
already received from your customers; and
c. that you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholdings.
9 We will not accept from you a conditional order for Shares on any basis.
10 Payment for Shares ordered from us shall be in the form of a wire transfer
or a cashiers check mailed to us. Payment shall be made within three (3)
business days after our acceptance of the order placed on behalf of your
customer. Payment shall be equal to the public offering price less the
discount retained by you hereunder.
7/97
<PAGE> 2
11 If payment is not received within ten (10) business days of our acceptance
of the order, we reserve the right to cancel the sale or, at our option, to
sell Shares to the Fund at the then prevailing net asset value. In this
event you agree to be responsible for any loss resulting to the Fund from
the failure to make payment as aforesaid.
12 Shares sold hereunder shall be available in book-entry form on the books of
the Funds' Transfer Agent unless other instructions have been given.
13 No person is authorized to make any representations concerning Shares of
any Fund except those contained in the applicable current Prospectus and
printed information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
make Shares available to your customers except under circumstances that
will result in compliance with the applicable Federal and State Securities
and Banking Laws and that you will not furnish to any person any
information contained in the then current Prospectus or cause any
advertisement to be published in any newspaper or posted in any public
place without our consent and the consent of the appropriate Fund.
14 Sales and exchanges of Shares may only be made in those states and
jurisdictions where Shares are registered or qualified for sale to the
public. We agree to advise you currently of the identity of those states
and jurisdictions in which the Shares are registered or qualified for
sales, and you agree to indemnify us and/or the Funds for any claim,
liability, expense or loss in any way arising out of a sale of Shares in
any state or jurisdiction not identified by us as a state or jurisdiction
in which such Shares are so registered or qualified. We agree to indemnify
you for any claim, liability, expense or loss in any way arising out of a
sale of shares in any state or jurisdiction identified by us as a state or
jurisdiction in which shares are so registered or qualified.
15 You shall be solely responsible for the accuracy, timeliness and
completeness of any orders transmitted by you on behalf of your customers
by wire or telephone for purchases, exchanges or redemptions, and shall
indemnify us against any claims by your customers as a result of your
failure to properly transmit their instructions.
16 All sales will be made subject to our receipt of Shares from the
appropriate Fund. We reserve the right, in our discretion, without notice,
to modify, suspend or withdraw entirely the offering of any Shares and,
upon notice, to change the sales charge or discount or to modify, cancel or
change the terms of this Agreement. You agree that any order to purchase
Shares of the Funds placed by you after any notice of amendment to this
Agreement has been sent to you shall constitute your agreement to any such
agreement.
17 The names of your customers shall remain your sole property and shall not
be used by us for any purpose except for servicing and information mailings
in the normal course of business to Fund Shareholders.
18 Your acceptance of this Agreement constitutes a representation that you are
a "Bank" as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and are duly authorized to engage in the transactions to
be performed hereunder.
All communications to us should be sent to A I M Distributors, Inc., Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046. Any notice to you shall
be duly given if mailed or telegraphed to you at the address specified by
you below or to such other address as you shall have designated in writing
to us. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By: X /s/ MICHAEL J. CEMO
------------------ ---------------------------------------
The undersigned agrees to abide by the foregoing terms and conditions.
Date: By: X
------------------ --------------------------------------
Signature
--------------------------------------
Print Name Title
--------------------------------------
Dealer's Name
--------------------------------------
Address
--------------------------------------
City State Zip
Please sign both copies and return one copy of each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
[AIM LOGO APPEARS HERE]
A I M DISTRIBUTORS, INC.
SCHEDULE "A" TO
BANK SELLING GROUP AGREEMENT
<TABLE>
<CAPTION>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Cash Management Fund No No
AIM Advisor Flex Fund Yes Yes
AIM Advisor Income Fund Yes Yes
AIM Advisor International Value Fund Yes Yes
AIM Advisor Large Cap Value Fund Yes Yes
AIM Advisor MultiFlex Fund Yes Yes
AIM Advisor Real Estate Fund Yes Yes
AIM Aggressive Growth Fund Yes No
AIM Balanced Fund Yes Yes
AIM Blue Chip Fund Yes Yes
AIM Capital Development Fund Yes Yes
AIM Charter Fund Yes Yes
AIM Constellation Fund Yes Yes
AIM Global Aggressive Growth Fund Yes Yes
AIM Global Growth Fund Yes Yes
AIM Global Income Fund Yes Yes
AIM Global Utilities Fund Yes Yes
AIM Growth Fund Yes Yes
AIM High Yield Fund Yes Yes
AIM Income Fund Yes Yes
AIM Intermediate Government Fund Yes Yes
AIM International Equity Fund Yes Yes
AIM Limited Maturity Treasury Shares Yes No
AIM Money Market Fund Yes Yes
AIM Cash Reserve Shares No No
AIM Municipal Bond Fund Yes Yes
AIM Tax-Exempt Bond Fund of Connecticut Yes No
AIM Tax-Exempt Cash Fund No No
AIM Tax-Free Intermediate Shares Yes No
</TABLE>
7/97
<PAGE> 4
<TABLE>
Shares Sold Shares Sold
Fund With Sales Charges* With CDSC**
- --------------------------------------------------------------------------------
<S> <C> <C>
AIM Value Fund Yes Yes
AIM Weingarten Fund Yes Yes
</TABLE>
A I M Distributors may from time to time make payments of finders fees
or sponsor other incentive programs as described in the applicable fund
prospectus and statement of additional information, which are incorporated
herein by reference as they may be amended from time to time.
*Trades at $1 million and over breakpoint automatically subject to CDSC with
exception of AIM Advisor Cash Management Fund, AIM Cash Reserve Shares, AIM
Limited Maturity Treasury Shares, AIM Tax-Exempt Cash Fund and AIM Tax-Free
Intermediate Shares.
**For all Funds sold with CDSC (includes Class B and Class C shares) except for
AIM Constellation Fund, which offers only Class C shares.
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 1
EXHIBIT 9(a)(7)
AMENDMENT NUMBER 3 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of February 1, 1997 is made to the Remote
Access and Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on the attached
Exhibit 1 hereof, (the "Fund") and The Shareholder Services Group, Inc., now
known as First Data Investor Services Group, Inc. ("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree that as of the date first referenced above, the
Agreement shall be amended as follows:
1. All references to "THE SHAREHOLDER SERVICES GROUP, INC." are hereby
deleted and replaced with "FIRST DATA INVESTOR SERVICES GROUP, INC." and all
references to "TSSG" are hereby deleted and replaced with "FDISG".
2. Delete the second sentence from Section 3(c) and replace with the
following:
"The Fund will pay to FDISG the amount so billed by Federal Funds Wire
within fifteen (15) business days after the Fund's receipt of the
invoice."
3. Section 4(b) of the Agreement is hereby deleted in its entirety and
replaced with the following new Section 4(b):
"FDISG agrees to provide to the Fund at its facilities located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046, 12 Greenway Plaza,
Houston, Texas 77046, 301 Congress Street, Suite 1700, Austin, Texas
78701 and 12503 East Euclid Drive, Suite 250, Englewood, CO 80111 or
at such other locations as may be mutually agreed upon in writing by
FDISG and the Fund (the "Fund Facility") remote access to the use of
information processing capabilities of the FDISG System as it may be
modified from time to time by FDISG."
4. Section 12 of the Agreement is hereby amended by adding the following
new Sections 12(c), through 12(i):
"(c) FDISG shall retain title to and ownership of the FDISG System,
including any and all data bases, computer programs, screen
formats, report formats, interactive design techniques,
derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents,
copyrights, trade secrets, and
<PAGE> 2
other related legal rights utilized in connection with the
services provided by FDISG to the Fund hereunder other than
shareholder account and transaction information which shall
remain the exclusive property of the Fund.
(d) FDISG hereby grants to the Fund and the Fund accepts a limited
license to the FDISG System for the sole and limited purpose
of having FDISG provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or
interpreted otherwise and subject to Section 15 such license
shall immediately terminate with the termination of this
Agreement.
(e) The transmission of account inquiry and transaction
information, including but not limited to maintenances,
exchanges, purchases and redemptions, shall be limited to
direct entry to the FDISG System by means of on-line mainframe
terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of
information to the FDISG System is strictly prohibited without
the prior written consent of FDISG.
(f) FDISG warrants that the FDISG System shall include, at no
additional cost to the Fund, design and performance
capabilities so that prior to, during, and after the calendar
year 2000, the FDISG System will not malfunction, produce
invalid or incorrect results, or abnormally cease to function
due to the year 2000 date change. In connection with the
foregoing, FDISG agrees to provide the Fund with periodic
quarterly updates with respect to FDISG compliance with this
provision.
(g) Other than CPU Authorization Passwords, FDISG represents and
warrants to the Fund the software products provided by FDISG
hereunder (the "Products") do not contain any "back door" or
concealed access devices, any block or protection feature
which prevents the Fund from making additional copies of such
Products as permitted by this Agreement or any "self-help"
code, "Unauthorized Code", "software locks" or any other
similar devices which, upon the occurrence of a certain date
or event, the passage of a certain amount of time, or taking
of any action (or failure to take action) by or on behalf of
FDISG, will cause such Products or any software or system with
such Products are used to be destroyed, erased, damaged, or
otherwise made inoperable. "Unauthorized Code" shall mean any
virus, Trojan horse, worm, or other software routines designed
to permit unauthorized access: to disable, or otherwise harm
software, hardware, or data; or to perform any other such
actions.
(h) Provided the Fund gives FDISG reasonable written notice,
reasonable assistance, including assistance from the Fund's
employees, agents, affiliates and to the extent possible
independent contractors (collectively, "FUND'S AGENTS"), and
sole authority to defend or settle the action, then FDISG
shall do the following ("INFRINGEMENT INDEMNIFICATION"): (a)
defend or settle, at its expense, any action brought against
the Fund or the Fund's Agents to the extent the action is
based on a claim that the Fund's use of the FDISG System
infringes a duly issued United
<PAGE> 3
States' patent or copyright or violates a third party's
proprietary trade secrets or other similar intellectual
property rights ("INFRINGEMENT"); and (b) pay damages and
costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no
Infringement Indemnification obligation if the alleged
Infringement is based upon the Fund's use of the FDISG System
with equipment or software not furnished or approved by FDISG
or if such claim arises from FDISG's compliance with the Fund's
designs, or from the Fund's modifications of the Software.
The Infringement Indemnification states FDISG's entire
liability for Infringement and shall be the Fund's sole and
exclusive remedy for such claims.
(i) Within sixty (60) days after the execution of this Amendment,
FDISG and the Fund shall enter into an escrow agreement
relating to the source code for (i) the FDISG proprietary
software used in connection with the FDISG System (as defined
in Section 1 of the Agreement: (ii) the "Software" (as that
term is defined in Schedule G), including the Third Party
Software set forth in Sections 2.1.1 and 2.1.2 of Exhibit 1 of
Schedule G; and (iii) the "FDISG Software" as that term is
defined in Schedule H (collectively, the "Source Code")
substantially in the form attached as Exhibit 2 of this
Amendment Number 3 ("Exhibit 2"). Promptly after signing the
escrow agreement, FDISG shall forward the agreement to the
escrow agent with a copy of the Source Code to be deposited
into escrow. FDISG agrees to update the Source Code held by
the escrow agent on a quarterly basis. The Fund shall be
responsible and pay for all fees of the escrow agent. The
Source Code may be released to the Fund only if (i) FDISG
ceases to do business, makes an assignment for the benefit of
creditors, becomes insolvent (as revealed by its books and
records or otherwise), is generally unable to pay its debts as
such debts become due, or commences, or has commenced against
it a case under any chapter of state or federal bankruptcy
laws; and FDISG fails to cure any such event within sixty (60)
days after receiving notice from the Fund; and (ii) the Fund
has paid all amounts due to FDISG under this Agreement. Upon
receipt of the Source Code from the escrow agent, the Fund
shall a have license to use the Software solely as set forth
herein for the remaining current term of the Agreement subject
to Section 15, which use shall be expanded to include the
right to modify the software solely in connection with support,
maintenance and operation of the software and not for any
other purpose or person."
5. Sections 14(a) and (b) of the Agreement are hereby deleted from the
Agreement and replaced with the following new Sections 14(a) and (b):
(a) This Agreement which became effective as of December 23, 1994
is hereby extended effective February 1, 1997 and shall
continue through January 31, 2000 (the "Initial Term"). Upon
the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or FDISG provides
written notice to the other of its intent not to
<PAGE> 4
renew. Such notice must be received not less than one-hundred
and eighty (180) days prior to the expiration of the Initial
Term or the then current Renewal Term.
(b) Notwithstanding the foregoing Section 14(a), in the event the
Fund provides notice of its intent to terminate as set forth in
Section 14(a), the Fund may extend the term of the Agreement
for up to an additional one-hundred and eighty (180) days (the
"Extension Period") by providing FDISG with written notice of
its intent to do so. Such notice must be received no later
than one-hundred and eighty (180) days prior to the expiration
of the Initial Term. During the Extension Period, the Fund may
terminate this Agreement at any time on thirty (30) days
written notice.
6. Section 15 is hereby amended by adding the following sentence to the
end of the paragraph:
"FDISG agrees to provide reasonable, supervised system access until
the Fund's conversion to another provider is complete".
7. Section 23(a) is hereby amended by deleting the information regarding
notices and inserting the following
To: The AIM Family of Funds
c/o A I M Fund Services, Inc.
Eleven Greenway Plaza, Suite 100
Houston, Texas 77046
Attention: John Caldwell, President
with copy to:
Fund Legal Counsel at same address
Attention: Carol F. Relihan, Senior Vice President &
General Counsel
To: First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 02109
Attention: President
with copy to : General Counsel (same address)
8. Section 23 is hereby amended by adding the following new sub-section
(k):
"(k) Notwithstanding the indemnity provided by the Fund in Section
8(g), FDISG agrees to use commercially reasonable efforts to
maintain a Disaster Recovery Plan, at no cost to the Fund,
designed to minimize the impact of any unforeseen business
interruption or outage that renders the FDISG System or FDISG
Facility inoperable, a summary of which is attached hereto as
Schedule I."
<PAGE> 5
9. Schedule C is hereby deleted in its entirety and replaced with the
attached revised Schedule C.
10. Exhibit 1 and Exhibit 2 of Schedule D are hereby deleted in their
entirety.
11. Schedule F is hereby deleted in its entirety and replaced with the
attached revised Schedule F.
12. Addendum Number 2 to the Agreement is hereby deleted in its entirety
and the new revised Schedule D - Out of Pocket Expenses as referenced in
Section 3(b) is hereby added to the Agreement.
13. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary IMPRESS Plus software and system in
accordance with the terms of and as more fully described in IMPRESS Plus
Software and Support Terms annexed hereto as Schedule G and incorporated
herein.
14. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary Accounting Control Environment +
("ACE +") software in accordance with the terms of and as more fully described
in the ACE + Software and Support Terms annexed hereto as Schedule H and
incorporated herein.
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant or other agent of either
party is authorized to make any representation, warranty, or other promises not
expressly contained herein with respect to the subject matter hereof.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 attached hereto as may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
-------------------------------------
Title: President
----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ GERALD G. KOKOS
-------------------------------------
Title: Executive Vice President
----------------------------------
<PAGE> 7
EXHIBIT 1
LIST OF FUNDS
<TABLE>
<S> <C>
AIM EQUITY FUNDS, INC.
Portfolios: Classes:
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
AIM FUNDS GROUP
Portfolios: Classes:
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B, and
AIM Cash Reserve Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes:
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
AIM INVESTMENT SECURITIES FUNDS
Portfolios: Classes:
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes:
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 8
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number __________
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this ______ day of _____ 1997, by and among
Data Securities International, Inc. ("DSI"), a Delaware corporation, First Data
Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 9
Agreement, DSI shall request the initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
2
<PAGE> 10
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of
3
<PAGE> 11
one or more of its officers, selected by DSI, whose identity shall be
available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
4
<PAGE> 12
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction means an officer of Depositor
warrants that a release condition has not occurred or has been cured.
DSI shall send a copy of the instruction by certified mail or
commercial express mail service to Preferred Registrant. DSI shall
notify both Depositor and Preferred Registrant that there is a dispute
to be resolved pursuant to Section 25. Upon receipt of Contrary
Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to
Section 25, order by a court of competent jurisdiction, or termination
by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit,
5
<PAGE> 13
to the Preferred Registrant filing for release following receipt of
any fees due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
6
<PAGE> 14
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not
7
<PAGE> 15
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement. For any
service not listed on the Fee and Services Schedule, DSI shall provide
a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
8
<PAGE> 16
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By: FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name:
------------------------------- By:
Title: ---------------------------------
------------------------------ Name:
-------------------------------
Title:
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
</TABLE>
<PAGE> 17
SCHEDULE A
LIST OF FUNDS
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
</TABLE>
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 18
EXHIBIT A
DESIGNATED CONTACT
Account Number: __________
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
[Company Name/Address] ------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
Invoice Contact:
- ---------------------------------------- --------------------------------
Designated Contact:
---------------------
Telephone:
------------------------------
Facsimile:
------------------------------
State of Incorporation:
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO:
-----------------------------------------------
First Data Investor Services Group, Inc.
4400 Computer Drive -----------------------------------------------
Westborough, MA 01581
-----------------------------------------------
-----------------------------------------------
Designated Contact: Invoice Contact:
--------------------- -------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 19
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number:
--------------------------------------------------------
Depositor Company Name:
--------------------------------------------------------
DEPOSIT TYPE:
Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS:
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS:
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler:
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: Version:
----------------- ------------------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By: By:
--------------------------------------- ---------------------------------------
Print Name: Print Name:
------------------------------- -------------------------------
Date: Date of Acceptance:
------------------------------------- -----------------------
ISE: EXHIBIT B#:
--------- ---------------
</TABLE>
<PAGE> 20
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following fees:
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
January 31, 2000, the Fund shall pay FDISG an annualized fee for shareholder
accounts open during any monthly period ("Open Account Fee") as follows:
<TABLE>
<CAPTION>
Account Volume Fee
<S> <C>
1-1.5 million $3.60/shareholder account
Exceeding 1.5 million $2.25/shareholder account
</TABLE>
The Fund also shall pay FDISG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and Closed Account Fees hereafter collectively referred to as
"Shareholder Account Fees"). The Shareholder Account Fees shall be billed by
FDISG monthly in arrears on a prorated basis of 1/12 of the annualized fee for
all such accounts.
FDISG will provide a credit to the Shareholder Account Fees of one million
dollars in the years 1998 and 1999. The credit shall be applied as a reduction
of $83,333.33 on each monthly fee bill in 1998 and 1999.
In addition, on January 1 of the years 1998, 1999, and 2000 the Shareholder
Account fees may be increased by FDISG in an amount equal to the lesser of (i)
the cumulative percentage increase in the Consumer Price Index for all Urban
Consumers (CPI-U) U.S. City Average, All Items (unadjusted - (1982-84 + 100),
published by the U.S. Department of Labor, or (ii) seven percent (7%) of the
Shareholder Account Fees charged by FDISG to the Fund for the preceding twelve
(12) month period.
In return for the Shareholder Account Fees, FDISG agrees to provide the
following to the Fund:
o Remote Access to FDISG's FSR System
o License for 512 IMPRESS Plus software installations valued at 2.5
million dollars. Includes six weeks of technical and user training
(train-the-trainer).
o License for up to 10 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H
o Dedicated Programming Support equivalent to I Systems Manager, 4
Programmers, and 2 Business Systems Analysts
o Implementation of a Separate FSR processing cycle by September 15,
1997, as more fully described in the attached Exhibit 3 of this
Schedule C.
o Implementation of the core TA system functionality identified in
Exhibit 1 of this Schedule C.
<PAGE> 21
o Implementation of IWT functionality as identified in Exhibit 2 of this
Schedule C
o Continued use of FDISG's Price/Rate Transmission (PRAT) application.
The PRAT Application will accept prices and dividend rates from the
Fund Accounting Department of the Fund electronically and post them to
the FDISG Pricing System. The PRAT application will run interconnected
via Local Area Network hardware and software.
II. DEDICATED PROGRAMMING SUPPORT
FDISG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. FDISG agrees to
use reasonable efforts to make dedicated programming support available for all
projects required by the Fund. The amount of the resources required and the
projects to be worked on shall be determined jointly based upon joint periodic
review of project requirements; however, the Fund will decide the priorities
which will be assigned to each project and will determine what projects the
dedicated resources are to work on. All enhancements, improvements,
modifications or new features added to the FDISG System shall be, and shall
remain, the confidential, exclusive property of, and proprietary to, FDISG. The
parties agree to use best efforts to ensure that all enhancements to FDISG's
System, whether made by the Dedicated Team or otherwise, shall be made in a
manner that will not adversely effect the operational efficiency or
functionality of the FDISG System. Request for software changes may be
initiated by those representatives of the Fund identified in Exhibit 4 of this
Schedule C. The Fund will use its best efforts to notify FDISG in writing of
requests for software changes within 72 hours of an initial verbal request.
FDISG reserves the right to stop work on a request for which written
specifications have not been received.
a. SUPPORT PROVIDED TO THE FUND PERFORMED IN GROUPS OTHER
THAN THE DEDICATED PROGRAMMING TEAM
1. Coding to correct deficiencies in the system, unless such
deficiencies are included in item (II)(b)(9) below in which
event the Fund will be charged for such services. A system
deficiency is defined as a system process which does not
operate according to the design of the computer application or
system specifications. To correct system deficiencies, FDISG
will, at its own expense, expend whatever resources are
necessary to analyze the deficiency and apply an appropriate
remedy, in the form of corrected application code as
expeditiously as possible. An alternate process, in the form
of a functional work around, may be a suitable substitute for
the actual system fix, if the level of effort to develop the
system fix is deemed to be impractical or the elapsed time to
develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be
mutually agreed upon by the parties.
FDISG will evaluate all reported referrals, to validate
deficiency status or reclassify as a system enhancement, based
on the above definition.
2. Simple Maintenance determined to be core processing.
<PAGE> 22
3. FDISG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes;
provided, however, FDISG will make such changes to the extent
that they are technically and commercially practical and are
within the scope of the software functions, capabilities and
database. FDISG agrees to use good faith in determining
whether such changes are technically and commercially
reasonable and agrees to negotiate with the Fund in good faith
to resolve any such issues.
b. EXAMPLES OF ACTIVITY TO BE PROVIDED TO THE FUND WHICH WILL
BE PERFORMED BY THE DEDICATED PROGRAMMING TEAM:
1. Customized form output (i.e., statements, confirmation
statements, commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial
funds being live.
8. Clean-up/Recovery project resulting from Fund error or causes
beyond the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to
code developed and currently maintained by the dedicated
teams.
10. Customization of existing functions specific to the Fund
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. Such
exclusivity would extend for a period of nine (9) months from the date
the enhancement is placed into the production libraries. Software
exclusivity would be waived if the Fund accepts either of the
following conditions:
a) If prior to implementation, FDISG or other FDISG clients agree
to share in the expense of the enhancements.
b) At any time during the 9 months following implementation,
FDISG or other FDISG clients agree to share the expense for
the enhancements.
Access and Capability. The Funds' dedicated programmers will have
access and capability to update any part of the System. However,
depending on the skill set of the programmers, as well as the scope of
the requested enhancement, it may be in the best interest of both the
Fund and FDISG to utilize non-dedicated programmers to address
<PAGE> 23
certain enhancements. In addition, because many programs are shared by
multiple clients, some enhancements may require approval from those
clients. These enhancements should be handled on an item by item
basis.
III. ADDITIONAL FEES
a. If the Fund chooses to use resources in addition to the
Dedicated Programming Team to accomplish work as outlined in
Section II.b, the following rates will apply:
<TABLE>
<CAPTION>
Annual Hourly
------ ------
<S> <C> <C>
Programmer $100,000 $135/hr
Business Systems Analyst $ 90,000 $100/hr
Acceptance Tester $ 85,000 $ 90/hr
</TABLE>
These rates apply to development and customization on all
software covered under this agreement (i.e. core TA system,
IMPRESS Plus, ACE+).
b. IMPRESS Plus Maintenance and Support Fees - The Fund will be
billed a monthly fee of $64,000 (fee based on $1500 per
workstation per year for 512 workstation license). Billing to
commence on the earlier of a) first production usage of
IMPRESS Plus software or b) August 1, 1997. Maintenance and
Support Fees include:
o All third party software maintenance charges from
software licensed in Exhibit 1 of Schedule G
o Full IMPRESS Plus applications support (bug fixes,
application assistance, etc.)
o Remote Dial-in IMPRESS Plus application support (if
needed)
o Subsequent interim and major releases for all
licensed IMPRESS Plus products
o 7x24 Help Desk Support for IMPRESS Plus applications
o Full support through First Data for third party
applications licensed in Exhibit 1 of Schedule G
o Participation in IMPRESS Plus User Group
c. IMPRESS Plus Installation Fees - Billable to the Fund at
$135/hr. (Estimate for 512 IMPRESS Plus workstations is 1100
hours). Installation includes:
o IMPRESS Plus application installation
o IMPRESS Plus third party software installation
o Network Design Assistance
o Hardware Configuration Assistance
o Workflow analysis
<PAGE> 24
o Project Management
o Post Installation Support
d. On each anniversary date of this Agreement, FDISG may adjust
the hourly and annual rates to reflect salary increases
and/or to maintain competitive rates in attracting qualified
personnel. Such annual increase will not exceed seven percent
(7%).
e. IMPRESS Plus Maintenance and Support and EMPRESS Plus
Installation Fees do not include the following:
o Hardware
o Network and Server Software not listed in Exhibit 1
of Schedule G
o Customization or application integration
o Support for IMPRESS Plus applications customized or
built by the Fund (see Section 3 of Exhibit 3 of
Schedule G)
o Installation, Integration and On-going Support of
hardware, network, and software components not
included in Schedule G
o Travel Expenses for install and support staff for
on-site visits (billed separately per Schedule D)
o Application Source Code
f. IMPRESS Plus Maintenance and Support and IMPRESS Plus
Installation Fees for Separate Test or Training System.
Maintenance and Support Fees - The Fund will be billed a
monthly fee of $2,666.66 (based on $1000 per workstation per
year with a minimum 32 workstation license). Billing to
commence on first production usage of IMPRESS Plus software in
the Training or Test environment. Maintenance and Support
includes items listed in Section III.b above.
Installation Fees - Billable to the Fund at $135/hr. (Estimate
for 32 IMPRESS Plus workstations is 200 hours). Installation
includes items listed in Section III.c above.
<PAGE> 25
g. Fees for IMPRESS Plus workstations in excess of 512:
<TABLE>
<CAPTION>
o Number of workstations ordered One-time License Fee
<S> <C>
32 $1300/workstation
64 $1000/workstation
128 waived
256 waived
</TABLE>
o Maintenance and Support - $1500 per workstation per
year; billable on first production usage of IMPRESS
Plus software; includes items listed in Section III.b
above
o Installation Fees - Billable to the Fund at $135/hr;
includes items listed in Section III.c above
The Fund agrees to pay a minimum of 18 months Maintenance and
Support for each workstation in excess of 512.
<PAGE> 26
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOI SYSTEMMATIC Specs
1 26610 DEFAULT/RECALCULATION PROBLEM Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
*Recalc does not include all
purchases applied to the LOI.*
Dealer comm credit not posted in
recalc.* No adjustment code to
adjust underwriter. * Trades
outside LOI period included in
recalc.* No ability to turn off
systematic recalc.
====================================================================================================================================
====================================================================================================================================
PRODUCE CHECKS ON NT2 ACCOUNTS Specs
2 19164 WITH DIRECT REDEMPTIONS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Checks should be produced for
direct reds on NT2 accounts.
Transactions post to history, yet
no checks are produced. Update
DRDM0750 to allow.
====================================================================================================================================
====================================================================================================================================
3 25276 WIRE ORDER PROCESSING PROBLEM Specs
Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Wire order cancel/replacements
(OPR/OPC) do not update master
controls if not double Qc'd. If not
double Qc'd both trades appear
as new purchase orders.
====================================================================================================================================
====================================================================================================================================
Specs
4 24262 CERTIFICATE REPORT MISSING DATA Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
PFSR135D-R12 does not include
the work of several days in 1996.
Unable to reconcile certificate
issues without adhocs to identify
missing data.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 27
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NSCC REPORT PNSC802D - Specs
INCORRECT COMMISSIONS ON Received
5 26768 SPLIT REPS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
This report overestimates the
commission paid to split reps.
NSCC regulation requires
settlement by this report,
resulting in overpayments.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC REJECT REPORT PNSCSPSD- Specs
R01 - MULTI PAGE REJECT RECEIVED
6 26769 DELETIONS AND TRUNCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC rejects for a dealer that
run for more than one page are
dropping accounts, resulting in
inconsistancies from one page to
the next. Also truncation pro-
blems with Settlement Value,
Commission Amount and Fund Owes
Dealer amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ONLINE EDIT PREVENTING USE OF Specs
7 26772 CDSC EXEMPT OPTION 3. Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Exempt option 3 grosses up
CDSC on SWiPs, ensuring
consistent dollar amount
swips. For funds allowing
CDSC-free SWIPs, edit pre-
venting a shareholder
redeeming an amount
greater than 12% annually
from having a SWIP with a set
dollar amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 28
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOIMNT DELETING Specs
BROKER CLIENT Received
8 23849 NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Systematic completion
of an LOI removes the
Broker Client Number
form the account in
error. Absence of the
BRCN causes problems
for the dealer.
Maintenance journals
are reviewed to
identify these accounts
and re-add the BRCN.
====================================================================================================================================
====================================================================================================================================
NET INDICATOR NOT Specs
CARRYING TO QC SCREEN Received
9 26155 AND NO MISMATCH WARNING
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When entering a wire
order redemption as a
"net" amount trade, the
net indicator is not
carried forward in the
QC process, and does not
provide a mismatch
warning. The trade then
processes as "gross",
the default.
====================================================================================================================================
====================================================================================================================================
ASSIGNMENT OF CLOSED Specs
11 26770 ACCOUNTS ON QA RECORD Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
If a QA record is
manually created and
the master account is
not designated, FSR
assigns the first
account entered. If
this account is
closed, a consolidated
statement will not
print. Results in
additional phone calls
andduplicate statement
requests.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REASSIGNMENT OF MASTER ACCOUNT Specs
12 26771 NUMBER Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When a master account closes
AIM would like the master
account status to be reassigned
systematically to an open account
within the QA cluster. Currently
this is a time consuming manual
process.
====================================================================================================================================
====================================================================================================================================
Specs
13 26611 DIVIDEND CONTROL REPORT PROBLEMS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
The Dividend and Capital Gain
reports do not match the
summary reports.
====================================================================================================================================
====================================================================================================================================
DUPLICATE STATEMENTS BY DBR NOT Specs
14 26612 AVAILABLE Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
AFS would like the ability to
request duplicate statements by
dealer, dealer/branch,
dealer/branch/rep. Current
functionality is by fund/account.
====================================================================================================================================
====================================================================================================================================
PAC'S NOT RUNNING ON CAPITAL Specs
16 26154 DEVELOPMENT ACCOUNTS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts opened via merger
subscription with converted PAC
information, when the PAC is
turned on, do not run. Deletion
and reestablishment of the PAC
data does not resolve the issue.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 30
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUNDSERV REDEMPTION SHOWS
INCORRECT SHARE AMOUNT ON Specs
17 25763 HISTORY Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Several examples of FundSERV
reds where the less than the
full amount of shares appear
redeemed in the line of
history, but the account is
left with a zero balance. The
correct amount is paid through
the NSCC. Control balancing
problems result.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
EXHIBIT 2 OF SCHEDULE C
IWT FUNCTIONALITY
<TABLE>
<CAPTION>
- ---------------------------- ----------------------------
NEW ACCOUNT FINANCIALS
- ---------------------------- ----------------------------
<S> <C>
CASHIERING REPORT
- ---------------------------- ----------------------------
ACCOUNT OPTIONS EXCEPTION WAIVER
- ---------------------------- ----------------------------
AUTO EXCHANGE ENHANCED QC
- ---------------------------- ----------------------------
BANK ADDRESS
- ---------------------------- ----------------------------
AIP FINANCIAL QC
- ---------------------------- ----------------------------
BANK WIRE IMBALANCE REPORT
- ---------------------------- ----------------------------
BENEFICIARY INTERNAL ASSET MOVE
- ---------------------------- ----------------------------
CHECKWRITING EXCHANGE
- ---------------------------- ----------------------------
DIVIDENDS/CAPGAIN TRANSFER
- ---------------------------- ----------------------------
SWP PURCHASES
- ---------------------------- ----------------------------
TELEPHONE RED REDEMPTIONS
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
ACCOUNT SEARCH
- ---------------------------- ----------------------------
ACCOUNT SETUP
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
DEALER
- ---------------------------- ----------------------------
DEALER OFFICE REP LIST
- ---------------------------- ----------------------------
DEALER ALPHA SEARCH
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
FINANCIAL INQUIRY
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
GROUP MASTER ADD
- ---------------------------- ----------------------------
LOI/ROA
- ---------------------------- ----------------------------
ACCOUNT LINK/UNLINK
- ---------------------------- ----------------------------
IWT ACCOUNT LIST
- ---------------------------- ----------------------------
PROCESSED ITEM LIST
- ---------------------------- ----------------------------
</TABLE>
<PAGE> 32
EXHIBIT 3 OF SCHEDULE C
AIM SEPARATE CYCLE OVERVIEW
This project removes AIM from all FSR regions, files, jobstreams, control
cards, etc. and establishes them with their own. It will allow AIM to have more
control over their processing and removes any unexpected complications caused
by dependency on the activities of other management companies.
VOLUME
o 1700+ Jobstreams (JCL, Procs, and Control Cards) to evaluate
o Approximately 70% of these will qualify for processing
(create new AIM and modify FSR)
o * Files to convert
o * GDGs
o * additional Tapes/Cartridges
o * additional DASD required
o * additional Tape Mounts
* These figures are currently being researched.
AFFECTED AREAS/DEPARTMENTS
o AIM Client Services - John Corey
o Atest - Kathy McNeil, Steve Carlson
o BOSS Application - Tom Farnsworth (B)
o Capacity Planning - Ron Larue
o Corporate Actions - Joe Viens
o DASD - John Dryer, Janet Rose (B)
o Database Administration (DBA) for On-line - Steve Powers (B)
o DCX - Linda Messore, Ann Stadtherr
o ESG - Connie Ciulla, Arthur Roy
o Express Delivery - Don Morgan
o FSR - Tom Woislow, Bill VonHandorf, Bill Quigley, Bob Reilly,
Ray Bennison
o NSCC - Carl Damelio
o Print Mail - Helene Grunes (B)
o Tape Operations - Don Chappell
o SCE - Ed Oelerich, Ellen Rhode
o Tax/CBA - Ed Boyle
o Transmissions - Frank Pitzi
Because of the large volume of work to be done and the number of departments
involved we are developing a "phased in" development and implementation
approach. This will cause the least impact to both our client and our own
internal departments. It will require tight project management and dedicated
point people both from AIM and our own departments. Each phase will migrate up
through test, acceptance and production.
<PAGE> 33
PHASE 1 - START-UP FILES
The foundation of this approach is to create six basic files with an AIM
high-level qualifier on a daily basis from the FSR system which can be used by
jobs which read them but not update them (see Phase 2). They would be deleted
at the beginning of the next day's cycle and recreated by the FSR cycle. These
files are:
P03AIM.PRIV.MASTER.DATE
P03AIM.PRIV.BATCH.DATE
P03AIM.PRIV.MASTER.FUND
P03AIM.PRIV.BATCH.FUND
P03AIM.PRIV.TRANS.ACCEPT1
P03AIM.PRIV.TRANS.DIVIDEND
The first four files would be copied from FSR files to AIM files in a new
temporary AIM job which would run daily.
The last two files, trans.accept1 and trans.dividend, currently exist with
different names in FSR. Job PFSR13DD (FSR/FED WIRE) now creates
P03FSR.TEMP.XMITOUT.ACCEPT1.AIM which contains all accept records for AIM. Job
PFSR13ED (FSR/FED WIRE) now creates P03FSR.TEMP.XMITOUT.DIV.AIM which contains
all dividend records for AIM. These files are input to AIM transmission jobs
(PFSRXCGD and PFSRXCLD) and the FSR/POST BACKUPS job (PFSR71HD).
We would rename P03FSR.PRIV.TRANS.ACCEPT1 and P03FSR.PRIV.TRANS.DIVIDEND to
P03AIM.PRIV.TRANS.ACCEPT1 and P03AIM.PRIV.TRANS.DIVIDEND in jobs PFSR13DD and
PFSR13ED. We would rename the transmission jobs to PAIMxxxx modify them
replacing FSR references with AIM, set up the appropriate schedule and move
them up the regions. We would place an override in PFSR71HD which would now
reference the PO3AIM file for backup. Once tested and QA'd by us and AIM we
would replace the FSR transmission jobs with the new AIM jobs.
RESULT OF PHASE 1
We now have three production jobs running in the AIM region and we have set up
the 6 basic AIM files which will be the basis for Phase 2.
<PAGE> 34
PHASE 2 - REPORTS, TRANSMISSIONS, AND AIM-ONLY JOBS
This phase involves converting jobs which do not update any of the master files.
They may read them and create temporary files but updating will wait for phase
3. Phase 2 jobstreams will include mainly report and transmission jobs as well
as any AIM-only jobs. We will be adding new schedule entries (CA-7) for AIM and
modifying existing FSR schedules where needed paying special attention to
triggers, requirements and dependencies. We will add new Express Delivery
entries for AIM reports and delete the AIM entries from the FSR system.
The actual migration of reports and transmission files from the FSR cycle to
the AIM cycle will be on a specific schedule. As we introduce reports to the
AIM cycle they will be available in SAR from both FSR and AIM cycles for a week
to allow AIM to review them. They will then be turned off in SAR for FSR. We
will provide AIM with a report schedule each week to aid this process.
Transmission files will be tested using record counts and selective file
compares. AIM-only jobs will also parallel for a week where feasible.
An example of a Phase 2 job is PFSR143D (FSR/AUTOEX). This job reads the batch
fund file, the batch date file and the trans.accept1 file to produce reports.
All these files are available in the AIM region.
Phase 2 work to be done described in a programmer's template includes (but is
not limited to):
Copy and rename the JCL jobs.
Modify procs and/or control cards if necessary for the test/acpt/prod
regions.
Verify that JCL, procs and control cards follow our current standards.
Create high-level overrides for FSR read-only files.
Change Express Delivery for AIM output and set up the FSR RID entry to
be deleted in n days.
Schedule the new AIM jobs with the same requirements and dependencies
as the FSR jobs but using the appropriate high level qualifier. This
requires tight control on the status of all jobs.
Change the schedules of any jobs which are dependent upon the FSR job
to be dependent upon the new AIM job. Note: this will not be the case
with all AIM jobs.
Move it up the regions testing at appropriate points.
Review the output (First Data and AIM).
After a week inhibit AIM output from FSR jobs from going to SAR. Only
AIM output from AIM jobs will be available in SAR.
The key to the success of this phase is an aggressive implementation schedule
and active participation by AIM representatives in checking and validating the
output.
RESULT OF PHASE 2
We now have report-only jobs (not associated with the actual updating of
files), most of the transmission jobs and all AIM-only jobs which are not
associated with updating files in AIM production. All converted reports and
files have been signed off by AIM. These AIM activities are also being
processed in FSR. We have gone as far as possible without updating files.
<PAGE> 35
PHASE 3 - ANCILLARY FILES AND SYSTEMS
This phase includes updating ancillary files and their associated jobstreams.
Examples of this type may include Bluesky, history, cert or check files, etc.
These files are not mainstream and tend to be localized in how they are
updated. In order to qualify for Phase 3 the Management Company must be the
high order sort key field.
There are two approaches we will use depending upon the main file's on-line
considerations. The first approach involves converting the main file once along
with all associated jobs and the other involves splitting out AIM from FSR at
the start of the cycle, updating it in AIM jobs and merging it back in FSR at
the end. Either approach will involve multiple jobs per master file.
For example, The Bluesky File is only used by 3 jobs: PFSRS07D which creates
the batch file, PFSR190D which updates the file and does an AIM-only extract,
and PFSR194D which does reports. In this case, we would split the FSR Bluesky
File into AIM-only and all other. The FSR Bluesky subsystem would then be
cloned for AIM and the result would be two separate Bluesky subsystems. Online
would access the appropriate Bluesky file.
Other subsystems may be too routed in our core to fully separate out and would
be better served breaking out AIM at the beginning of its cycle, updating in
AIM-only jobs and remerging it at the end of the cycle. Any special jobs used
for splitting out files or merging them after update will have to be backed out
in Phase 4.
All activities described in Phase 2 apply here as well.
RESULT OF PHASE 3
We have now isolated and converted any subsystems not bound to core processing.
Most AIM reports and transmissions are being produced in the AIM region. We are
updating some master files and have done everything possible surrounding the
core without touching it. We are ready for Phase 4.
<PAGE> 36
PHASE 4 - THE CORE
This phase deals with updates to our core master files, our functional
processes, converting large volume files (ShareA and its splits, history, lots,
global, etc.) and includes all jobstreams that have not yet been converted.
Additionally, it includes backing out any special split or merge jobs as well
as special overrides introduced in earlier phases. This will be the largest
phase. On-line will now access all AIM-only files.
Many of the activities done in the previous phases will be performed here as
well. Because so many programs interact with the core modules there is no easy
way to break this activity up. As always we will need our AIM partners to help
in the QA activities for this hefty stage.
It is possible to combine Phases 3 and 4 if it were felt to be desirable.
However, it is our intention to have all peripheral completed before attacking
the core so there will be no unnecessary distractions. Additionally, for
development contention reasons, we would like to turn these modules over as
expeditiously as possible.
All AIM-related activities, programs, control cards, overrides, splits, merges,
etc. will be removed from all FSR jobs.
RESULT OF PHASE 4
All AIM processing is now contained in its own region and runs under its own
schedule. On-line accesses AIM-only files. FSR no longer has any AIM
processing relationship with the exception of any files which are to be merged
from both regions for transmission or system reasons.
<PAGE> 37
EXHIBIT 4 of SCHEDULE C
AUTHORIZED PERSONS REQUESTING SYSTEM MODIFICATIONS
---------------------------------------------------
John Caldwell
President, A I M Fund Services, Inc.
---------------------------------------------------
Joseph Charpentier
Assistant Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Tony D. Green
Senior Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Jean Miller, Director of Applications
Information Technology Services
A I M Advisors, Inc.
<PAGE> 38
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction,
$.10/per same day trade confirmations
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals
and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and related expenses, as pre-approved by the Fund
o System training, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversions between FDISG
systems
o Such other miscellaneous expenses reasonably incurred by FDISG
in performing its duties and responsibilities under this
Agreement
<PAGE> 39
SCHEDULE F
PERFORMANCE STANDARDS
I STANDARDS FOR RESOLUTION OF SYSTEM DEFICIENCIES
"SYSTEM DEFICIENCY" - A system process which does not operate according to the
design of the computer application or system specifications, and is not a
result of any act or failure to act by the Fund.
1. FIRE CALL - A System Deficiency with at least one of the following
characteristics:
1. Potential or real financial exposure in excess of $100,000, or
2. Causes the Fund to be out of compliance with a major
regulatory requirement, or
3. Causes incorrect transaction processing and/or shareholder
confirmations with no reasonable manual workaround available
either at the Fund or in FDISG's systems
FDISG Response: Analysis and resolution within 36 hours or 2 nightly
processing cycles
2. CRITICAL DEFICIENCY - A System Deficiency with at least one of the
following characteristics:
o Potential or real financial exposure estimated from
$25,000-$100,000 or,
o Manual workaround requires substantial manual effort and
carries a high potential for error
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within 5 business days of
initial notification; Problem resolution within an average of 30
business days of initial notification
3. NON-CRITICAL DEFICIENCY - All other System Deficiencies
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within an average of 15
business days of initial notification; Problem resolution and target
dates to be determined on an item-by-item basis jointly by the Fund
and FDISG.
<PAGE> 40
II STANDARDS FOR ON-LINE SYSTEMS AVAILABILITY AND RESPONSE TIME
These standards shall apply on business days of the Funds.
o On-line systems availability between 7:00 a.m. and 7:00 p.m
Central Time ("CT") - 99% of hours available measured monthly.
o Average response time (7:00 a.m. to 7:00 p.m. CT) of 3 seconds
or less, measured end-to-end, in response to the system
employed by A I M Fund Services, Inc. as of September 1, 1994
- 99% measured monthly.
III STANDARDS FOR DELIVERY OF SYSTEM REPORTS
o CRITICAL REPORTS - The following report bundles in queue and
ready to begin transmission no later than 7:00 a.m. CT each
business day - a cumulative of two late bundles permitted per
month:
EFSR047H
EFSR601H
Changes to critical report bundles must be jointly approved by
an FDISG Client Service Officer and an authorized requestor of
the Fund as listed in Exhibit 4 of Schedule C.
o All other nightly report bundles in queue and ready to begin
transmission no later than 7:00 a.m. CT each business day -
95% measured monthly.
<PAGE> 41
IV STANDARDS FOR DELIVERY OF FILE TRANSMISSIONS
o CRITICAL FILES - The following jobs in queue and ready to
begin transmission no later than 4:30 CT each business day of
the Fund - a cumulative of two late files permitted per month:
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCAD Daily Cap Stock File
PFSRXCYD Daily DISC Cap Stock File
PFSRXCTD Daily DISC ACH File
PFSRXCVD Daily DISC NSCC Green Sheets File
</TABLE>
o The following jobs in queue and ready to begin transmission no
later than 4:30 CT each business day of the Fund - 95%
measured monthly
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCGD Daily Acceptance File
PFSRXCKD Daily Dealer File
PFSRXCHD Daily Order File
PFSRXCID Daily ShareA Master File
PFSRXCJD Daily Fund File
PFSRXCMD Daily Lot History File
PFSRXCND Daily Lot Maintenance File
PFSRXCLD Periodic. Dividend Activity
</TABLE>
The standards will not apply on business days with the
following activity: Processing of Year-end Dividend and
Capital Gain Activity, Annual Trustee Fee Payment; Year-end
File Initialization.
V STANDARDS FOR THE FUND
All inbound transmissions (i.e. SIAC, various third parties) and fund prices in
receipt by FDISG by 8:00 p.m. CT
VI RIGHT TO AUDIT
The Fund shall have the option, on an annual basis, to audit the reports used
to measure the standards listed in this Schedule F. Notice of an audit will be
given 14 days in advance, and the audit will not last more than one day.
<PAGE> 42
VII PENALTIES/INCENTIVES
FDISG agrees to achieve the performance levels specified in Schedule F,
Sections II, III, and IV, and semiannually (as of each June 30th and December
31st) to adjust the monthly Account Fee Invoice to reflect any
penalties/incentives as outlined below. Penalties for a given business day will
be applied only if the Standards of the Fund in Section V are achieved.
ON-LINE SYSTEMS AVAILABILITY - MONTHLY
For each one-tenth of 1% under 99%, the monthly Account Fees will be reduced by
the same percentage. The monthly maximum percentage penalty reduction will be
3% of the monthly bill. For each one-tenth of 1% in excess of 99% up to a
maximum of 1%, the monthly Account Fees will be increased by the same
percentage.
ON-LINE SYSTEMS AVAILABILITY - DAILY
If systems availability on any given business day is less than 80%, the monthly
account Fees will be reduced by the percentage of systems availability below
80% for that day times 1/30 of the monthly Account Fees.
REPORT AVAILABILITY - CRITICAL REPORTS
Monthly Account Fees will be reduced by $250.00 for each late instance greater
than the allowable error rate, up to a maximum of $500.00 per day. For each
month within the allowable error rate, monthly Account Fees shall be increased
by $1,000.
FILE TRANSMISSIONS - CRITICAL FILES
Monthly Account Fees will be reduced by $500.00 for each late instance greater
than the allowable error rate with a maximum penalty of $10,000 per month. For
each month within the allowable error rate, monthly Account Fees shall be
increased by $1,000.
The Performance Standards and related penalties set forth in this Schedule F
shall not apply in the event of any occurrence defined in Section 8(g) of the
Agreement.
<PAGE> 43
SCHEDULE G
IMPRESS PLUS SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule G (the "Software"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibits 1 of Schedule G ("EXHIBIT 1")
and Exhibit 1.1 of Schedule G ("EXHIBIT 1.1") (collectively, the "SOFTWARE
EXHIBITS"). Subject to the terms and conditions set forth in this Schedule G,
FDISG grants to the Fund and the Fund accepts from FDISG the non-exclusive,
non-transferable license to use the Software during the term of the Agreement
("LICENSE"). Some software components ("THIRD PARTY SOFTWARE") required to be
used with the Software were developed by a third party ("THIRD PARTY VENDOR").
Third Party Software is licensed to the Fund only pursuant to: (a) shrink
wrapped or other agreements between the Third Party Vendor and the Fund and (b)
the specifically indicated terms and conditions in this Schedule G. The
Software Exhibits shall indicate which Third Party Software the Fund is
required to obtain and license from FDISG and which Third Party Software the
Fund shall be solely responsible to obtain and license. As part of the
Software, FDISG shall provide the Fund with the interfaces set forth in Exhibit
1, between the Software and Third Party Software ("INTERFACES"). FDISG shall
provide the software support services ("SOFTWARE SUPPORT") so designated in
Exhibit 3 of Schedule G ("EXHIBIT 3"). Software Support shall include a
License to error corrections, minor enhancements and interim upgrades to the
Software which are made generally available to FDISG client's of the Software
under Software Support, but shall not include a License to substantial added
functionality, new interfaces, new architecture, new platforms or other major
software development efforts, as determined solely by FDISG.
1.2 Ownership. FDISG or its licensors shall retain tide to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION"). FDISG
reserves all rights in the Proprietary Information not expressly granted to the
Fund in this Schedule G. Upon FDISG's reasonable request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") set forth in Exhibit 2.1 of Schedule G with respect to production
equipment and Exhibit 2.2 of Schedule G with respect to Test/Training equipment
(collectively, ("EXHIBIT 2"). Additional terms and conditions concerning the
Equipment are set forth in Exhibit 2. The Equipment identified in Exhibit 2
represents the minimum equipment configuration required to properly operate the
Software. FDISG disclaims responsibility for the performance of the Software in
the event that the Fund utilizes equipment different than that which is set
forth in Exhibit 2. FDISG and the Fund shall (a) within a reasonable time after
the Effective Date, agree upon the tasks required to implement the Software,
Third Party Software and Equipment ("SYSTEM") and the party responsible and
time frames for each task ("SCOPE OF WORK"); (b) perform their respective
assigned tasks according to the Scope of Work; and (c) if not the party
assigned to a task, cooperate with the responsible party. To the extent the
Scope of Work is incomplete, FDISG shall follow its reasonable and customary
practices. Upon prior notice by FDISG to the Fund, the Fund shall give
reasonable access to the System to FDISG, FDISG's employees. affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) and solely in connection with the Fund's use of the FDISG System and
only at the locations identified in the Agreement. If the Equipment is
inoperative due to malfunction, the license grant shall, upon written notice to
FDISG, be temporarily extended to authorize the Fund to use the Software on any
other equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph. Except as otherwise specifically stated
herein, the Fund shall not modify, re-engineer, decompile or reverse engineer
the Software or otherwise attempt to obtain any source code without FDISG's
prior written consent.
<PAGE> 44
1.5 Software Installation and Acceptance. FDISG shall advise the Fund that
the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
sixty (60) days after Software Installation Date or sixty (60) days after the
Fund's first use of any Software component to process live production data
("SOFTWARE ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
1.7 No-Export. The Software shall not be shipped or used by the Fund
outside the United States. The Fund shall comply with all applicable export and
re-export restrictions and regulations of the U.S. Department of Commerce or
other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule G which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software Warranties and Remedies. For the term of the Agreement, FDISG
warrants ("PERFORMANCE WARRANTY") that the Software shall perform on the
Equipment substantially in accordance with the Documentation and shall enable
the Funds to meet the requirements set forth in Section 240.17a-4 of the
Securities Exchange Act of 1934, except for Directly Obtained Third Party
Software as set forth in Section 2.2 below. The timely correction of errors
and deficiencies in the Software pursuant to Software Support shall be Fund's
sole and exclusive remedy for the Performance Warranty. FDISG warrants ("RIGHTS
WARRANTY") it has the right to license the Software in accordance with the
Agreement. Provided the Fund gives FDISG timely written notice, reasonable
assistance, including assistance from the Fund's employees, agents, independent
contractors and affiliates (collectively, "FUND'S AGENTS"), and sole authority
to defend or settle the action, then FDISG shall do the following
("INFRINGEMENT INDEMNIFICATION"): (a) defend or settle, at its expense, any
action brought against the Fund or the Fund's Agents to the extent the action is
based on a claim that the Software infringes a duly issued United States'
patent or copyright or violates a third party's proprietary trade secrets or
other similar intellectual property rights ("INFRINGEMENT"); and (b) pay
damages and costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Directly Obtained Third Party Software Warranties. All warranties for
the Directly Obtained Third Party Software identified Section 2.2 of Exhibit 1,
if any, are specifically set forth in the applicable agreements supplied by the
Third Party Vendors of such products.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and as
limited by applicable law, the Fund shall indemnify, defend and hold FDISG and
FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
<PAGE> 45
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("CONFIDENTIAL INFORMATION"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential Information, the other party may obtain injunctive relief, in
addition to its other remedies, inadequate monetary damages and irreparable
harm being acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System.
<PAGE> 46
EXHIBIT 1 OF SCHEDULE G
SOFTWARE
1. FDISG Software.
1.1 FDISG Software includes the following IMPRESS Plus products which are
further described in Exhibit 1.1 ("Specifications"):
IMPRESS Plus Workflow/Image Release 5.3
IMPRESS Plus Intelligent Workstations (IWT) Release 5.3 for FSR
IMPRESS Plus Customer Service System Release 5.3
1.2 Interfaces. Except as agreed in writing, FDISG shall not be required
to modify the Software or the Interfaces to accommodate changes made by the
Fund's vendor to its portion of the interface. If the Fund's vendor needs
information about the Software, then the vendor must first execute a
nondisclosure agreement in form and content reasonably acceptable to FDISG.
FDISG shall not be liable for any delay or degradation to the Software or
Equipment attributable to the Fund's use of Interfaces.
1.3 Customization. The listed products are licensed for IMPRESS Plus use
and customization only. Use of these tools to develop or customize non-IMPRESS
Plus applications is not permitted without the express written authorization of
FDISG.
2. Third Party Software.
2.1 FDISG Provided Third Party Software. The following Third Party
Software is licensed to the Fund directly by FDISG subject to the terms of the
Agreement:
2.1.1 BancTec Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory BancTec ("BancTec")
terms and conditions set forth in Attachment 1 of this Exhibit 1 of Schedule G
("Attachment 1"), attached and incorporated by reference. To the extent that
the terms of Attachment 1 conflict with or differ from the other terms and
conditions in the Agreement, the terms of Attachment 1 shall prevail with
respect to the following BancTec Software ("BancTec Software"):
Informix Multi-User with 512 maximum users
XDP Storage Manager Multi-User with 512 maximum users
FloWare Multi-User with 512 maximum users
Application Designer Single-User with 512 maximum users
2.1.2 Pegasystems Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory Pegasystems
("Pegasystems") terms and conditions set forth in Attachment 2 of this Exhibit
1 of Schedule G ("Attachment 2"), attached and incorporated by reference. To
the extent that the terms of Attachment 2 conflict with or differ from the
other terms and conditions in the Agreement, the terms of Attachment 2 shall
prevail with respect to the following Pegasystems Software ("Pegasystems
Software"):
Product Name Version Function
PegaSHARES RES 6.2 Workflow Engine
PegaENVIRONMENT ENV 4.2 Operating Shell
PegaPRISM Prism 5.1 Image Viewer
PegaStorage Manager Stor 2.1 Image Librarian
PegaREACH Real.0 Desktop Graphical Interface
2.2 Directly Obtained Third Party Software. The following Third Party,
Software is separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of any "shrink-wrapped" or
<PAGE> 47
other agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required: Optional:
<S> <C>
- - Microsoft DOS 6.2 or higher - ALCOM LanFax Redirector V2.15gl or greater
- - Microsoft Windows 95 or NT 4.0 (required if using fax)
- - Microsoft Office 95 or better - HiJaak PRO 2.0 or greater for Windows
- - Microsoft NT Server 3.5 (required if using fax)
- - Microsoft NTSQL Database 4.x and client - Word for Windows 6.Oc or greater (required if
Licenses using fax)
- - Microsoft TCP/IP Stack - Quarterdeck QEMM 7.X or greater (required if
- - Novell NetWare 3.11 or greater using fax)
- - SNA Server 3.0 or higher - CGS Computer Associates, Inc. Scanlib software
- - UNIX for selected Image Server platform (required for Ricoh scanners)
- - UNIX ESQL/C Compiler for selected - Powersoft PowerViewer (required for adhoc
UNIX platform reports)
- - MDI Gateway for DB2 by - 3270 Windows emulation package
MicroDecisionware Inc., A Sybase client (usually Rumba for Windows by WaUData)
- - Sybase Open Client NetLibrary for the
selected TCP/IP stack
</TABLE>
<PAGE> 48
ATTACHMENT 1 OF EXHIBIT 1 OF SCHEDULE G
TERMS AND CONDITIONS
BANCTEC
1. Each BancTec Software Package listed in Exhibit 1 of Schedule G
("Program") which is identified as "Multi-User Program" is licensed for
installation on a single network server computer which is supplied by BancTec,
FDISG, or a third party, and which is electronically linked with one or more
workstations having access to the Program. If Section 2.1.1 of Exhibit 1 of
Schedule G ("Exhibit 1") designates a maximum number of users authorized to
simultaneously access the Multi-User Program, no access will be permitted in
excess of such maximum number. In all other cases, Multi-User Program is
authorized to be accessed by all workstations which are configured to
communicate with that network server computer.
2. Each Program listed in Exhibit 1 identified as "Single-User Software"
is licensed for installation and use on a single computer.
3. Each Program listed in Exhibit 1 identified as an "Unlimited User
Program" is licensed for use by Client after ordering a copy of the Program.
Once ordered, the Fund may make unlimited copies of such Programs at no
additional charge.
4. Each Program listed in Exhibit 1 identified as a "Device Program" is
licensed for use solely to facilitate the operation of the corresponding
equipment device. If a Device Program is used for more than one device, the
license must be upgraded in accordance with Exhibit 1.
5. Each Program listed in Exhibit 1 identified as a "Development-User
Program" is licensed for installation and use on a single computer for
development and testing purposes. The license for Development-User Programs
also includes a license for production use on a single computer.
6. Each Program listed in Exhibit 1 identified as a "Production-User
Program" consists of necessary runtime modules and associated link libraries
for inclusion with custom software applications. Production-User Programs are
not licensed for use in the development of custom software applications and may
be either Multi-User or Single-User Programs.
7. Only a nontransferable, nonexclusive, perpetual license to use the
Programs and related BancTec documentation for its own internal use (including,
without limitation, providing processing services to third parties in a service
bureau or facilities management environment) is granted to the Fund.
8. BancTec or its vendors retain all title to the Programs, and all
copies thereof, and no title to the Programs, or any intellectual property in
the Programs, is being transferred; provided, however, nothing contained herein
shall give BancTec or its vendors any right, title or interest in the Software.
9. The Programs shall not be copied, except as specifically authorized
under an Exhibit to this Agreement and except for backup or archival purposes.
All such copies shall contain all copyright and other proprietary notices or
legends of BancTec or its vendors contained in the Programs delivered under
this Agreement.
10. The Programs shall not be modified, reverse assembled or decompiled by
the Fund. No attempt shall be made by the Fund to derive source code from the
Programs.
11. The Programs will not be shipped or used by FDISG or the Fund to
Africa or the Middle East. All applicable export and re-export restrictions and
regulations of the U.S. Department of Commerce or other U.S. agency or
<PAGE> 49
authority shall be complied with. The Programs shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
12. Each Program is copyrighted and contains proprietary and confidential
trade secret information of BancTec and its vendors. Each sublicensee of the
Programs shall protect the confidentiality of the Programs with at least the
same standard of care used to protect the Fund's own similar confidential
information.
13. BancTec and its vendors are each a direct and intended beneficiary of
the sublicenses granted for the Programs and may enforce such sublicenses
directly against sublicenses of the Programs.
14. Neither BancTec nor its vendors shall be liable to the Fund for any
general, special, direct, indirect, consequential, incidental, or other damages
arising out of the sublicense of the Programs.
15. The license granted to the Fund of the Programs may be terminated,
either immediately or after a notice period not exceeding thirty (30) days,
upon violation by the Fund of any of the terms or conditions of the Agreement,
including but not limited to Attachment 1.
16. Upon termination of the license grant to the Fund to use the Program
or the Agreement, the Fund shall return all copies of the Programs to FDISG.
<PAGE> 50
ATTACHMENT 2 OF EXHIBIT 1 OF SCHEDULE G
PEGASYSTEMS TERMS AND CONDITIONS
In addition to the terms of the Agreement, the following terms shall apply with
respect to the Pegasystems Software:
1. The Fund is prohibited from assigning, timesharing, renting, or
hypothecating any of the Pegasystems Software, without prior written approval
of Pegasystems.
2. The Fund is prohibited from passing or transferring any right, title,
or interest to the Pegasystems Software to any third party.
3. The Fund is prohibit from publicizing or disseminating any results of
any benchmark or other testing of the Pegasystems Software.
4. To the fullest extent permitted by applicable law, (i) Pegasystems
shall have no liability to the Fund for damages and claims, whether direct,
indirect, incidental, consequential, or punitive, and all attorneys' fees and
costs, arising from the Fund's use of the Pegasystems Software, and (ii) the
Fund shall have no rights to assert claims for damages against Pegasystems,
including claims against Pegasystems as a third party beneficiary of this
agreement.
5. Pegasystems, Inc. is a third party beneficiary of this agreement to
the extent permitted by applicable law.
<PAGE> 51
IMPRESSive Technology, IMPRESSive Results
EXHIBIT 1.1 OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. PRODUCT OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . Page 1
II. PRODUCT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . Page 3
III. TECHNICAL OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . Page 5
IV. HIGH LEVEL OVERVIEW OF IMPRESS Plus FUNCTIONALITY . . . . . . . Page 6
A. Workflow Management
B. Image Processing
C. Intelligent Workstation Processing
D. Customer Service System
</TABLE>
This item is the property of First Data Investor Services Group (First Data) of
Boston, Massachusetts, and contains confidential and trade secret information.
This item may not be transferred from the custody or control of First Data
except as authorized by, and then only by way of loan for limited purposes. It
must be returned to First Data upon request and, in all events, upon completion
of the purpose of the loan. Neither this item nor the information it contains
may be used or disclosed to persons not having a need for such use or
disclosure consistent with the purpose of the loan, without the prior written
consent of First Data.
Copyright First Data Investor Services Group
1994, 1995, 1996
ALL RIGHTS RESERVED
This media contains unpublished, confidential, and proprietary information of
First Data Investor Services Group. No disclosure or use of any portion of
these materials may be made without the express written consent of First Data
Investor Services Group.
<PAGE> 52
IMPRESSive Technology, IMPRESSive Results
I. PRODUCT OVERVIEW
IMPRESS Plus is First Data's workstation product. Designed to be a
cost-effective customer service and workflow management solution, it
takes an integrated approach to transfer agent service and processing
applications. IMPRESS Plus uses an open, three-tiered, client/server
architecture that provides both the flexibility and scalability to
address client's customization and growth needs.
IMPRESS Plus's valuable benefits include:
o Extensive management tools and employee empowerment via
intelligent workstation technologies.
o A lower cost of processing delivery through workflow routing
and document imaging.
o Efficient customer service through reduced research time,
automated inquiry tracking and correspondence tracking.
o State-of-the-art three-tiered client/server architecture
backed by relational databases and open systems.
o Client configurable screens, dialogue scripts, and workflow
rules for those components which use the Pegaysystems
technology.
o Automated correspondence generation.
IMPRESS Plus consists of these major components:
1.) A SOPHISTICATED MANAGEMENT WORKFLOW TOOL that contributes to
streamlining the flow of information on an enterprise-wide
basis. Automated workflow processes are systematically created
and the user's process is automatically documented at the same
time. Product users can continuously examine and redesign
their current processes, managing them interactively, focusing
on improving organizational productivity and quality.
2.) AN IMAGE PROCESSING SYSTEM that has the ability to scan
incoming documents, store them digitally and automatically
route them to the appropriate processing department thereby
eliminating paper from the workflow. This system also allows
for long term storage of documents and document retrieval.
Users can modify workflow and business rules on site.
3.) AN INTELLIGENT WORKSTATION APPLICATION (IWT) that improves
data entry speed and service quality by using graphical user
interface tools that seamlessly connect the user's desktop to
First Data's transfer agent processing systems, office
automation tools, correspondence/service tracking and
policy/procedure access systems.
4.) A CUSTOMER SERVICE SYSTEM that automates and enhances the
correspondence and customer servicing areas in mutual fund
operations. Customer Service staff can log all activity, such
as phone calls, letters, transactions, etc., while interacting
with customers. The system enables the service representative
to perform transactions over the phone, create "electronic
forms" consisting of instructions for other processors, and
dynamically sends work items to other staff electronically.
The Customer Service System is designed to enhance the quality
and efficiency of the service provided to customers through
the use of state-of-the-art client/server technology.
<PAGE> 53
IMPRESSive Technology, IMPRESSive Results
II. PRODUCT BENEFITS
o Allows clients to process transactiona and customer
correspondence quickly and efficiently.
o Allows clients to be at the leading edge of technology to
maintain competitiveness and to effectively deliver quality
service.
o IMPRESS Plus enables the organization to:
- enhance service responsiveness and quality
- streamline workflow and improve document control by
eliminating paper
- increase employee productivity and participation
- have access to real-time production statistics
- enhance organization cohesion and effectiveness
- reduce manual tasks
- increase accuracy by using intelligent rules-based
applications
- reduce processing costs
- Tie Customer Service Reps to sales
o The IMPRESS Plus workflow tools allow business/operational
workflows to be set up. Automated workflow processes are
created and the user's process is automatically documented at
the same time. Product users can continuously examine and
redesign their business processes and manage them
interactively, focusing on improving organizational
productivity and quality.
o IMPRESS Plus is a scaleable and flexible solution that allows
the user to choose an enterprise-wide or a departmental
solution. It allows the client to determine an implementation
strategy that meets their strategic plans and goals.
o The IMPRESS Plus product platform allows the user to build
upon and utilize future First Data services such as
information delivery of shareholder/investor data, sales and
marketing data and customer service processing.
o IMPRESS Plus is modular to support increasing volumes,
increasing numbers of users and future advances in component
technologies. This allows for functional as well as
enterprise-wide solution.
o The IMPRESS Plus product's UNIX and NT-based platform allows
for the flexibility and growth needed to market position and
grow in the '90s to meet the demands of the mutual fund
industry.
o IMPRESS Plus is developed to run in an open systems
environment, so that the application has the ability to
incorporate diverse hardware choices, such as servers,
scanners and printers.
Additional benefits that can be provided through customization of
certain products include:
o Ability for AIM Funds operations associates to customize
interfaces, rules, scripts, etc. based on predefined "levels"
of operators. Levels may range from entire organization right
down to the individual CSR.
o Creation of an Integrated Service Backbone within the AIM
organization designed to allow consistent processing of
service items, documents, correspondence, etc. regardless of
where they originated. (Internet, scan mail, fax, phone,
etc.)
o Optional ability to link VRU to the desktop via CTI and
related technologies for more efficiency and quality in
servicing.
<PAGE> 54
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
o Ability for AIM Funds operations associates to change workflow rules,
scripts, menus, screens, etc. associated with the front end servicing
applications as they see fit to effectively run their business efficiently
and with highest regard to quality.
o Ability for AIM Funds to introduce intelligent, 'point of contact'
scripting for service associates in the front end selling process.
Through the customized rules capability, AIM Funds can set up random
sales, campaigns, or promotions. In addition, IMPRESS Plus can be told
when to prompt CSR's that selected promotions apply to the customer at
hand based on data points in the customer's profile, recent activity, or
the like.
<PAGE> 55
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
III. TECHNICAL OVERVIEW
First Data's combined Customer Service, Workflow, Image and
Intelligent Workstation (IWT) technologies enable users to display the
digitized image of a shareholder form on the workstation along with
other service, data entry and office automation applications. This
allows a user to enter information directly from the image without
having to look away from the screen or handle paper. IMPRESS Plus
will have access to First Data's transfer agent processing system,
office automation tools, and correspondence tracking and
policy/procedure access systems. First Data has developed the
workflow and image capabilities of the system to meet the needs of the
financial industry.
The Customer Service and Intelligent Workstation applications improve
data entry speed and quality by using graphical user interface tools
and LAN/WAN topologies to seamlessly connect the users desktop to the
mainframe servers. These tools and technologies will significantly
off-load transactions and query processing from the mainframe by
putting these capabilities on the desktops and empowering the
end-user.
IMPRESS Plus is designed to run in an open systems environment. It has
the ability to incorporate various workstation platforms due to a
common set of access routines and open communication architecture.
IMPRESS Plus supports high-performance networking architectures
including Novell's SPX/IPX as well as the UNIX TCP/IP standard. SNA
connectivity is supported for LU6.2, 3270, and 5250 communications.
The application supports Microsoft Windows 3.11, Windows 95, and NT
client workstations, multiple UNIX server back-end platforms, and the
latest client/server database technologies offered by the INFORMIX and
Microsoft database systems.
IMPRESS Plus contains a state-of-the-art integration API (application
programming interface) that allows other applications, including
customer-specific applications, to be seamlessly integrated into
IMPRESS Plus.
The Customer Service and IWT applications have been designed with an
object-based architecture that allows one common application to
support First Data's multiple back-end transfer agent systems. They
are designed around First Data's newly defined and implemented
corporate data model. This model represents the future data source
for First Data's common transfer agent application. This object-based
architecture allows for a high level of client customization and
integration.
<PAGE> 56
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IV. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
WORKFLOW MANAGEMENT FUNCTIONALITY OVERVIEW
WORKFLOW DYNAMIC WORKFLOW DESIGN AND MONITORING
MANAGEMENT
IMPRESS Plus provides a set of client/server based tools that
allow designers and authorized system users to build workflow
rules to be implemented on the work floor. These rules can be
built and implemented, then changed as required by trained
administrators.
GENERIC WORKFLOW AVAILABLE FOR ALL TRANSACTIONS
IMPRESS Plus offers a generic wordflow that can be used for
any transaction type that is designated in an operation.
Liquidations, correspondence, new accounts, etc. are just some
examples of transactions that can be processed through this
generic workflow. Should the workflow need to be customized or
altered, it can be.
WORK FLOW MONITORING
IMPRESS Plus provides the following work flow monitoring
activities in a real time mode:
o Allow users with the proper security access to
monitor the status of workflow activities or entire
work flow maps
o Monitor work-in-process items via a graphical display
which produces bar graphs in a variety of
presentation formats
o Monitor multiple statistics simultaneously on a
graphical display.
PRIORITIZATION OF WORK
IMPRESS Plus allows the setting of a default priority of items
during workflow design, and, in addition, dynamically during
work in process. During work in process, an item's priority
is based on its transaction type, its default or subsequently
manually altered priority setting, as well as its age in the
activity queue.
<PAGE> 57
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
WORKFLOW MANUAL ROUTING OF ITEMS
MANAGEMENT
(CONTINUED) IMPRESS Plus allows items to be manually routed to
workflow map destinations, or, in some cases, to
specific end users by those users with authorization
to do so.
AUTOMATIC ROUTING OF WORK
IMPRESS Plus routes work items to the next
destination on a pre-defined set of workflow rules.
These rules can be overridden by the user when
necessary.
ITEM COPY ROUTING
IMPRESS Plus allows users to make "copies" of items
within the workflow and route them to other workflow
activities. This is commonly used when an individual
processing the work determines that an item must be
forwarded to another processing department or review
the steps because it is actually two or more
transactions.
ENHANCED QUALITY CONTROL
IMPRESS Plus allows for random or pre-determined QC,
statistical QC, or other more intelligent or
selective QC means.
ENHANCED QUALITY ASSURANCE
IMPRESS Plus allows for random or pre-determined QA,
statistical QA, or other more intelligent or
selective QA means.
<PAGE> 58
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IMAGE FUNCTIONALITY OVERVIEW
IMAGE DOCUMENT SCAN, STORE, ROUTE, AND RETRIEVE
PROCESSING
IMPRESS Plus captures, through scanning, electronic
images OF documents, stores these electronic images
on magnetic disk, and subsequently allows for
retrieval of the electronic images. IMPRESS Plus
allows images to be accessed for image quality review
and provides for the rescanning of images determined
to be of unacceptable quality. Following the
completion of scanning and any image quality review,
items are automatically routed to subsequent
activities, based on a predefined set of workflow
rules.
ELECTRONIC DOCUMENT IMAGE PRESENTATION AND
MANIPULATION
IMPRESS Plus allows images to be viewed on image-
enabled workstations. Multi-page documents can be
scrolled through, and selected portions of an image
can be magnified.
IMAGE CROSS-REFERENCE TO PHYSICAL DOCUMENT LOCATION
TRACKING
AND RETRIEVAL IMPRESS Plus is designed so that the image database
stores the location of the physical document for each
document image. This location - known as a storage
box - is entered into the system while scanning
documents.
INDEXING OF IMAGES
IMPRESS Plus automatically assigns a unique indexing
number to each document that is created through
scanning. The unique indexing number consists of a
system-generated number that can subsequently be used
to cross-reference an item to a mainframe transfer
agent system. In addition, IMPRESS Plus allows for
the alternate indexing of documents by other user-
entered fields such as fund/account.
SOURCE KEY GENERATION AND DISPLAY
Each transaction type processed within IMPRESS Plus
receives a unique identifier that can be used to link
an item to the First Data transfer agent system.
This key may also be used for document retrieval.
IMAGE SCANNING, INDEXING, AND STORAGE OF DOCUMENTS
TRACKING PROCESSED PRIOR TO IMAGE WORKFLOW
AND RETRIEVAL
(CONTINUED) Through the IMPRESS Plus merge facility, users can
scan documents processed prior to the installation of
IMPRESS Plus. The merge facility allows you to
associate documents with existing, already scanned
and indexed documents, making them available for
future inquiry using IMPRESS Plus.
IMAGE ARCHIVAL AND SUBSEQUENT RETRIEVAL FROM OPTICAL
STORAGE
IMPRESS Plus provides storage and backup functions
for data objects, is designed to handle media
management, and communicates with the database
management system. IMPRESS Plus supports archival of
items to magnetic or selected WORM (Write Once
<PAGE> 59
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
Read Many) optical media. Archival from magnetic to
optical media criteria are set during installation
time.
PRINTING OF IMAGES
IMPRESS Plus allows you to print copies of document
images at LAN-based printers equipped with the
appropriate print server components.
REAL-TIME ADMINISTRATION TOOLS
IMPRESS Plus offers an administration function that
allows authorized users to add and maintain user
profiles, funds, transaction types, locations, and
other client site-specific data. This tool also
allows authorized users to change courier status,
determine the status of work that may have been
affected by an environmental mishap, and perform
other administrative tasks.
DOCUMENT/ACTIVITY HISTORY AND AUTOMATIC UPDATE
IMPRESS Plus automatically records and stores
document/activity history statistics on audit trail
logs during workflow activities, and produces
standard reports for such items as:
o Workflow activity type
o Date/time/user of each activity
o Beginning/ending date/time of each activity
o Last update user/date/time
ADMINISTRATIVE IMPRESS Plus allows much of this activity history to
FUNCTIONS be viewed on-line in various portions of the
(CONTINUED) application.
PRODUCTIVITY REPORTING AND QUALITY/TIMELINESS
REPORTING
IMPRESS Plus logs document/activity history
statistics to produce standard productivity reports
that can be run at the client's request.
ADHOC REPORTING
IMPRESS Plus provides a suite of standard reports
that can be customized. A client can also create
their own additional reports.
QUALITY CONTROL PROCESSING
IMPRESS Plus currently allows for processing
activities to be reviewed for quality by routing them
to a Quality Control queue. Authorized users can
then QC work items. Future IMPRESS Plus releases
will include various rule-based options for selective
quality control. IMPRESS Plus prevents users from
quality control checking their own work.
ACCESS SECURITY
IMPRESS Plus image processing provides security
access in the form of user logons and user profiles.
Users must have a user ID to access the system and
are further constrained by their user profile. The
client assigns user IDs for staff to access the
system and specifies the parameters of each user
profile. These profiles limit users to performing
<PAGE> 60
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
only those specific activities for which they have
been given permission (e.g. processing, scan, etc.).
It is recommended that the logon IDs match the user's
logon ID from the First Data transfer agent system.
VALUE-ADDED SHAREHOLDER ACCOUNTING SYSTEM ACCESS
FUNCTIONALITY
IMPRESS Plus allows workstation access to First
Data's transfer agent recordkeeping system. 3270
terminal emulation is accomplished through a
Windows-based software application. Keyboard mapping
is limited to the technical capabilities of the
emulation software and/or hardware.
DYNAMIC DATA EXCHANGE (DDE) FUNCTIONALITY
IMPRESS Plus will allow for Dynamic Data Exchange at
selected points in application modules when necessary
to transfer data between processes. An example would
be the passing of a source key stored on a transfer
agent system history line to the imaging inquiry
screen for a customer service operator.
ON-LINE HELP FOR USERS
IMPRESS Plus offers a comprehensive on-line help
system that follows Microsoft Windows help system
conventions. It is designed to serve both new users
learning how to use the system and more experienced
users who may occasionally need assistance or
additional information.
SYSTEM ADMINISTRATION PROCEDURES
IMPRESS Plus System Administration is made easier for
designated IMPRESS Plus technical support staff due
to the IMPRESS Plus Systems Administration and
Procedures manual and related documentation.
<PAGE> 61
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
INTELLIGENT WORKSTATION PROCESSING
(IWT) FUNCTIONALITY OVERVIEW
INTELLIGENT IWT is designed with a graphic interface ("GUI")
WORKSTATION which will provide an intelligent real-time interface
PROCESSING to the First Data transfer agent system for the
(IWT) following transaction activity:
NEW ACCOUNT SETUP
The IWT new account setup application is designed to
provide a MS/Windows graphic interface ("GUI") to
allow an intelligent real-time interface to the First
Data transfer agent system. New account setup
functionality includes:
o new account setup entry
o dealer/rep list
o TIN list for shareholder list
o systematic city and state population based on
entry of a 5 digit zip code
o dividend/cap gain addresses
o beneficiary addresses
o statement addresses
o ABA lookup and validation
o fund list
o wire and ACH bank addresses
Financial Transactions
The IWT financial transaction entry application is
designed to provide a MS/Windows graphic interface
("GUI") to allow an intelligent real-time interface
to the First Data transfer agent system. Financial
transaction entry functionality includes:
o telephone redemptions
o telephone exchange
o exchange processing
o transfer processing
o redemption processing
o subscription processing
Group
o linking and linking of accts by ROA, confirm,
L01, plan
<PAGE> 62
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
CUSTOMER SERVICE & ENHANCED INQUIRY SYSTEMS
FUNCTIONALITY OVERVIEW
CUSTOMER The Customer Service System is a client/server based,
SERVICE graphical user interface (GUI) system designed to
SYSTEM provide an intelligent real-time application to
enable clients to improve the quality of the service
provided to both shareholders and broker dealers.
This system provides functionality in the following
areas:
CONTACT TRACKING AND MANAGEMENT
A key feature of the Customer Service System will be
the ability to track and report on all interaction
with an end customer, be it a shareholder or
broker/dealer. Designed for ease of use by a
customer service representative, this system will
allow for the logging of telephone calls and
correspondence, the creation and updating of service
items, the processing and resolution of customer
issues to insure customer satisfaction at the end of
any contact. In addition, via reason codes and aging
information, management is empowered with the use of
statistical and trending reports regarding contact
made with their customer base .
CORRESPONDENCE GENERATION AND TRACKING
The Customer Service System is closely integrated to
word processing to allow for the automatic generation
of outgoing correspondence related to service items.
A service representative can choose from customized
pre-defined letters to generate high quality customer
correspondence.
TELEPHONE TRADING
Authorized customer service system users will be able
to perform transactions while on the telephone with
customers by invoking simplified graphical data entry
screens. In addition, customer service
representatives can create electronic forms
consisting of processing instructions for other
departments and dynamically send route these work
items via the workflow manager.
CUSTOMER ENHANCED INQUIRY
SERVICE
SYSTEM The Enhanced Inquiry windows provide enriched and
(Continued) user-friendly replacements for legacy transfer agent
inquiry screens. Examples of the inquiry functions
are search for customer information by name, account
number and social security number, account
information, financial transaction history, service
history, and correspondence history.
<PAGE> 63
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
IMPRESS IMAGE PRODUCTION HARDWARE AND SYSTEMS SOFTWARE
- ---------------------------------------------------------------------------------------------------------
PRODUCT Description QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Servers Parallel Cable for printer 10
- ---------------------------------------------------------------------------------------------------------
HP IV+ / 5 Laser Printer with 6 MB Ram, Jet Direct for
Printers other printing can be installed 10
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable,
Scan Server Terminator. 5
- ---------------------------------------------------------------------------------------------------------
Ricoh IS-520 SCSI with Ink Jet Endorser. SCSI
Mid Speed Scanner Version 5
- ---------------------------------------------------------------------------------------------------------
Sun SPARCstation 5 Model 170, 17" Color Display,
48MB RAM, 2X2.1 GB Int disks, 4mm Tape, 3.5"
Floppy Drive, CD-ROM, Solaris 2.5.1, Solarais
Answerbooks, 1 @ X1053A, Solaris 2.5.1 SDK Kit,
Kodak Scan Server Solaris 2.5.1 Motif ToolKit, SUN Professional C 4.0 3
- ---------------------------------------------------------------------------------------------------------
High Speed Scanner Kodak 923D Scanners 3
- ---------------------------------------------------------------------------------------------------------
Sun ULTRAserver 6000, 12 250MHZ CPU's, 17" Color
Display, 1.2GB RAM, 2x9 GB Int disks, DG Clariion 42
Gb Raid 5 disk array, 4mm Tape, CD-ROM, Solaris
2.5.1. Answerbooks, 35/7OGb DLT Tape Changer, 1 @
1053A, 1 @ X1052A, 2 @ X1062, Fast
Image Server Ethernet/FDDI/ATM 1
- ---------------------------------------------------------------------------------------------------------
CYGNET 1802 with (3) Philips LD6100 Optical Drives,
Jukebox Optical SCSI Cable, RS-232 Null Modem Cable 1
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 x 768, Windows 3.1, Hiijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- ---------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 2 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (4)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- ---------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 2 or 3
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
**The fax server will require analog modem lines a max of 16 lines would
- ---------------------------------------------------------------------------------------------------------
be required for the hardware listed above.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (10 KVA) 1
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN) (1.4 KVA) 3
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX HW) (1 KVA) 2
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 64
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- ---------------------------------------------------------------------------------------------------------
Equipment to maintain a routed or switched network
environment with no more that 25-30 clients per
Network Hardware network segment.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32MB ram. Display
should optimally support Image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (1280X1024) 400
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Software required on all workstations
- ---------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- ---------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- ---------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 65
EXHIBIT 2.2 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
IMPRESS Test/Training Hardware and Systems Software
- -------------------------------------------------------------------------------------------------------
PRODUCT DESCRIPTION QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Server Parallel Cable for printer 1
- -------------------------------------------------------------------------------------------------------
HP IV+/5 Laser Printer with 6 MB Ram, Jet Direct for
Printer other printing can be installed 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP 120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable
Scan Server Terminator 1
- -------------------------------------------------------------------------------------------------------
Ricoh IS-420 SCSI with Ink Jet Endorser, SCSI
Low Speed Scanner Version 1
- -------------------------------------------------------------------------------------------------------
Sun ULTRAserver 1, 250MHZ CPU, 17" Color Display,
128MB RAM, 2X2.1 GB Int disks, SUN 4GB External
Disk Pack, (2) 4mm Tape Drives, CD-ROM, Solaris
Image Server 2.5.1, Answerbooks, 1 @ 1053A, 1 @ X1052A. 1
- -------------------------------------------------------------------------------------------------------
Phillips LD6100 Optical Drive Differential, SCSI Cable
Standalone Optical SCSI Differential Terminator. 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 X 768, Windows 3.1, Hijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- -------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 1 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (1)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- -------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
** THE FAX SERVER WILL REQUIRE ANALOG MODEM LINES A MAX OF 4 LINES WOULD BE
REQUIRED FOR THE HARDWARE LISTED ABOVE.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX) (1 KVA) 1
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (3 KVA) 1
- -------------------------------------------------------------------------------------------------------
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32 MBram. Display
should optimally support image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (128X1024) 10
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Software required on all workstations
- -------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- -------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- -------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 66
EXHIBIT 3 OF SCHEDULE G
MAINTENANCE AND SUPPORT TERMS
These terms are based on an IMPRESS User network environment of up to 512 Users
and the associated server(s), as described in Exhibits 1 and 2 of this Schedule
G.
1. Software Support.FDISG shall provide the following Software support
services ("Software Support"):
1.1. FDISG shall provide the Fund with full System Administration Guide(s)
for FDISG Software.
1.2. FDISG will have a Response Center (help desk) to provide 24 hours a
day, 7 days a week to designated client contacts.
1.3. FDISG shall use reasonable efforts to resolve all Software failures
through; (a) remote support to the Fund's information systems staff ("Fund's
Staff"); (b) coordination of Third Party Vendor support (on-site or remotely);
(c) coordination of other subcontractors' actions; or (d) direct on-site
support by FDISG personnel.
1.4. FDISG shall investigate errors in the Software reported by the Fund
which prevent substantial compliance with the then current Documentation and to
initiate the corrective action, if any, which FDISG considers reasonable and
appropriate, including but not limited to temporary fixes, patches and
corrective releases to FDISG's clients generally. Notwithstanding the
foregoing, if reported errors result from or arise out of. (i) malfunctions of
equipment other than the Equipment, (ii) improper Fund operator procedure or
misuse of the system by the Fund, (iii) modifications or changes made to the
system without FDISG's prior written approval, (iv) causes beyond the
reasonable control of either party, or (v) user developed features such as
those users may develop with form generators, ad hoc report writers and user
customized screens, then FDISG shall have no responsibility for investigating
the error or making the correction, except as the parties may otherwise agree
to in writing. The Fund shall pay FDISG's then current time and materials
charges plus reasonable travel and out-of-pocket expenses incurred in
investigating and attempting to correct any such errors.
1.5. FDISG shall from time to time provide bug fixes, error corrections,
maintenance, minor enhancements, upgrades and updates to the Software which are
generally made available by FDISG to its similar customers as part of Software
Support ("Updates"). The cost of the Updates is included in the fees and other
charges identified in Schedule C of the Agreement, if the updates are supplied
to the Fund using FDISG's standard update facility. FDISG installation
assistance for the new Updates may be required and, is billable to the Fund as
an Additional Service. During the term of the Agreement, FDISG will use
reasonable efforts to provide the Fund with not less than thirty (30) days
prior written notice of FDISG's intent issue a new update of Software. The
Fund shall implement an Update within ninety (90) days of receipt. Any support
by FDISG of any prior release of the Software after such ninety (90) day period
shall be at FDISG's sole discretion and as an Additional Service.
1.6. Software Support, the License, and the Software shall not include any
modification to the Software which contains any substantial added functionality
(including any significant new interface features), as determined solely by
FDISG or any new architecture or any significant modification of the Software
which contains any substantial added or different functionality, whether or not
such new functionality is coupled with any change in software architecture or
hardware platform ("New Products"). New Products shall be provided and
licensed to the Fund as an Additional Service.
1.7. FDISG may decline to support the Software if (i) the Software or
Equipment was added to or changed without FDISG's prior approval; (ii) the Fund
does not perform the Software Support; or (iii) FDISG determines that such
support would adversely affect the Scope of Work.
1.8 Software Support for the FDISG Software shall conform to the standards
set forth in Section I of Schedule F.
2. The Fund's Maintenance and Support Responsibilities. The Fund's facility
will have all of the required security, space, electrical power source,
communications lines, heating, ventilation and cooling, and other physical
<PAGE> 67
requirements reasonably necessary for the installation and proper operation of
the Equipment. The Fund's users will first direct all questions and problem to
the Fund's Staff for proper call tracking and problem resolution. The Fund's
Staff will coordinate all facility issues at the site and will serve as primary
contact for FDISG when planning installs, upgrades and other equipment changes.
The Fund's Staff shall:
2.1. Identify designated client contacts, one for Operations and one
technical systems administrator, to function as single points of contact for
discussion, review and resolution of problems with FDISG.
2.2. Perform initial problem determination and symptom documentation.
2.3. Be responsible for all system hardware and network hardware components
and shrink-wrap software from a maintenance, support and problem resolution
standpoint.
2.4. Provide (a) data back-up and recovery, (b) preventive maintenance,
and (c) perform server administration tasks as described in the Systems
Administration Guide(s) and Third Party Software documentation.
2.5. Maintain all network and trouble-log documentation required by FDISG
or by third-party vendors. FDISG shall be allowed to review such documentation
if necessary to resolve support issues.
2.6. Be available during normal business hours and reachable for support 24
hours a day, 7 days a week, as required. The Fund shall maintain the
appropriate staff level to adequately perform the maintenance support functions
specified. This staff should have experience in network administration,
troubleshooting, Microsoft Windows, workstation memory management, and UNIX and
NT systems administration.
2.7. Consult with FDISG before performing any work that may affect the
Software or performance of the System, including installation, upgrading, or
unplanned maintenance affecting Equipment
2.8. The fund is responsible for maintenance and support of customized code
unless contracted with FDISG.
3. Support of Customized Code. (Code changed by Fund or FDISG on a customized
basis)
3.1 Software Revisions. At times, FDISG will provide software updates to
components (third party or FDISG software) to either enhance the product or
address quality deficiencies. FDISG is responsible for notifying the Fund of
these updates, and what changes have been made. The Fund is responsible for
installing the updates and modifying any code which they have customized to
accommodate these enhancements. Assistance can be provided by FDISG at stated
billable rates.
3.2 Support of Modified Code. FDISG will provide application, technical
and workflow support for modified code only on a time and materials basis.
FDISG may request the replacement of the modified code with the original code
in order to assist in the determination of the problem source.
3.3 Mainframe Resource Utilization. If customized code requires greater
FDISG mainframe CICS, DASD, or CPU resources than the base FDISG delivered
IMPRESS Plus solution, FDISG reserves the right to charge the Fund for this
usage. If there is concern that excessive resource utilization could impair
the mainframe system, FDISG reserves the right to disallow this modified code
from executing on the mainframe. The Fund is advised to consult with FDISG in
order to determine if planned customization may negatively impact mainframe
resources.
4. Roles and Responsibilities.
4.1 FDISG shall not be responsible for the support of any Directly
Obtained Third Party Software or any other third party products. The Fund is
responsible for network connectivity, Operating Systems, gateways, and other
third party products. FDISG is not responsible for hardware not listed in
Exhibit 2 of Schedule G or software not listed in Sections 1, 2.1.1, or 2.1.2
of Exhibit 1 of Schedule G, unless specifically covered in a separate
agreement.
4.2 Additional support tasks may be provided on a time and material basis.
This may include workflow analysis, customization, network design, third party
product installation and additional training.
<PAGE> 68
SCHEDULE H
ACE + SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule H (the "SOFTWARE"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibit 1 of Schedule H ("Exhibit 1").
Subject to the terms and conditions set forth in this Schedule H, FDISG grants
to the Fund and the Fund accepts from FDISG the non-exclusive, non-transferable
license to use the Software during the term of the Agreement ("LICENSE"). Some
software components ("THIRD PARTY SOFTWARE") required to be used with the
Software were developed by a third party ("THIRD PARTY VENDOR"). Third Party
Software is licensed to the Fund only pursuant to shrink wrapped or other
agreements between the Third Party Vendor and the Fund directly. Exhibit 1
shall indicate the Third Party Software that the Fund is responsible to obtain
and license. FDISG shall provide the Fund with all error corrections, minor
enhancements and interim upgrades to the Software which are made generally
available to FDISG client's of the Software ("SOFTWARE SUPPORT"), but shall not
provide a License to any substantial added functionality, new interfaces, new
architecture, new platforms or other major software development efforts, as
determined solely by FDISG.
1.2 Ownership. FDISG or its licensor shall retain title to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION").
FDISG reserves all rights in the Proprietary Information not expressly granted
to the Fund in this Schedule H. Upon FDISG's request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") also set forth in Exhibit 1 of Schedule H. Additional terms and
conditions concerning the Equipment are also set forth in Exhibit 1. The
Equipment identified in Exhibit 1 represents the minimum equipment requirements
to run the Software. FDISG disclaims responsibility for the performance of the
Software in the event that the Fund utilizes equipment different than that
which is set forth in Exhibit 1. FDISG and the Fund shall (a) within a
reasonable time after the Effective Date, agree upon the tasks required to
implement the Software, Third Party Software and Equipment ("SYSTEM") and the
party responsible and time frames for each task ("SCOPE OF WORK"); (b) perform
their respective assigned tasks according to the Scope of Work; and (c) if not
the party assigned to a task, cooperate with the responsible party. To the
extent the Scope of Work is incomplete, FDISG shall follow its reasonable and
customary practices. Upon prior notice by FDISG to the Fund, the Fund shall
give reasonable access to the System to FDISG, FDISG's employees, affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) in connection with the Fund's use of the FDISG System and only at the
locations identified in the Agreement. If the Equipment is inoperative due to
malfunction, the license grant shall, upon written notice to FDISG, be
temporarily extended to authorize the Fund to use the Software on any other
equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph..
1.5 Software Installation and Acceptance. FDISG shall advise the Fund
that the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
thirty (30) days after Software Installation Date or thirty (30) days after the
Fund's first use of Software to process live production data ("SOFTWARE
ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
<PAGE> 69
1.7 No-Export. The Software shall not be shipped or used by the fund
outside the United States. The Fund shall comply with all applicable export
and re-export restrictions and regulations of the U.S. Department of Commerce
or other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule H which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software. For the term of the Agreement, FDISG warrants ("Performance
Warranty") that the Software shall perform on the Equipment substantially in
accordance with the Documentation, except for Third Party Software as set forth
in Paragraph 2.2 below. The timely correction of errors and deficiencies in
the Software shall be Fund's sole and exclusive remedy for the Performance
Warranty. FDISG warrants ("Rights Warranty") it has the right to license the
Software in accordance with the Agreement. Provided the Fund gives FDISG
timely written notice, reasonable assistance, including assistance from the
Fund's employees, agents, independent contractors and affiliates (collectively,
"Fund's Agents"), and sole authority to defend or settle the action, then FDISG
shall do the following ("Infringement Indemnification"): (a) defend or settle,
at its expense, any action brought against the Fund or the Fund's Agents to the
extent the action is based on a claim that the Software infringes a duly issued
United States' patent or copyright or violates a third party's proprietary
trade secrets or other similar intellectual property rights ("Infringement");
and (b) pay damages and costs finally awarded against the Fund or the Fund's
Agents directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Third Party Warranties. All warranties for the Third Party Software,
if any, are specifically set forth in the Software Exhibits, Exhibit 1 or in
the applicable agreements supplied by the Third Party Vendors. Subject to the
terms of the Exhibit 1 and to the extent permitted by FDISG's suppliers, FDISG
conveys to Fund all Third Party Software warranties made by the Third Party
Vendors.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and
as limited by applicable law, the Fund shall indemnify, defend and hold FDISG
and FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("Confidential Information"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party, prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential
<PAGE> 70
Information, the other party may obtain injunctive relief, in addition to its
other remedies, inadequate monetary damages and irreparable harm being
acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System. Fund shall not
modify or reverse engineer the Software without FDISG's prior written consent.
<PAGE> 71
EXHIBIT 1 OF SCHEDULE H
SOFTWARE/HARDWARE
1. FDISG Software.
1.1 FDISG Software includes the following products:
ACE +
2. Third Party Software.
2.1 Directly Obtained Third-Party Software. The following Third Party
Software are separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of "shrink-wrapped" or other
agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required Optional
-------- --------
<S> <C>
Windows 3.1 Reachout PC Link (for external FDISG Support of ACE +)
DOS 3.3 or higher
</TABLE>
3. Hardware.
3.1 It is recommended that ACE + run on a PC Network (LAN) to fully use its
database features. The network should have at least 200 Mb of available disk
space. ACE + will also run on an individual local (hard) drive. PC
specifications are:
o 2 or more IBM PC Compatible 486/66 (486/33 minimum) Mhz (or
Pentium) with 16 Mb Ram (8 Mb minimum)
o 500 Mb Local (hard) drives (for backup only)
o External Fax/Modems (9600 baud or greater)(for PC faxing or
Reachout only)
o HP Laserjet 4 w/ Windows Drivers
3.2 PC/Mainframe Connection: ACE + data is based on mainframe ASCII files.
These files must be transmitted from the mainframe to LAN or PC. This can be
accomplished various ways. FDISG uses a mainframe to Gateway and BARR/SNA
transmission.
<PAGE> 72
SCHEDULE I
DISASTER RECOVERY SUMMARY
OVERVIEW
First Data's data center is a free standing building that is self sufficient
with back-up water supply, fuel storage, and diesel generator backup. The
building is protected with 24 hour on site guard protection as well as security
camera coverage throughout the property. Access is by picture ID only and all
doors are protected with card key access. Additionally, all systems are
protected by ACF2 Security. Security is audited on a regular basis.
Additionally, First Data maintains a reliable, tested disaster recovery system.
A tape backup system is set up on a daily rotation schedule with a full backup
of all data. The backup jobs run automatically every night and all tapes are
sent off-site on a daily basis to a physically secured facility. A business
resumption site has been established in our Providence facility. This Hot Site
is fully equipped with equipment, wiring and supplies in the case of a disaster
or business recovery.
A disaster is defined as any unforeseen business interruption or outage that
renders the data center or telecommunications network inoperable or
inaccessible for an undetermined amount of time suspending normal processing.
First Data's Disaster Recovery Plan provides us with the required procedures
and resource references to execute a full recovery of the data center and
associated critical processing.
This Plan addresses:
o Computer and communications equipment
o Programs, data and documentation
o Building and environmental concerns
o Fire detection and building evacuation
o Personnel, and
o Client Liaisons.
Due to contractual requirements, the data center must provide on-line
accessibility and processing availability within 24 hours of a declared
disaster. Total "downtime" is not to exceed 48 hours.
All outages that affect any client are considered priority one and all
available resources will be utilized to resolve outages, failures or slowdowns.
APPROACH
In a disaster situation, numerous issues and tasks must be addressed
immediately. To ensure all get equal attention, "teams" have been developed.
These teams are comprised of experienced First Data personnel responsible to
execute specific assigned functions critical to the overall recovery. Each team
will activate their procedures concurrently to affect a full system recovery at
the hot site. Some of the teams will act as support teams providing
<PAGE> 73
financial, administrative, and logistical coordination. The remaining recovery
teams will address more specific data and telecommunications issues.
o Support Teams
Financial/Administrative Support
Human Resources/Corporate Communications
Applications Team
Client Liaison Team
o Recovery Teams
Management Teams
Systems Software
Data Center Operations
Vendor
Telecommunications Team
Production Control
Facilities/Hardware
Each team will be headed by a team leader and a designated alternate. If, for
any reason, the team leader is unavailable, the alternate will assume
responsibility for the team notification and progress reporting to the team
management.
Dial backup capabilities, diverse routing of communications circuits and
triangulation present the best options for insuring continued system access in
the event of a communications failure. First Data can demonstrate each of these
capabilities at the client's request.
TESTING SUMMARY
First Data/FDT has contracted with Comdisco to provide hotsite disaster
recovery and backup services. First Data's overall goal is to establish network
connectivity for on-line and transmission capability, restore the application
and recover forward to a point in time and then re-process a batch cycle.
Using Comdisco's site at North Bergen, the First Data Technology (FDT)
operating system will be recovered while testing FDISG recoverability for all
network and application platforms.
The recovery will take place remotely with FDT, using the Business Recovery
Facilities (BRF) in Denver, and Westboro staff working out of the new BRF
in Tewksbury, MA. Comdisco will have staff at both BRFs, as well as North
Bergen, to assist whenever needed.
Tests are conducted annually. The test runs for 48 contiguous hours. Multiple
shifts will be required for FDT, FDISG, and Comdisco staff. Specific staff
requirements will be determined as the scope of the test becomes more clearly
defined.
The systems recovery portion of the test will take place at the Comdisco site in
New Jersey utilizing an IBM ES9000 with related peripherals. All the equipment
used in testing is
<PAGE> 74
compatible with the FDT hardware located in Denver. All tape mounts will be
handled by Comdisco staff in New Jersey, and the telecommunications testing
will be staffed by FDT with Comdisco assisting in New Jersey.
FDISG Test Objectives
o Test recoverability from both of Comdisco's new Business Recovery
Facilities
o Test transmission and network connectivity with clients
o Check and verify tape volumes stored offsite
o Benchmark the restore time for all (500) DASD volumes
o Ship all tapes from Denver to New Jersey
o Document (CDRS/FDISG) connectivity procedures
o Recover all applications to previous business cycle
<PAGE> 1
EXHIBIT 9(b)(3)(iii)
AMENDMENT NO. 2
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Agreement"), dated October
18, 1993, by and between A I M Advisors, Inc., a Delaware corporation and A I M
Fund Services, Inc. on behalf of the Portfolios and Classes of shares of the
Funds set forth in appendix A thereto shall hereby be amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
APPENDIX A
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM FUNDS GROUP (All Classes)
AIM Balanced Fund
AIM Government Securities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Municipal Bond Fund
AIM Money Market Fund
AIM Utilities Fund
AIM Value Fund
AIM INTERNATIONAL FUNDS, INC. (All Classes)
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM INVESTMENT SECURITIES FUNDS
AIM Adjustable Rate Government Fund
Limited Maturity Treasury Portfolio (AIM Limited Maturity Treasury
Shares)
AIM SUMMIT FUND, INC.
<PAGE> 2
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio (AIM Tax-Free Intermediate Shares)
SHORT-TERM INVESTMENTS CO.
Prime Portfolio (All Classes)
Liquid Assets Portfolio
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio (All Classes)
Treasury TaxAdvantage Portfolio
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: July 1, 1994
A I M ADVISORS, INC.
Attest:/s/ NANCY L. MARTIN By:/s/ ROBERT H. GRAHAM
------------------------ ---------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest:/s/ NANCY L. MARTIN By:/s/ J. ABBOTT SPRAGUE
------------------------ ---------------------------
Assistant Secretary J. Abbott Sprague
Senior Vice President
(SEAL)
<PAGE> 1
EXHIBIT 9(b)(3)(iv)
AMENDMENT NO. 3
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Agreement"), dated October
18, 1993, by and between A I M Advisors, Inc., a Delaware corporation and A I M
Fund Services, Inc. on behalf of the Portfolios and Classes of shares of the
Funds set forth in appendix A thereto is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
APPENDIX A
AIM EQUITY FUNDS, INC.
AIM Aggressive Growth Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM FUNDS GROUP (All Classes)
AIM Balanced Fund
AIM Government Securities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Utilities Fund
AIM Value Fund
AIM INTERNATIONAL FUNDS, INC. (All Classes)
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM INVESTMENT SECURITIES FUNDS
AIM Adjustable Rate Government Fund
Limited Maturity Treasury Portfolio (AIM Limited Maturity Treasury
Shares)
AIM SUMMIT FUND, INC.
<PAGE> 2
AIM TAX-EXEMPT FUNDS, INC.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio (AIM Tax-Free Intermediate Shares)
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: September 16, 1994
A I M ADVISORS, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
----------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ JOHN CALDWELL
----------------------------- -------------------------------
Assistant Secretary John Caldwell
President
(SEAL)
<PAGE> 1
EXHIBIT 9(b)(3)(v)
AMENDMENT NO. 4
ADMINISTRATIVE SERVICES AGREEMENT
The Administrative Services Agreement (the "Agreement"), dated October
18, 1993, as amended, by and between A I M Advisors, Inc., a Delaware
corporation and A I M Fund Services, Inc., a Delaware corporation, on behalf of
the Portfolios and Classes of shares of the Funds set forth in Appendix A
thereto is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
AIM SUMMIT FUND, INC."
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: November 1, 1994
A I M ADVISORS, INC.
Attest:/s/ STEPHEN I. WINER By:/s/ ROBERT H. GRAHAM
------------------------- --------------------------
Assistant Secretary Robert H. Graham
President
(SEAL)
A I M FUND SERVICES, INC.
Attest:/s/ STEPHEN I. WINER By:/s/ JOHN CALDWELL
------------------------- --------------------------
Assistant Secretary John Caldwell
President
(SEAL)
<PAGE> 1
EXHIBIT 9(b)(4)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
This MASTER ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is made
this 28th day of February, 1997 by and between A I M ADVISORS, INC., a
Delaware corporation (the "Administrator"), and AIM TAX-EXEMPT FUNDS, INC., a
Maryland corporation (the "Company"), with respect to the separate series set
forth from time to time in Appendix A to this Agreement (the "Portfolios").
W I T N E S S E T H:
WHEREAS, the Company is an open-end investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Portfolios are separate series of common stock
representing interests in separate investment portfolios of the Company; and
WHEREAS, the Company, on behalf of the Portfolios, has retained the
Administrator to provide investment advisory services pursuant to a Master
Investment Advisory Agreement which provides that the Administrator may perform
(or arrange for the performance of) accounting, shareholder servicing and other
administrative services as well as investment advisory services to the
Portfolios, and that the Administrator may receive reasonable compensation or
may be reimbursed for its costs in providing such additional services, upon the
request of the Board of Directors and upon a finding by the Board of Directors
that the provision of such services is in the best interest of the Portfolios
and their shareholders; and
WHEREAS, the Board of Directors has found that the provision of such
administrative services is in the best interest of the Portfolios and their
shareholders, and has requested that the Administrator perform such services;
NOW, THEREFORE, the parties hereby agree as follows:
1. The Administrator hereby agrees to provide, or arrange for the
provision of, any or all of the following services by the Administrator or its
affiliates:
(a) the services of a principal financial officer of the Company
(including related office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and
records of the Company and the Portfolios, including the review of
daily net asset value calculations and the preparation of tax returns;
and the services (including related office space, facilities and
equipment) of any of the personnel operating under the direction of
such principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Administrator; changing account designations or changing addresses;
assisting in the purchase or redemption of shares of the Portfolios;
supervising the operations of the custodian(s), transfer agent(s) or
dividend agent(s) for the Portfolios; or otherwise providing services
to shareholders of the Portfolios; and
<PAGE> 2
(c) such other administrative services as may be furnished from time
to time by the Administrator to the Company or the Portfolios at the
request of the Company's Board of Directors.
2. The services provided hereunder shall at all times be subject
to the direction and supervision of the Company's Board of Directors.
3. As full compensation for the services performed and the
facilities furnished by or at the direction of the Administrator, the
Portfolios shall reimburse the Administrator for expenses incurred by them or
their affiliates in accordance with the methodologies established from time to
time by the Company's Board of Directors. Such amounts shall be paid to the
Administrator on a quarterly basis.
4. The Administrator shall not be liable for any error of judgment
or for any loss suffered by the Company or the Portfolios in connection with
any matter to which this Agreement relates, except a loss resulting from the
Administrator's willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement.
5. The Company and the Administrator each hereby represent and
warrant, but only as to themselves, that each has all requisite authority to
enter into, execute, deliver and perform its obligations under this Agreement
and that this Agreement is legal, valid and binding, and enforceable in
accordance with its terms.
6. Nothing in this Agreement shall limit or restrict the rights of
any director, officer or employee of the Administrator who may also be a
director, officer or employee of the Company to engage in any other business or
to devote his time and attention in part to the management or other aspects of
any business, whether of a similar or a dissimilar nature, nor limit or
restrict the right of the Administrator to engage in any other business or to
render services of any kind to any other corporation, firm, individual or
association.
7. This Agreement shall continue in effect until February 28, 1999
and shall continue in effect from year to year thereafter; provided that such
continuance is specifically approved at least annually:
(a) (i) by the Company's Board of Directors or (ii) by the
vote of a majority of the outstanding voting securities of the Company
(as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Company's
directors who are not parties to this Agreement or interested persons
of a party to this Agreement, by votes cast in person at a meeting
specifically called for such purpose.
This Agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a)(4) of the 1940 Act) or, with respect to
one or more Portfolios in the event of termination of the Master Investment
Advisory Agreement relating to such Portfolio(s) between the Company and the
Administrator.
2
<PAGE> 3
8. This Agreement may be amended or modified, but only by a
written instrument signed by both the Company and the Administrator.
9. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (a) to the Administrator at Eleven Greenway
Plaza, Suite 1919, Houston, Texas 77046, Attention: President, with a copy to
the General Counsel, or (b) to the Company at Eleven Greenway Plaza, Suite
1919, Houston, Texas 77046, Attention: President, with a copy to the General
Counsel.
10. This Agreement contains the entire agreement between the
parties hereto and supersedes all prior agreements, understandings and
arrangements with respect to the subject matter hereof.
11. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
A I M ADVISORS, INC.
Attest:/s/ DAVID L. KITE By:/s/ ROBERT H. GRAHAM
---------------------------- ------------------------------
Assistant Secretary President
(SEAL)
AIM TAX-EXEMPT FUNDS, INC.
Attest:/s/ OFELIA M. MAYO By:/s/ ROBERT H. GRAHAM
---------------------------- ------------------------------
Assistant Secretary President
(SEAL)
3
<PAGE> 4
AIM TAX-EXEMPT FUNDS, INC.
APPENDIX A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT
February 28, 1997
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COUNSEL
AIM TAX-EXEMPT FUNDS, INC.
We hereby consent to the use of our name and to the reference to our
firm under the caption "General Information - Legal Counsel" in the Prospectus
for AIM Tax-Exempt Funds, Inc. (the "Fund") and under the caption Miscellaneous
Information - Legal Matters in the Statement of Additional Information for the
Fund, which is included in Post-Effective Amendment No. 5 to the Registration
Statement under the Securities Act of 1933 (No. 33-66242) and Amendment No. 6
to the Registration Statement under the Investment Company Act of 1940 (No.
811-7890) on Form N-1A of the Fund.
/s/ Ballard Spahr Andrews & Ingersoll
-------------------------------------
Philadelphia, Pennsylvania
July 15, 1997
<PAGE> 1
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors and Shareholders
AIM Tax-Exempt Funds, Inc.:
We consent to the use of our reports on the AIM Tax-Free Intermediate Shares,
AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of Connecticut
(portfolios of AIM Tax-Exempt Funds, Inc.) dated May 2, 1997 included herein
and the references to our firm under the headings "Financial Highlights" in the
Prospectus and "Audit Reports in the Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Houston, Texas
July 16, 1997
<PAGE> 1
EXHIBIT 11(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of Post-Effective Amendment No. 5 to the registration
statement of AIM Tax-Exempt Funds, Inc. on Form N-1A (the "Registration
Statement") of our report dated February 16, 1993, relating to the selected per
share data and ratios appearing in the December 31, 1992 Annual Report to
Shareholders of AIM Tax-Exempt Cash Fund and AIM Tax-Exempt Bond Fund of
Connecticut. We also consent to the references to us under the heading
"Financial Highlights" in the Prospectus and under the heading "Audit Reports"
in the Statement of Additional Information.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Houston, Texas
July 25, 1997
<PAGE> 1
EXHIBIT 15(a)(3)
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM TAX-EXEMPT FUNDS, INC.
(RETAIL CLASSES)
SECTION 1. AIM Tax-Exempt Funds, Inc. (the "Fund") may act as a
distributor of shares of the AIM Tax-Exempt Cash Fund, and AIM Tax-Exempt Bond
Fund of Connecticut series portfolios (the "Shares") of which the Fund is the
issuer, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act"), according to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur as a distributor of the Shares, expenses
of up to twenty-five one-hundredths of one percent (0.25%) per annum of the
average daily net assets of the Fund attributable to the Shares, subject to any
applicable limitations imposed from time to time by applicable rules of the
National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Section 2 may be expended when and if
authorized in advance by the Fund's Board of Directors. Such amounts may be
used to finance any activity which is primarily intended to result in the sale
of the Shares, including, but not limited to, expenses of organizing and
conducting sales seminars, advertising programs, finders fees, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature, supplemental payments to dealers
and other institutions as asset-based sales charges. Amounts set forth in
Section 2 may also be used to finance payments of service fees under a
shareholder service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund has suspended or
otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be
used in part for the implementation by Distributors of
shareholder service arrangements with respect to the Shares. The
maximum service fee paid to any service provider shall be
twenty-five one-hundredths of one percent (0.25%) per annum of
the average daily net assets of the Fund attributable to the
Shares owned by the customers of such service provider.
<PAGE> 2
(b) Pursuant to this program, Distributors may enter into
agreements substantially in the form attached hereto as Exhibit A
("Service Agreements") with such broker-dealers ("Dealers") as
may be selected from time to time by Distributors for the
provision of distribution-related personal shareholder services
in connection with the sale of Shares to the Dealers' clients and
customers ("Customers") to Customers who may from time to time
directly or beneficially own Shares. The distribution-related
personal continuing shareholder services to be rendered by
Dealers under the Service Agreements may include, but shall not
be limited to, the following: (i) distributing sales literature;
(ii) answering routine Customer inquiries concerning the Fund and
the Shares; (iii) assisting Customers in changing dividend
options, account designations and addresses, and in enrolling
into any of several retirement plans offered in connection with
the purchase of Shares; (iv) assisting in the establishment and
maintenance of customer accounts and records, and in the
processing of purchase and redemption transactions; (v) investing
dividends and capital gains distributions automatically in
Shares; and (vi) providing such other information and services as
the Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank Shareholder
Service Agreements substantially in the form attached hereto as
Exhibit B ("Bank Agreements") with selected banks acting in an
agency capacity for their customers ("Banks"). Banks acting in
such capacity will provide some or all of the shareholder
services to their customers as set forth in the Bank Agreements
from time to time.
(d) Distributors may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit C
("Bank Trust Department Agreements and Brokers for Bank Trust
Department Agreements") with selected bank trust departments and
brokers for bank trust departments. Such bank trust departments
and brokers for bank trust departments will provide some or all
of the shareholder services to their customers as set forth in
the Bank Trust Department Agreements and Brokers for Bank Trust
Department Agreements from time to time.
SECTION 5. This Plan has been approved by a vote of at least a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of the
Shares.
SECTION 6. This Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority of both (a) the
Board of Directors of the Fund, and (b) those directors of the Fund who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Dis-interested Directors"), cast in person at a
meeting called for the purpose of voting on this Plan or such agreements.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan
shall continue in effect for a period until June 30, 1998, and thereafter shall
continue in effect so long as such continuance is specifically approved, at
least annually, in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of Directors
and the Board of Directors shall review, at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
-2-
<PAGE> 3
SECTION 9. This Plan may be terminated at any time by vote of a majority
of the Disinterested Directors, or by vote of a majority of the outstanding
voting securities of the Shares. If this Plan is terminated, the obligation of
the Fund to make payments pursuant to this Plan will also cease and the Fund
will not be required to make any payments beyond the termination date even with
respect to expenses incurred prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in writing,
and shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Dis-interested Directors or by a vote of the outstanding voting
securities of the Fund attributable to the Shares, on not more
than sixty (60) days' written notice to any other party to the
agreement; and
(b) that such agreement shall terminate automatically in
the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
AIM TAX-EXEMPT FUNDS, INC.
(on behalf of its Retail Classes)
Attest: /s/ OFELIA M. MAYO By: /s/ CAROL F. RELIHAN
--------------------------- ----------------------------
Assistant Secretary President
Effective as of August 6, 1993, as amended as of September 10, 1994.
Amended and restated for all Portfolios as of June 30, 1997.
-3-
<PAGE> 1
EXHIBIT 15 (a)(4)
SECOND AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM TAX-EXEMPT FUNDS, INC.
(CLASS A SHARES)
SECTION 1. AIM Tax-Exempt Funds, Inc. (the "Fund") may act as a
distributor of the Class A Shares of the AIM Tax-Exempt Cash Fund, and AIM
Tax-Exempt Bond Fund of Connecticut series portfolios (the "Shares") of which
the Fund is the issuer, pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "1940 Act"), according to the terms of this Distribution Plan (the
"Plan").
SECTION 2. The Fund may incur as a distributor of the Shares,
expenses of up to twenty-five one-hundredths of one percent (0.25%) per annum
of the average daily net assets of the Fund attributable to the Shares, subject
to any applicable limitations imposed from time to time by applicable rules of
the National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Section 2 may be expended when
and if authorized in advance by the Fund's Board of Directors. Such amounts
may be used to finance any activity which is primarily intended to result in
the sale of the Shares, including, but not limited to, expenses of organizing
and conducting sales seminars, advertising programs, finders fees, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature, supplemental payments to dealers
and other institutions as asset-based sales charges. Amounts set forth in
Section 2 may also be used to finance payments of service fees under a
shareholder service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when the Fund has suspended or
otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by Distributors of
shareholder service arrangements with respect to the Shares.
The maximum service fee paid to any service provider shall be
twenty-five one-hundredths of one percent (0.25%) per annum of
the average daily net assets of the Fund attributable to the
Shares owned by the customers of such service provider.
<PAGE> 2
(b) Pursuant to this program, Distributors may
enter into agreements substantially in the form attached hereto
as Exhibit A ("Service Agreements") with such broker-dealers
("Dealers") as may be selected from time to time by
Distributors for the provision of distribution-related personal
shareholder services in connection with the sale of Shares to
the Dealers' clients and customers ("Customers") to Customers
who may from time to time directly or beneficially own Shares.
The distribution-related personal continuing shareholder
services to be rendered by Dealers under the Service Agreements
may include, but shall not be limited to, the following: (i)
distributing sales literature; (ii) answering routine Customer
inquiries concerning the Fund and the Shares; (iii) assisting
Customers in changing dividend options, account designations
and addresses, and in enrolling into any of several retirement
plans offered in connection with the purchase of Shares; (iv)
assisting in the establishment and maintenance of customer
accounts and records, and in the processing of purchase and
redemption transactions; (v) investing dividends and capital
gains distributions automatically in Shares; and (vi) providing
such other information and services as the Fund or the Customer
may reasonably request.
(c) Distributors may also enter into Bank
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit B ("Bank Agreements") with selected
banks acting in an agency capacity for their customers
("Banks"). Banks acting in such capacity will provide some or
all of the shareholder services to their customers as set forth
in the Bank Agreements from time to time.
(d) Distributors may also enter into Shareholder
Service Agreements substantially in the form attached hereto as
Exhibit C ("Bank Trust Department Agreements and Brokers for
Bank Trust Department Agreements") with selected bank trust
departments and brokers for bank trust departments. Such bank
trust departments and brokers for bank trust departments will
provide some or all of the shareholder services to their
customers as set forth in the Bank Trust Department Agreements
and Brokers for Bank Trust Department Agreements from time to
time.
SECTION 5. This Plan has been approved by a vote of at least a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Shares.
SECTION 6. This Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority of
both (a) the Board of Directors of the Fund, and (b) those directors of the
Fund who are not "interested persons" of the Fund (as defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Dis-interested Directors"), cast in
person at a meeting called for the purpose of voting on this Plan or such
agreements.
SECTION 7. Unless sooner terminated pursuant to Section 9, this
Plan shall continue in effect for a period until June 30, 1998, and thereafter
shall continue in effect so long as such continuance is specifically approved,
at least annually, in the manner provided for approval of this Plan in Section
6.
-2-
<PAGE> 3
SECTION 8. Distributors shall provide to the Fund's Board of
Directors and the Board of Directors shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 9. This Plan may be terminated at any time by vote of a
majority of the Dis-interested Directors, or by vote of a majority of the
outstanding voting securities of the Shares. If this Plan is terminated, the
obligation of the Fund to make payments pursuant to this Plan will also cease
and the Fund will not be required to make any payments beyond the termination
date even with respect to expenses incurred prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated at any
time, without payment of any penalty, by vote of a majority of
the Dis-interested Directors or by a vote of the outstanding
voting securities of the Fund attributable to the Shares, on
not more than sixty (60) days' written notice to any other
party to the agreement; and
(b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially
the amount of distribution expenses provided for in Section 2 hereof unless
such amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
AIM TAX-EXEMPT FUNDS, INC.
(on behalf of its Class A Shares)
Attest: By:
--------------------------- ------------------------------------
Assistant Secretary President
Effective as of August 6, 1993, as amended as of September 10, 1994.
Amended and restated for all Portfolios as of June 30, 1997, as further amended
and restated as of .
----------------
- 3 -
<PAGE> 1
EXHIBIT 15(b)
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE] FOR SALE OF SHARES
A I M Distributors, Inc. OF THE AIM MUTUAL FUNDS
This Shareholder Service Agreement (the "Agreement") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") by each
of the AIM-managed mutual funds (or designated classes of such funds) listed on
Schedule A to this Agreement (the "Funds"), under a Distribution Plan (the
"Plan") adopted pursuant to said Rule. This Agreement, being made between A I M
Distributors, Inc. ("Distributors"), solely as agent for the Funds, and the
undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by each of the Funds. The Plan and the Agreement have been approved by
a majority of the directors of each of the Funds, including a majority of the
directors who are not interested persons of such Funds, and who have no direct
or indirect financial interest in the operation of the Plan or related
agreements (the "Dis-interested Directors"), by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgement and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit such Fund and its shareholders.
1 To the extent that you provide distribution-related continuing personal
shareholder services to customers who may, from time to time, directly or
beneficially own shares of the Funds, including but not limited to,
distributing sales literature, answering routine customer inquiries
regarding the Funds, assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several
special investment plans offered in connection with the purchase of the
Fund's shares, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares and providing such other services as the Funds or
the customer may reasonably request, we, solely as agent for the Funds,
shall pay you a fee periodically or arrange for such fee to be paid to you.
2 The fee paid with respect to each Fund will be calculated at the end of each
payment period (as indicated in Schedule A) for each business day of the
Fund during such payment period at the annual rate set forth in Schedule A
as applied to the average net asset value of the shares of such Fund
purchased or acquired through exchange on or after the Plan Calculation
Date shown for such Fund on Schedule A. Fees calculated in this manner
shall be paid to you only if your firm is the dealer of record at the close
of business on the last business day of the applicable payment period, for
the account in which such shares are held (the "Subject Shares"). In cases
where Distributors has advanced payment to you of the first year's fee for
shares sold at net asset value and subject to contingent deferred sales
charge, no additional payments will be made to you during the first year
the Subject Shares are held.
3 The total of the fees calculated for all of the Funds listed on Schedule A
for any period with respect to which calculations are made shall be paid
to you within 45 days after the close of such period.
4 We reserve the right to withhold payment with respect to the Subject Shares
purchased by you and redeemed or repurchased by the Fund or by us as Agent
within seven (7) business days after the date of our confirmation of such
purchase. We reserve the right at any time to impose minimum fee payment
requirements before any periodic payments will be made to you hereunder.
5 This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
6 You shall furnish us and the Funds with such information as shall
reasonably be requested either by the directors of the Funds or by us with
respect to the fees paid to you pursuant to this Agreement.
7 We shall furnish the directors of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under the Plan by
us and the purposes for which such expenditures were made.
8 Neither you nor any of your employees or agents are authorized to make any
representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds, and you shall have no authority
to act as agent for the Funds or for Distributors.
7/97
<PAGE> 2
9 We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10 This Agreement and Schedule A may be amended at any time without your
consent by Distributors mailing a copy of an amendment to you at the address
set forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this Agreement
within thirty (30) days of your receipt of such amendment.
11 This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty by the vote of a majority of the directors
of such Fund who are Dis-interested Directors or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written notice. It will
be terminated by any act which terminates either the Selected Dealer
Agreement between your firm and us or the Fund's Distribution Plan, and in
any event, it shall terminate automatically in the event of its assignment
as that term is defined in the 1940 Act.
12 The provisions of the Distribution Agreement between any Fund and us,
insofar as they relate to the Plan, are incorporated herein by reference.
This Agreement shall become effective upon execution and delivery hereof
and shall continue in full force and effect as long as the continuance of
the Plan and this related Agreement are approved at least annually by a
vote of the directors, including a majority of the Dis-interested
Directors, cast in person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to the address of
Distributors as shown at the bottom of this Agreement. Any notice to you
shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13 You represent that you provide to your customers who own shares of the
Funds personal services as defined from time to time in applicable
regulations of the National Association of Securities Dealers, Inc., and
that you will continue to accept payments under this Agreement only so long
as you provide such services.
14 This Agreement shall be construed in accordance with the laws of the State
of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor Income Fund A Shares 0.25 August 4, 1997
AIM Advisor Income Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 Ocotober 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 July 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
7/97
<PAGE> 4
SCHEDULE "A"
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
7/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Income Fund) is paid as an asset-based sales charge, as those
terms are defined under the rules of the National Association of Security
Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
7/97
<PAGE> 1
EXHIBIT 15(c)
[LOGO APPEARS HERE] BANK SHAREHOLDER
A I M Distributors, Inc. SERVICE AGREEMENT
We desire to enter into an Agreement with A I M Distributors, Inc. (the
"Company") acting as agent for the "AIM Funds", for servicing of our agency
clients who are shareholders of, and the administration of such shareholder
accounts in the shares of the AIM Funds (hereinafter referred to as the
"Shares"). Subject to the Company's acceptance of this Agreement, the terms and
conditions of this Agreement shall be as follows:
1 We shall provide continuing personal shareholder and administration
services for holders of the Shares who are also our clients. Such services
to our clients may include, without limitation, some or all of the
following: answering shareholder inquiries regarding the Shares and the AIM
Funds; performing subaccounting; establishing and maintaining shareholder
accounts and records; processing and bunching customer purchase and
redemption transactions; providing periodic statements showing a
shareholder's account balance and the integration of such statements with
those of other transactions and balances in the shareholder's other
accounts serviced by us; forwarding applicable AIM Funds prospectuses, proxy
statements, reports and notices to our clients who are holders of Shares;
and such other administrative services as you reasonably may request, to
the extent we are permitted by applicable statute, rule or regulations to
provide such services. We represent that we shall accept fees hereunder
only so long as we continue to provide personal shareholder services to our
clients.
2 Shares purchased by us as agents for our clients will be registered (choose
one) (in our name or in the name of our nominee) (in the names of our
clients). The client will be the beneficial owner of the Shares purchased
and held by us in accordance with the client's instructions and the client
may exercise all applicable rights of a holder of such Shares. We agree to
transmit to the AIM Funds' transfer agent in a timely manner, all purchase
orders and redemption requests of our clients and to forward to each
client any proxy statements, periodic shareholder reports and other
communications received from the Company by us on behalf of our clients.
The Company agrees to pay all out-of-pocket expenses actually incurred by
us in connection with the transfer by us of such proxy statements and
reports to our clients as required by applicable law or regulation. We
agree to transfer record ownership of a client's Shares to the client
promptly upon the request of a client. In addition, record ownership will
be promptly transferred to the client in the event that the person or
entity ceases to be our client.
3 Within five (5) business days of placing a purchase order we agree to send
(i) a cashiers check to the Company, or (ii) a wire transfer to the AIM
Funds' transfer agent, in an amount equal to the amount of all purchase
orders placed by us on behalf of our clients and accepted by the Company.
4 We agree to make available to the Company, upon the Company's request, such
information relating to our clients who are beneficial owners of Shares and
their transactions in such Shares as may be required by applicable laws and
regulations or as may be reasonably requested by the Company. The names of
our customers shall remain our sole property and shall not be used by the
Company for any other purpose except as needed for servicing and
information mailings in the normal course of business to holders of the
Shares.
5 We shall provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying out
the purposes of this Agreement.
6 Except as may be provided in a separate written agreement between the
Company and us, neither we nor any of our employees or agents are
authorized to assist in distribution of any of the AIM Funds' shares except
those contained in the then current Prospectus applicable to the Shares;
and we shall have no authority to act as agent for the Company or the AIM
Funds. Neither the AIM Funds, A I M Advisors, Inc. nor A I M Distributors,
Inc. will be a party, nor will they be represented as a party, to any
agreement that we may enter into with our clients.
7/97
<PAGE> 2
7 In consideration of the services and facilities described herein, we shall
receive from the Company on behalf of the AIM Funds an annual service fee,
payable at such intervals as may be set forth in Schedule A hereto, of a
percentage of the aggregate average net asset value of the Shares owned
beneficially by our clients during each payment period, as set forth in
Schedule A hereto. We understand that this Agreement and the payment of
such service fees has been authorized and approved by the Boards of
Directors/Trustees of the AIM Funds, and is subject to limitations imposed
by the National Association of Securities Dealers, Inc. In cases where the
Company has advanced payments to us of the first year's fee for shares sold
with a contingent deferred sales charge, no payments will be made to us
during the first year the subject Shares are held.
8 The AIM Funds reserve the right, at their discretion and without notice, to
suspend the sale of any Shares or withdraw the sale of Shares.
9 We understand that the Company reserves the right to amend this Agreement
or Schedule A hereto at any time without our consent by mailing a copy of
an amendment to us at the address set forth below. Such amendment shall
become effective on the date specified in such amendment unless we elect to
terminate this Agreement within thirty (30) days of our receipt of such
amendment.
10 This Agreement may be terminated at any time by the Company on not less
than 15 days' written notice to us at our principal place of business. We,
on 15 days' written notice addressed to the Company at its principal place
of business, may terminate this Agreement, said termination to become
effective on the date of mailing notice to us of such termination. The
Company's failure to terminate for any cause shall not constitute a waiver
of the Company's right to terminate at a later date for any such cause.
This Agreement shall terminate automatically in the event of its assigment,
the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.
11 All communications to the Company shall be sent to it at Eleven Greenway
Plaza, Suite 1919, Houston, Texas, 77046-1173. Any notice to us shall be
duly given if mailed or telegraphed to us at this address shown on this
Agreement.
12 This Agreement shall become effective as of the date when it is executed
and dated below by the Company. This Agreement and all rights and
obligations of the parties hereunder shall be governed by and construed
under the laws of the State of Texas.
A I M DISTRIBUTORS, INC.
/S/ MICHAEL J. CEMO
Date:________________ By: X____________________________________________
The undersigned agrees to abide by the foregoing terms and conditions.
Date:________________ By: X____________________________________________
Signature
____________________________________________
Print Name Title
____________________________________________
Dealer's Name
____________________________________________
Address
____________________________________________
City State Zip
Please sign both copies and return one copy of
each to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
7/97
<PAGE> 3
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ------------------------------------------------------------------------------------------
<S> <C> <C>
AIM Advisor Flex Fund A Shares 0.25 August 4, 1997
AIM Advisor Flex Fund C Shares 1.00** August 4, 1997
AIM Advisor Income Fund A Shares 0.25 August 4, 1997
AIM Advisor Income Fund C Shares 1.00** August 4, 1997
AIM Advisor International Value Fund A Shares 0.25 August 4, 1997
AIM Advisor International Value Fund C Shares 1.00** August 4, 1997
AIM Advisor Large Cap Value Fund A Shares 0.25 August 4, 1997
AIM Advisor Large Cap Value Fund C Shares 1.00** August 4, 1997
AIM Advisor MultiFlex Fund A Shares 0.25 August 4, 1997
AIM Advisor MultiFlex Fund C Shares 1.00** August 4, 1997
AIM Advisor Real Estate Fund A Shares 0.25 August 4, 1997
AIM Advisor Real Estate Fund C Shares 1.00** August 4, 1997
AIM Aggressive Growth Fund A Shares 0.25 July 1, 1992
AIM Balanced Fund A Shares 0.25 October 18, 1993
AIM Balanced Fund B Shares 0.25 October 18, 1993
AIM Balanced Fund C Shares 1.00** August 4, 1997
AIM Blue Chip Fund A Shares 0.25 June 3, 1996
AIM Blue Chip Fund B Shares 0.25 October 1, 1996
AIM Blue Chip Fund C Shares 1.00** August 4, 1997
AIM Capital Development Fund A Shares 0.25 June 17, 1996
AIM Capital Development Fund B Shares 0.25 October 1, 1996
AIM Capital Development Fund C Shares 1.00** August 4, 1997
AIM Charter Fund A Shares 0.25 November 18, 1986
AIM Charter Fund B Shares 0.25 June 15, 1995
AIM Charter Fund C Shares 1.00** August 4, 1997
AIM Constellation Fund A Shares 0.25 September 9, 1986
AIM Constellation Fund C Shares 1.00** August 4, 1997
AIM Global Aggressive Growth Fund A Shares 0.50 September 15, 1994
AIM Global Aggressive Growth Fund B Shares 0.25 September 15, 1994
AIM Global Aggressive Growth Fund C Shares 1.00** August 4, 1997
AIM Global Growth Fund A Shares 0.50 September 15, 1994
AIM Global Growth Fund B Shares 0.25 September 15, 1994
AIM Global Growth Fund C Shares 1.00** August 4, 1997
AIM Global Income Fund A Shares 0.50 September 15, 1994
</TABLE>
7/97
<PAGE> 4
SCHEDULE "A" TO BANK
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ----------------------------------------------------------------------------------------
<S> <C> <C>
AIM Global Income Fund B Shares 0.25 September 15, 1994
AIM Global Income Fund C Shares 1.00** August 4, 1997
AIM Global Utilities Fund A Shares 0.25 July 1, 1992
AIM Global Utilities Fund B Shares 0.25 September 1, 1993
AIM Global Utilities Fund C Shares 1.00** August 4, 1997
AIM Growth Fund A Shares 0.25 July 1, 1992
AIM Growth Fund B Shares 0.25 September 1, 1993
AIM Growth Fund C Shares 1.00** August 4, 1997
AIM High Yield Fund A Shares 0.25 July 1, 1992
AIM High Yield Fund B Shares 0.25 September 1, 1993
AIM High Yield Fund C Shares 1.00** August 4, 1997
AIM Income Fund A Shares 0.25 July 1, 1992
AIM Income Fund B Shares 0.25 September 1, 1993
AIM Income Fund C Shares 1.00** August 4, 1997
AIM Intermediate Government Fund A Shares 0.25 July 1, 1992
AIM Intermediate Government Fund B Shares 0.25 September 1, 1993
AIM Intermediate Government Fund C Shares 1.00** August 4, 1997
AIM International Equity Fund A Shares 0.25 May 21, 1992
AIM International Equity Fund B Shares 0.25 September 15, 1994
AIM International Equity Fund C Shares 1.00** August 4, 1997
AIM Limited Maturity Treasury Shares 0.15 December 2, 1987
AIM Money Market Fund A Shares 0.25 October 18, 1993
AIM Money Market Fund B Shares 0.25 October 18, 1993
AIM Money Market Fund C Shares 1.00** August 4, 1997
AIM Cash Reserve Shares 0.25 October 18, 1993
AIM Municipal Bond Fund A Shares 0.25 July 1, 1992
AIM Municipal Bond Fund B Shares 0.25 September 1, 1993
AIM Municipal Bond Fund C Shares 1.00** August 4, 1997
AIM Tax-Exempt Bond Fund of Connecticut A Shares 0.25 July 1, 1992
AIM Tax-Exempt Cash Fund A Shares 0.10 July 1, 1992
AIM Value Fund A Shares 0.25 July 1, 1992
AIM Value Fund B Shares 0.25 October 18, 1993
AIM Value Fund C Shares 1.00** August 4, 1997
</TABLE>
7/97
<PAGE> 5
<TABLE>
<CAPTION>
Fund Fee Rate* Plan Calculation Date
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AIM Weingarten Fund A Shares 0.25 September 9, 1986
AIM Weingarten Fund B Shares 0.25 June 15, 1995
AIM Weingarten Fund C Shares 1.00** August 4, 1997
</TABLE>
* Frequency of Payments: Quarterly, B and C share payments begin after an
initial 12 month holding period. Where the broker dealer or financial
institution waives the 1% up-front commission on Class C shares, payments
commence immediately.
** Of this amount, 0.25% is paid as a shareholder servicing fee and 0.75%
(0.35% for AIM Income Fund) is paid as an asset-based sales charge, as those
terms are defined under the rules of the National Association of Security
Dealers, Inc.
Minimum Payments: $50 (with respect to all funds in the aggregate.)
No payment pursuant to this Schedule is payable to a dealer, bank or other
service provider for the first year with respect to sales of $1 million or
more, at no load, in cases where A I M Distributors, Inc. has advanced the
service fee to the dealer, bank or other service provider.
7/97
<PAGE> 1
EXHIBIT 15(d)
AGENCY PRICING AGREEMENT
(THE AIM FAMILY OF FUNDS--Registered Trademark--)
This Agreement is entered into as of the____ of ____________, 1997,
between _______________________(the "Plan Provider") and A I M Distributors,
Inc. (the "Distributor").
RECITAL
Plan Provider acts as a trustee and/or servicing agent for defined
contribution plans and/or deferred compensation plans (the "Plans") and invests
and reinvests such Plans' assets as specified by an investment advisor, sponsor
or administrative committee of the Plan (a "Plan Representative") generally
upon the direction of Plan beneficiaries (the "Participants").
Plan Provider and Distributor desire to facilitate the purchase and
redemption of shares (the "Shares") of the funds listed on Exhibit A hereto
(the "Fund" or "Funds"), registered investment companies distributed by
Distributor, on behalf of the Plans, through one or more accounts (not to
exceed one per Plan) in each Fund (individually an "Account" and collectively
the "Accounts"), subject to the terms and conditions of this Agreement.
Distributor shall, on behalf of the Funds, pay to Plan Provider a fee in
accordance with Exhibit A hereto.
AGREEMENT
1. SERVICES
Plan Provider shall provide shareholder and administration services
for the Plans and/or their Participants, including, without
limitation: answering questions about the Funds; assisting in changing
dividend options, account designations and addresses; establishing and
maintaining shareholder accounts and records; and assisting in
processing purchase and redemption transactions (the "Services").
Plan Provider shall comply with all applicable laws, rules and
regulations, including requirements regarding prospectus delivery and
maintenance and preservation of records. To the extent allowed by
law, Plan Provider shall provide Distributor with copies of all
records that Distributor may reasonably request. Distributor or its
affiliate will recognize each Plan as an unallocated account in each
Fund, and will not maintain separate accounts in each Fund for each
Participant. Except to the extent provided in Section 3, all Services
performed by Plan Provider shall be as an independent contractor and
not as an employee or agent of Distributor or any of the Funds. Plan
Provider and Plan Representatives, and not Distributor, shall take all
necessary action so that the transactions contemplated by this
Agreement shall not be "Prohibited Transactions" under section 406 of
the Employee Retirement Income Security Act of 1974, or section 4975
of the Internal Revenue Code.
2. PRICING INFORMATION
Each Fund or its designee will furnish Plan Provider on each business
day that the New York Stock Exchange is open for business ("Business
Day"), with (i) net asset value information as of the close of trading
(currently 4:00 p.m. Eastern Time) on the New York Stock Exchange or
as at such later times at which a Fund's net asset value is calculated
as specified in such Fund's prospectus ("Close of Trading"), (ii)
dividend and capital gains
<PAGE> 2
information as it becomes available, and (iii) in the case of income
Funds, the daily accrual or interest rate factor (mil rate). The Funds
shall use their best efforts to provide such information to Plan
Provider by 6:00 p.m. Central Time on the same Business Day.
Distributor or its affiliate will provide Plan Provider (a) daily
confirmations of Account activity within five Business Days after each
day on which a purchase or redemption of Shares is effected for the
particular Account, (b) if requested by Plan Provider, quarterly
statements detailing activity in each Account within fifteen Business
Days after the end of each quarter, and (c) such other reports as may
be reasonably requested by Plan Provider.
3. ORDERS AND SETTLEMENT
If Plan Provider receives instructions in proper form from
Participants or Plan Representatives before the Close of Trading on a
Business Day, Plan Provider will process such instructions that same
evening. On the next Business Day, Plan Provider will transmit orders
for net purchases or redemptions of Shares to Distributor or its
designee by 9:00 a.m. Central Time and wire payment for net purchases
by 2:00 p.m. Central Time. Distributor or its affiliate will wire
payment for net redemptions on the Business Day following the day the
order is executed for the Accounts. In doing so, Plan Provider will
be considered the Funds' agent, and Shares will be purchased and
redeemed as of the Business Day on which Plan Provider receives the
instructions. Plan Provider will record time and date of receipt of
instructions and will, upon request, provide such instructions and
other records relating to the Services to Distributor's auditors. If
Plan Provider receives instructions in proper form after the Close of
Trading on a Business Day, Plan Provider will treat the instructions
as if received on the next Business Day.
4. REPRESENTATIONS WITH RESPECT TO THE DISTRIBUTOR AND THE FUNDS
Plan Provider and its agents shall limit representations concerning a
Fund or Shares to those contained in the then current prospectus of
such Fund, in current sales literature furnished by Distributor to
Plan Provider, in publicly available databases, such as those
databases created by Standard & Poor's and Morningstar, and in current
sales literature created by Plan Provider and submitted to and
approved in writing by Distributor prior to its use.
5. USE OF NAMES
Plan Provider and its affiliates will not, without the prior written
approval of Distributor, make public references to A I M Management
Group Inc. or any of its subsidiaries, or to the Funds. For purposes
of this provision, the public does not include Plan Providers'
representatives who are actively engaged in promoting the Funds. Any
brochure or other communication to the public that mentions the Funds
shall be submitted to Distributor for written approval prior to use.
Plan Provider shall provide copies of its regulatory filings that
include any reference to A I M Management Group Inc. or its
subsidiaries or the Funds to Distributor. If Plan Provider or its
affiliates should make unauthorized references or representations,
Plan Provider agrees to indemnify and hold harmless the Funds, A I M
Management Group Inc. and its subsidiaries from any claims, losses,
expenses or liability arising in any way out of or connected in any
way with such references or representations.
-2-
<PAGE> 3
6. TERMINATION
(a) This Agreement may be terminated with respect to any Fund at
any time without any penalty by the vote of a majority of the
directors of such Fund who are "disinterested directors", as
that term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), or by a vote of a majority of the
Fund's outstanding shares, on sixty (60) days' written notice.
It will be terminated by any act which terminates either the
Fund's Distribution Plan, or any related agreement thereunder,
and in any event, it shall terminate automatically in the
event of its assignment as that term is defined in the 1940
Act.
(b) Either party may terminate this Agreement upon ninety (90)
days' prior written notice to the other party at the address
specified below.
7. INDEMNIFICATION
(a) Plan Provider agrees to indemnify and hold harmless the
Distributor, its affiliates, the Funds, the Funds' investment
advisors, and each of their directors, officers, employees,
agents and each person, if any, who controls them within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), (the "Distributor Indemnitees") against any
losses, claims, damages, liabilities or expenses to which a
Distributor Indemnitee may become subject insofar as those
losses, claims, damages, liabilities or expenses or actions in
respect thereof, arise out of or are based upon (i) Plan
Provider's negligence or willful misconduct in performing the
Services, (ii) any breach by Plan Provider of any material
provision of this Agreement, or (iii) any breach by Plan
Provider of a representation, warranty or covenant made in
this Agreement; and Plan Provider will reimburse the
Distributor Indemnitee for any legal or other expenses
reasonably incurred, as incurred, by them in connection with
investigating or defending such loss, claim or action. This
indemnity agreement will be in addition to any liability which
Plan Provider may otherwise have.
(b) Distributor agrees to indemnify and hold harmless Plan
Provider and its affiliates, and each of its directors,
officers, employees, agents and each person, if any, who
controls Plan Provider within the meaning of the Securities
Act (the "Plan Provider Indemnitees") against any losses,
claims, damages, liabilities or expenses to which a Plan
Provider Indemnitee may become subject insofar as such losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement or Prospectus of a
Fund, or the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make statements therein not misleading, (ii) any breach by
Distributor of any material provision of this Agreement, (iii)
Distributor's negligence or willful misconduct in carrying out
its duties and responsibilities under this Agreement, or (iv)
any breach by Distributor of a representation, warranty or
covenant made in this Agreement; and Distributor will
reimburse the Plan Provider Indemnitees for any legal or other
expenses reasonably incurred, as incurred, by them, in
connection with investigating or defending any such loss,
claim or action. This indemnity agreement will be in addition
to any liability which Distributor may otherwise have.
-3-
<PAGE> 4
(c) If any third party threatens to commence or commences any
action for which one party (the "Indemnifying Party") may be
required to indemnify another person hereunder (the
"Indemnified Party"), the Indemnified Party shall promptly
give notice thereof to the Indemnifying Party. The
Indemnifying Party shall be entitled, at its own expense and
without limiting its obligations to indemnify the Indemnified
Party, to assume control of the defense of such action with
counsel selected by the Indemnifying Party which counsel shall
be reasonably satisfactory to the Indemnified Party. If the
Indemnifying Party assumes the control of the defense, the
Indemnified Party may participate in the defense of such claim
at its own expense. Without the prior written consent of the
Indemnified Party, which consent shall not be withheld
unreasonably, the Indemnifying Party may not settle or
compromise the liability of the Indemnified Party in such
action or consent to or permit the entry of any judgment in
respect thereof unless in connection with such settlement,
compromise or consent each Indemnified Party receives from
such claimant an unconditional release from all liability in
respect of such claim.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Texas applicable to agreements fully
executed and to be performed therein.
9. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party represents that it is free to enter into this Agreement and
that by doing so it will not breach or otherwise impair any other
agreement or understanding with any other person, corporation or other
entity. Each party represents that it has full power and authority
under applicable law, and has taken all action necessary to enter into
and perform this Agreement and the person executing this Agreement on
its behalf is duly authorized and empowered to execute and deliver
this Agreement. Additionally, each party represents that this
Agreement, when executed and delivered, shall constitute its valid,
legal and binding obligation, enforceable in accordance with its
terms.
Plan Provider further represents, warrants, and covenants that:
(a) it is registered as a transfer agent pursuant to Section 17A
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), or is not required to be registered as such;
(b) the arrangements provided for in this Agreement will be
disclosed to the Plan Representatives; and
(c) it is registered as a broker-dealer under the 1934 Act or any
applicable state securities laws, or, including as a result of
entering into and performing the services set forth in this
Agreement, is not required to be registered as such.
Distributor further represents, warrants and covenants, that:
(a) it is registered as a broker-dealer under the 1934 Act and any
applicable state securities laws; and
-4-
<PAGE> 5
(b) the Funds' advisors are registered as investment advisors
under the Investment Advisers Act of 1940, the Funds are
registered as investment companies under the 1940 Act and Fund
Shares are registered under the Securities Act.
10. MODIFICATION
This Agreement and Exhibit A may be amended at any time by Distributor
without Plan Provider's consent by Distributor mailing a copy of an
amendment to Plan Provider at the address set forth below. Such
amendment shall become effective thirty (30) days from the date of
mailing unless this Agreement is terminated by the Plan Provider
within such thirty (30) days.
11. ASSIGNMENT
This Agreement shall not be assigned by a party hereto, without the
prior written consent of the other parties hereto, except that a party
may assign this Agreement to an affiliate having the same ultimate
ownership as the assigning party without such consent.
12. SURVIVAL
The provisions of Sections 1, 5 and 7 shall survive termination of
this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of the date first above written.
______________________________________
(PLAN PROVIDER)
By:___________________________________
Print Name:___________________________
Title:________________________________
Address: _____________________________
______________________________________
______________________________________
A I M DISTRIBUTORS, INC.
(DISTRIBUTOR)
By:___________________________________
Print Name:___________________________
Title:________________________________
11 Greenway Plaza
Suite 1919
Houston, Texas 77210
-5-
<PAGE> 6
EXHIBIT A
For the term of this Agreement, Distributor, or its affiliates, shall
pay Plan Provider the following amounts for each of the following Funds with
respect to the average daily net asset value of the Class A and Class C Shares
of the Plans' balances for the prior quarter:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
- ---------- ----------
<S> <C>
AIM Equity Funds, Inc.
- ----------------------
AIM Aggressive Growth Fund* .25%
AIM Blue Chip Fund .25%
AIM Capital Development Fund .25%
AIM Charter Fund .25%
AIM Constellation Fund .25%
AIM Weingarten Fund .25%
AIM Funds Group
- ---------------
AIM Balanced Fund .25%
AIM Global Utilities Fund .25%
AIM Growth Fund .25%
AIM High Yield Fund .25%
AIM Income Fund .25%
AIM Intermediate Government Fund .25%
AIM Municipal Bond Fund .25%
AIM Value Fund .25%
AIM International Funds, Inc.
- -----------------------------
AIM Global Aggressive Growth Fund .25%
AIM Global Growth Fund .25%
AIM Global Income Fund .25%
AIM International Equity Fund .25%
AIM Investment Securities Funds
- -------------------------------
Limited Maturity Treasury Portfolio (AIM
Limited Maturity Treasury Shares) .15%
</TABLE>
Distributor or its affiliates shall calculate the amount of quarterly
payment and shall deliver to Plan Provider a quarterly statement showing the
calculation of the quarterly amounts payable to Plan Provider. Distributor
reserves the right at any time to impose minimum fee payment requirements
before any quarterly payments will be made to Plan Provider. Payment to Plan
Provider shall occur within 30 days following the end of each quarter. All
parties agree that the payments referred to herein are for record keeping and
administrative services only and are not for legal, investment advisory or
distribution services.
Minimum Payments: $50 (with respect to all Funds in the aggregate.)
* AIM Aggressive Growth Fund is currently closed to new investors.
<PAGE> 1
EXHIBIT 15(e)
A I M DISTRIBUTORS, INC.
[LOGO APPEARS HERE] SHAREHOLDER SERVICE AGREEMENT
A I M Distributors, Inc.
(BANK TRUST DEPARTMENTS)
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 2
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not
<PAGE> 3
Shareholder Service Agreement Page 3
(Bank Trust Departments)
constitute a waiver of AIM Distributors's right to terminate at a later
date for any such cause. This Agreement may be terminated with respect
to any Fund at any time by the vote of a majority of the directors or
trustees of such Fund who are disinterested directors or by a vote of a
majority of the Fund's outstanding shares, on not less than 60 days'
written notice to us at our principal place of business. This Agreement
will be terminated by any act which terminates a Fund's Distribution
Agreement with AIM Distributors, the Agreement for Purchase of Shares of
The AIM Family of Funds--Registered Trademark-- between us and AIM
Distributors or a Fund's Distribution Plan, and in any event, it shall
terminate automatically in the event of its assignment by us, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM
Family of Funds--Registered Trademark-- through Bank Trust Departments
constitute the entire agreement between us and AIM Distributors and
supersede all prior oral or written agreements between the parties
hereto. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute the same
instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------
(Firm Name)
-------------------------------------
(Address)
-------------------------------------
City/State/Zip/County
By:
------------------------------
Name:
--------------------------------
Title:
------------------------------
Dated:
-------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Dated:
----------------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
</TABLE>
__________________________________
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE]
A I M Distributors, Inc. (BROKERS FOR BANK TRUST DEPARTMENTS)
____________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating to shares
of the Funds owned by our clients. AIM Distributors, on behalf of the
Funds, agrees
<PAGE> 7
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
to pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
<PAGE> 8
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation
by us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for any such cause. This Agreement may be terminated
with respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates a Fund's
Distribution Agreement with AIM Distributors, the Selected Dealer
Agreement between us and AIM Distributors or a Fund's Distribution Plan,
and in any event, shall terminate automatically in the event of its
assignment by us, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors
from any obligations either may have under any other agreements between
us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 9
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-------------------------------------------------
(Firm Name)
-------------------------------------------------
(Address)
-------------------------------------------------
City/State/Zip/County
By:
------------------------------------------
Name:
--------------------------------------------
Title:
------------------------------------------
Dated:
-------------------------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 10
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
* AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM Growth Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Value Fund
AIM International Funds, Inc.
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
Limited Maturity Treasury Portfolio
AIM Tax-Exempt Funds, Inc.
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
Intermediate Portfolio
</TABLE>
__________________________________
*Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 1
EXHIBIT 18
AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Amended and Restated Multiple Class Plan (the "Plan") adopted in
accordance with Rule 18f-3 under the Act shall govern the terms and
conditions under which the Funds may issue separate Classes of Shares
representing interests in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC upon
redemption.
d. Class - a class of Shares of a Fund representing an interest
in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class A
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class B
Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class C
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class C Shares for purposes of this Plan.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which
are primarily intended to result in the distribution and sale
of Shares as defined in a Plan of Distribution and/or
agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
l. Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
m. Institutional Shares - shall mean Shares of a Fund
representing an interest in a Portfolio offered for sale to
institutional customers as may be approved by the Directors
from time to time and as set forth in the Fund's prospectus.
n. Plan of Distribution - Any plan adopted under Rule 12b-1 under
the Act with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders
and/or the maintenance of shareholder accounts.
q. Share - a share of common stock of or beneficial interest in
a Fund, as applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear
directly any and all Distribution Fees and/or Service Fees
payable by such Class pursuant to a Plan of Distribution
adopted by the Fund with respect to such Class.
b. Transfer Agency and Shareholder Recordkeeping Fees - Each
Class shall bear directly the transfer agency fees and
expenses and other shareholder recordkeeping fees and
expenses specifically attributable to that Class.
c. Allocation of Other Expenses - Each Class shall bear
proportionately all other expenses incurred by a Fund based
on the relative net assets attributable to each such Class.
d. Allocation of Income, Gains and Losses - Except to the extent
provided in the following sentence, each Portfolio will
allocate income and realized and unrealized capital gains and
losses to a Class based on the relative net assets of each
Class. Notwithstanding the foregoing, each Portfolio that
declares dividends on a daily basis will allocate income on
the basis of settled shares.
e. Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the
Portfolio may waive or reimburse the expenses of a particular
Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below will apply for the following
Classes offered by a Fund with respect to a Portfolio. The provisions
of the Fund's prospectus describing the distribution and servicing
arrangements in detail are incorporated herein by this reference.
a. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Directors and set forth in the Fund's prospectus,
may be reduced or eliminated for certain money market fund
2
<PAGE> 3
shares, for larger purchases, under a combined
purchase privilege, under a right of accumulation,
under a letter of intent or for certain categories of
purchasers as permitted by Rule 22(d) of the Act and as set
forth in the Fund's prospectus. Class A Shares that are not
subject to a front-end sales charge as a result of the
foregoing shall be subject to a CDSC for the CDSC Period set
forth in Section 5(a) of this Plan if so provided in the
Fund's prospectus. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with
Rule 22c-1 and Section 22(d) of the Act and the rules and
regulations thereunder. Class A Shares shall be subject to
ongoing Service Fees and/or Distribution Fees approved from
time to time by the Directors and set forth in the Fund's
prospectus. Although AIM Cash Reserve Shares, AIM Limited
Maturity Treasury Shares, AIM Tax-Free Intermediate Shares
and shares of AIM Tax-Exempt Bond Fund of Connecticut and AIM
Tax Exempt Cash Fund are not designated as "Class A", they
are substantially similar to Class A Shares as defined herein
and shall be deemed to be Class A Shares for the purposes of
this Plan.
b. Class B Shares. Class B Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(b), (iii) subject to ongoing Service Fees
and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus, and (iv)
converted to Class A Shares eight years from the end of the
calendar month in which the shareholder's order to purchase
was accepted as set forth in the Fund's prospectus.
c. Class C Shares. Class C Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set
forth in Section 5(c), and (iii) subject to ongoing Service
Fees and Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus.
d. Institutional Shares. Institutional Shares shall be (i)
offered at net asset value, (ii) offered only to certain
categories of institutional customers as approved from time
to time by the Directors and as set forth in the Fund's
prospectus and (iii) may be subject to ongoing Service Fees
and/or Distribution Fees as approved from time to time by the
Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that
do not incur a front-end sales charge and of Class B Shares and Class
C Shares as follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be 18
months. The CDSC Rate shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A
Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares shall
be six years. The CDSC Rate for the Class B Shares shall be
as set forth in the Fund's prospectus, the relevant portions
of which are incorporated herein by this reference.
3
<PAGE> 4
c. Class C Shares. The CDSC Period for the Class C Shares shall
be one year. The CDSC Rate for the Class C Shares shall be as
set forth in the Fund's prospectus, the relevant portions of
which are incorporated herein by reference.
d. Method of Calculation. The CDSC shall be assessed on an
amount equal to the lesser of the then current market value
or the cost of the Shares being redeemed. No sales charge
shall be imposed on increases in the net asset value of the
Shares being redeemed above the initial purchase price. No
CDSC shall be assessed on Shares derived from reinvestment of
dividends or capital gains distributions. The order in which
Shares are to be redeemed when not all of such Shares would
be subject to a CDSC shall be determined by the Distributor
in accordance with the provisions of Rule 6c-10 under the Act.
e. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares and disclosed in
the Fund's prospectus or statement of additional information
and, for the Class A Shares, as allowed under Rule 6c-10 under
the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between
Funds as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the
Fund's prospectus as it may be amended from time to time,
relevant portions of which are incorporated herein by this
reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class C Shares of any
other Portfolio at their relative net asset value.
d. Depending upon the Portfolio from which and into which an
exchange is being made and when the shares were purchased,
shares being acquired in an exchange may be acquired at their
offering price, at their net asset value or by paying the
difference in sales charges, as disclosed in the Fund's
prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class A
Shares, Class B Shares and Class C Shares subject to a CDSC
shall be computed in the manner described in the Fund's
prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's
prospectus, relevant portions of which are incorporated herein by this
reference. All other terms and conditions with respect to Service Fees
and Distribution Fees shall be governed by the Plan of Distribution
adopted by the Fund with respect to such fees and Rule 12b-1 of the
Act.
4
<PAGE> 5
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and
Distributions - Shares purchased through the reinvestment of
dividends and distributions paid on Shares subject to
conversion shall be treated as if held in a separate
sub-account. Each time any Shares in a Shareholder's account
(other than Shares held in the sub-account) convert to Class A
Shares, a proportionate number of Shares held in the
sub-account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All
conversions shall be effected on the basis of the relative
net asset values of the two Classes without the imposition of
any sales load or other charge.
c. Amendments to Plan of Distribution for Class A Shares - If
any amendment is proposed to the Plan of Distribution under
which Service Fees and Distribution Fees are paid with
respect to Class A Shares of a Fund that would increase
materially the amount to be borne by those Class A Shares,
then no Class B Shares shall convert into Class A Shares of
that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of
such Class B Shares do not approve the proposed amendment, the
Directors of the Fund and the Distributor shall take such
action as is necessary to ensure that the Class voting
against the amendment shall convert into another Class
identical in all material respects to Class A Shares of the
Fund as constituted prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested
persons of the Fund, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each
Class individually and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of
this Plan unless such amendment is approved in the manner specified in
Section 9 above.
5
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM TAX-FREE
INTERMEDIATE SHARES OF AIM TAX-EXEMPT FUNDS, INC. FOR THE YEAR ENDED MARCH 31,
1997.
</LEGEND>
<CIK> 0000909466
<NAME> AIM TAX-EXEMPT FUNDS, INC.
<SERIES>
<NUMBER> 001
<NAME> AIM TAX-FREE INTERMEDIATE SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 199440470
<INVESTMENTS-AT-VALUE> 201075980
<RECEIVABLES> 2391977
<ASSETS-OTHER> 56941
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 203524898
<PAYABLE-FOR-SECURITIES> 29476663
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 706455
<TOTAL-LIABILITIES> 30183118
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 172821545
<SHARES-COMMON-STOCK> 16154571
<SHARES-COMMON-PRIOR> 7695513
<ACCUMULATED-NII-CURRENT> (10946)
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<NET-INVESTMENT-INCOME> 4272718
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4406557)
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 11037256
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<SHARES-REINVESTED> 277497
<NET-CHANGE-IN-ASSETS> 90275333
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 518238
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<PER-SHARE-NAV-BEGIN> 10.79
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT OF AIM TAX-EXEMPT FUNDS, INC. FOR THE YEAR ENDED MARCH 31,
1997.
</LEGEND>
<CIK> 0000909466
<NAME> AIM TAX-EXEMPT FUNDS, INC.
<SERIES>
<NUMBER> 002
<NAME> AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
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<ACCUMULATED-NII-CURRENT> 36704
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR THE AIM TAX-EXEMPT
CASH FUND OF AIM TAX-EXEMPT FUNDS, INC. FOR THE YEAR ENDED MARCH 31, 1997.
</LEGEND>
<CIK> 0000909466
<NAME> AIM TAX-EXEMPT FUNDS, INC.
<SERIES>
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<NAME> AIM TAX-EXEMPT CASH FUND
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</TABLE>
