File Nos. 33-91174
811-9022
As filed with the Securities and Exchange Commission on February 15, 1996
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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. 4 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
(check appropriate box or boxes)
With respect to Common Stock:
AIG ALL AGES FUNDS, INC.
(Exact name of registrant as specified in charter)
70 PINE STREET, NEW YORK, NEW YORK 10270
(Address of principal executive offices)
(800) 862-3984
(Registrant's telephone number, including area code)
CT CORPORATION SYSTEM
1633 Broadway
New York, New York 10019
(Name and address of agent for service)
With respect to Guarantee: With respect to Support Agreement:
AIG CAPITAL MANAGEMENT CORP. AMERICAN INTERNATIONAL GROUP, INC.
(Exact name of co-registrant (Exact name of co-registrant
as specified in charter) as specified in charter)
70 PINE STREET, NEW YORK, NY 10270 70 PINE STREET, NEW YORK, NY 10270
(Address of principal executive (Address of principal executive
offices) offices)
(212) 770-7000 (212) 770-7000
(Co-registrant's telephone number) (Co-registrant's telephone number)
ELIZABETH M. TUCK KATHLEEN E. SHANNON, ESQ.
AIG Capital Management Corp. American International Group, Inc.
70 Pine Street, New York, NY 10270 70 Pine Street, New York, NY 10270
(Name and address of agent for service)
Copies to:
ROBERT W. HELM, ESQ. DAVID HARTMAN, ESQ.
Dechert Price & Rhoads American International Group, Inc.
1500 K Street, Washington, DC 20005 70 Pine Street, New York, NY 10270
It is proposed that this filing will become effective (check appropriate box):
[X] immediately upon filing pursuant to [_] on (date) pursuant to
paragraph (b) of Rule 485. paragraph (b) of Rule 485.
[_] 60 days after filing pursuant to [_] on (date) pursuant to
paragraph (a)(1) of Rule 485. paragraph (a)(1) of Rule 485.
[_] 75 days after filing pursuant to [_] on (date) pursuant to
paragraph (a)(2) of Rule 485. paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant AIG All Ages Funds, Inc. has registered under the Securities Act of
1933 an indefinite amount of securities pursuant to Rule 24f-2(a)(1) under the
Investment Company Act of 1940. Registrant intends to file the Notice required
by Rule 24f-2 within the time period required by such Rule.
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EXPLANATORY NOTE
This Registration Statement relates to (A) the registration under the
Investment Company Act of 1940 of AIG All Ages Funds, Inc. (the "Registrant"),
an open-end management investment company, and (B) the registration under the
Securities Act of 1933 of (i) an indefinite number of shares of common stock of
the Registrant; (ii) a guarantee (the "Guarantee") by AIG Capital Management
Corp. (the "Manager") to the Registrant that the net asset value of the shares
of AIG Retiree Fund -- 2003, a series of the Registrant managed by the Manager
(the "Fund"), will be sufficient, on or after November 15, 2003, that
shareholders of the Fund who have reinvested all dividends and distributions
will receive, upon redemption of their shares, at least the amount of their
original investment (including any sales charge paid); and (iii) a Support
Agreement (the "Support Agreement") entered into between American International
Group, Inc. ("AIG") and the Manager pursuant to which AIG will provide financial
support to the Manager in the event it is unable to meet its obligations under
the Guarantee. No separate consideration will be received by the Manager or AIG
for entering into the Guarantee or the Support Agreement. Shares of the Fund
will be offered only for a limited period (the "Offering Period"). The maximum
amount payable under the Guarantee and the Support Agreement will equal, without
duplication, the aggregate purchase price, including sales charges, of all
shares of the Fund sold during the Offering Period. This Registration Statement
has also been signed by First Global Equity Portfolio (the "Equity Portfolio") a
registered open-end management investment company in which the Fund will invest.
This Post-Effective Amendment No. 4 is being filed to include the
financial statements of the Equity Portfolio and AIG and certain exhibits. This
Amendment incorporates by reference the Prospectus, Statement of Additional
Information and Part C for the AIG Children's World Fund -- 2005 from
Post-Effective Amendment No. 1 to the Registration Statement, and the financial
statements relating to that fund and the guarantee issued in connection
therewith.
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PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
RELATING TO AIG RETIREE FUND -- 2003
CROSS REFERENCE SHEET REQUIRED BY RULE 495
UNDER THE SECURITIES ACT OF 1933
The enclosed Prospectus, Statement of Additional Information and Part
C relate only to AIG Retiree Fund -- 2003, a series of AIG All Ages Funds, Inc.
(the "Fund"), and contain information relating only to this series. Information
relating to AIG Children's World Fund -- 2005 is incorporated by reference from
the Prospectus and Statement of Additional Information relating to the AIG
Children's World Fund -- 2005, filed pursuant to Rule 497 on November 3, 1995.
Item No. in Part A of Form N-1A Location in Prospectus
1. Cover Page Cover Page
2. Synopsis Not applicable
3. Condensed Financial Information Not applicable
4. General Description of Registrant Investment Objectives and Management
Policies; American International
Group, Inc.
5. Management of Fund Investment Advisory Services
5a. Managers' Discussion of Fund Not applicable
Performance
6. Capital Stock and Other Securities Organization and Capitalization;
Dividends and Distributions; Taxes;
Investment Objectives and Management
Policies -- The Manager's Guarantee
7. Purchase of Securities Being Offered Cover Page; Purchase of Shares
8. Redemption or Repurchase Redemption or Repurchase of Shares
9. Pending Legal Proceedings Not applicable
Location in Statement of Additional
Item No. in Part B of Form N-1A Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information
13. Investment Objectives and Policies Investment Objectives and Policies
14. Management of the Registrant Management and Expenses
15. Control Persons and Principal Directors and Officers
Holders of Securities
16. Investment Advisory and Other Management and Expenses; Other
Services Information
17. Brokerage Allocation Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities Other Information -- Capital Stock
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19. Purchase, Redemption and Pricing of Purchase and Redemption of Fund
Valuation Shares;
20. Tax Status Taxes
21. Underwriters Distribution Services
22. Calculation of Performance Data Not applicable
23. Financial Statements Not applicable
<PAGE>
AIG RETIREE FUND -- 2003
a series of
AIG All Ages Funds, Inc.
505 Carr Road, Wilmington, Delaware 19809 o (800) 862-3984
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This prospectus describes the AIG Retiree Fund -- 2003 (the
"Fund"). The Fund is a diversified series of AIG All Ages Funds, Inc., an
open-end management investment company (the "Company"). The Fund has two
investment objectives. The first objective is to provide a guaranteed return, on
or after November 15, 2003 (the "Maturity Date"), of the full amount originally
invested (including any sales charge paid) by each shareholder who has
reinvested all dividends and distributions. The Fund pursues its first objective
by investing a portion of its assets in zero coupon securities that are the
direct obligations of the United States Treasury ("Treasury Securities"),
combined with further assurance from a guarantee (the "Manager's Guarantee") by
AIG Capital Management Corp., the Fund's investment adviser (the "Manager"). The
Manager's obligations under its guarantee will be backed by its parent, American
International Group, Inc. ("AIG").
The Fund's second objective is to achieve total return on
capital through both capital growth (realized and unrealized) and income. The
Fund seeks to achieve this objective by investing the balance of its assets in
the First Global Equity Portfolio (the "Equity Portfolio"), an open-end
management investment company that invests in a globally diversified portfolio
of equity securities. There can be no assurance that this second objective of
total return on capital will be achieved.
Shares of the Fund will be offered to investors only from
February 15, 1996 through November 30, 1996 (the "Offering Period"). During this
limited period the shares will be offered at their net asset value plus the
applicable sales charge, if any. The Fund does not expect that its shares will
be offered after November 30, 1996.
(Continued on Page 2)
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SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
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.
This prospectus sets forth concisely the information a
prospective investor should know about the Fund and the Equity Portfolio before
investing. Please read it carefully before you invest and keep it for future
reference. Additional information about the Fund, including a Statement of
Additional Information, has been filed with the Securities and Exchange
Commission. The Statement of Additional Information is available upon request
and without charge by calling or writing the Fund at the telephone number or the
address set forth above. The Statement of Additional Information is dated the
same date as this Prospectus and is incorporated herein by reference in its
entirety.
The date of this prospectus is February 15, 1996.
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AIG RETIREE FUND -- 2003, PAGE 2
The Fund is intended for shareholders who are not seeking
current income, but rather are looking for an investment vehicle that offers
total return potential, plus the return of principal. Return of principal is
accomplished through investment in zero coupon Treasury Securities coupled with
the additional assurance of the Manager's Guarantee. The Manager's Guarantee
operates such that an investor who has reinvested all dividends and
distributions (an "Eligible Investor") will be able to demand the return of the
full amount of his or her original investment in the Fund (including any
front-end sales charges paid) on or after the Maturity Date. A shareholder who
has reinvested all dividends and distributions and has redeemed some shares
prior to the Maturity Date is still an Eligible Investor with respect to the
shares not redeemed. Investors who do not reinvest all dividends and
distributions will not be Eligible Investors and will not be certain to receive
the full benefits of the Manager's Guarantee. However, the Manager's Guarantee
operates such that non-Eligible Investors may benefit to some extent from any
payment made by the Manager to the Fund pursuant to the Manager's Guarantee. See
"Investment Objectives and Management Policies--The Manager's Guarantee" and
"The Manager's Guarantee" in the Statement of Additional Information.
The Fund seeks to achieve the investment objective of total
return on capital by investing a portion of its investable assets in the Equity
Portfolio, a diversified open-end management investment company with the same
investment objective. Both the Fund and the Equity Portfolio are managed by the
Manager and investment advice is provided by affiliated companies. By investing
a portion of its assets in the Equity Portfolio, the Fund differs from those
mutual funds that directly acquire and manage their own portfolio of securities.
The Fund and the Equity Portfolio constitute a two-tier master-feeder structure.
The two-tier structure permits the Equity Portfolio to offer its shares to other
investors and thus is intended to reduce certain expenses that would otherwise
be payable entirely by the Fund. The Fund will directly acquire and manage its
portfolio of zero coupon Treasury Securities. See "Special Information
Concerning the Two-Tier Structure."
The Fund is an open-end fund, which means that shareholders
may elect to receive dividends and distributions in cash and may redeem some or
all of their shares at any time. However, the Fund is intended for long-term
investors and is not appropriate for investors seeking current income or
investors who do not intend to reinvest dividends and distributions.
Shareholders are urged to consult their tax advisers concerning the effect of
federal, state, and local income taxes in their individual circumstances. See
"Taxes." In addition, the Fund may not be appropriate for investors who expect
to redeem all or a portion of their shares prior to November 15, 2003 because
there can be no assurance of the amount that will be received upon early
redemption. The net asset value of a share of the Fund can be expected to
fluctuate substantially owing to changes in prevailing interest rates that will
affect the current value of the Fund's holdings of zero coupon Treasury
Securities, as well as changes in the value of the Fund's other holdings.
Although the two-tier structure permits the Equity Portfolio to offer its shares
to other investors and thus is intended to reduce certain expenses that would
otherwise be payable entirely by the Fund, the Fund itself does not expect to
offer its shares after November 30, 1996 and will not benefit from an inflow of
new capital investments. In addition, the Fund may experience redemptions and
capital losses prior to November 15, 2003 and will pay dividends and
distributions in cash to shareholders who so elect. Losses, redemptions and
dividends and distributions paid in cash will reduce the Fund's assets and its
ability to meet the total return
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AIG RETIREE FUND -- 2003, PAGE 3
objective. See "Investment Objectives and Management Policies -- Proposed
Operations of the Fund" and "Risk Factors -- Zero Coupon Securities."
The Fund is sold through financial intermediaries by
individual account representatives who recommend and sell mutual funds, stocks,
bonds and other securities. Account representatives provide a wide array of
services to their clients. An important service is assisting clients in their
financial planning and in choosing investment products that fit their risk and
investment profiles. There can be no assurance that an account representative's
recommendations will be suitable or that, if purchased, they will result in the
anticipated financial benefits. Their responsibility to their clients is to
offer advice based on their knowledge of the products they are recommending and
understanding their clients' needs, for which they receive a fee or commission
paid by their clients. If you do not fully understand the shares that are
offered by this Prospectus, you may wish to consult your account representative.
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AIG RETIREE FUND -- 2003, PAGE 4
THE FUND'S AND THE EQUITY PORTFOLIO'S EXPENSES
The following table lists the costs and expenses that an
investor will pay as a shareholder of the Fund, based upon the sales charge that
may be incurred at the time of purchase and upon the projected annual operating
expenses of the Fund and the Equity Portfolio, as a percentage of average net
assets of the Fund, for the current fiscal year. The Directors of the Fund
believe that the aggregate per share expenses of the Fund and the Equity
Portfolio will be less than or approximately equal to the expenses that the Fund
would incur if the assets of the Fund that are invested in the Equity Portfolio
were instead invested directly by the Fund in the type of securities held by the
Equity Portfolio.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses1
<S> <C>
Maximum sales load imposed on purchases
(as a percentage of offering price) 4.75%
Maximum sales load imposed on reinvested dividends
(as a percentage of offering price) None
Deferred sales load
(as a percentage of original purchase
price or redemption proceeds,
as applicable):
Shares acquired under Large Purchase Privilege2 1.00%
All other shares None
Redemption fees
(as a percentage of amount redeemed) None
Exchange fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees (assuming 65% of the Fund's
assets are invested directly in
Treasury Securities and 35% in
the Equity Portfolio):
Treasury Securities 0.20% x 65% = 0.13%
Equity Portfolio 1.20% x 35% = 0.42%
Estimated total management fees 0.55%3
12b-1 fees (during Offering Period only) 0.50%
Other expenses4 1.00%
Total Fund Operating Expenses:
Before Manager's assumption of the Fund's expenses5 2.05%
After Manager's assumption of the Fund's expenses
during the Offering Period 1.95%
</TABLE>
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1 Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details. Reduced sales charges apply to purchases of $100,000
or more. See "Purchase of Shares."
2 The redemption within one year of shares purchased at net asset value
under the Large Purchase Privilege (available for purchases
in amounts of $1 million or more) may be
subject to a 1% contingent deferred sales
charge. See "Purchase of Shares."
3 The management fee would be 0.55% if 65% of the Fund's assets were
invested directly in zero coupon Treasury Securities and 35% in the
Equity Portfolio. However, this allocation will fluctuate with
changes in market conditions. See "Investment Objectives and
Management Policies-- Proposed Operations of the Fund." The Manager
estimates that, under normal market conditions, the portion of the
Fund's assets invested in zero coupon Treasury Securities will not be
less than 50% or more than 80% during the current fiscal year. Thus the
total management fee is estimated to vary between 0.40% and 0.70%
during this period. However, in extreme market conditions, the
percentage of zero coupon Treasury Securities could be less than 50%
or more than 80%, with the result that the total management fee would fall
outside the indicated range.
4 Comprises expenses payable directly by the Fund plus the Fund's pro rata
share of expenses incurred by the Equity Portfolio.
5 The Manager's assumption of the Fund's expenses is subject to reimbursement
by the Fund in subsequent years under certain circumstances, as described
below.
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AIG RETIREE FUND -- 2003, PAGE 5
"Other expenses" in the above table include, among other
things, fees for transfer agent services, custodial fees, directors' and
trustees' fees, legal fees and accounting fees, printing costs, registration
fees, costs of preparing and distributing reports to shareholders and the fee
for shareholder servicing described under "Shareholder Servicing Agreement," and
is based on estimated amounts for the current fiscal year, assuming that the
average assets of the Fund during such year are $83,300,000. The Manager has
agreed to limit the Fund's expenses to the extent Total Fund Operating Expenses
during the Offering Period exceed 1.95% of average daily net assets, subject to
reimbursement by the Fund in subsequent years under certain circumstances. See
"Investment Advisory Services -- The Manager." Rule 12b-1 fees will be payable
only during the Offering Period.
The following example is intended to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly.
Example
You would pay the following expenses on a 1 Year 3 Years
$1,000 investment assuming
(1) 5% annual return and (2) redemption at
the end of each time period: $66 $106
The example is intended to assist you in comparing expenses of
the Fund with those of other funds over varying investment periods. All funds
are required to present this information based on an assumed return of 5%. This
makes the comparison of various funds simpler. However, the Fund's actual return
will vary and may be greater or less than 5%. Also, if you redeem your shares
before November 15, 2003 or if you do not reinvest all dividends and
distributions, your proceeds may be less than the amount you originally
invested. This example should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
In General
The Fund has two investment objectives. The first is to
provide a guaranteed return at any time on or after the Maturity Date of the
full amount originally invested (including any sales charge paid) by each
shareholder who has reinvested all dividends and distributions, which the Fund
pursues through investment of a portion of its assets in zero coupon Treasury
Securities, with additional assurance provided by the Manager's Guarantee,
backed by its parent AIG. The Fund's second objective is to achieve total return
on capital through both capital gains (realized and unrealized) and income. The
Fund seeks to achieve this objective by investing the balance of its assets in
the Equity Portfolio, an open-end management investment company that invests in
a globally diversified portfolio of equity securities. See "-- Proposed
Operations of the Fund." The investment objectives of the Fund are fundamental
and cannot be changed without the approval of the holders of a majority of the
outstanding voting securities of the Fund, as defined under the Investment
Company Act of 1940, as amended (the "1940 Act").
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 6
The Fund's investment strategy with respect to zero coupon
Treasury Securities, together with the Manager's Guarantee, ensures that
shareholders who reinvest all dividends and distributions will receive the full
amount of their original investment when they redeem their shares on or after
the Maturity Date. In addition, the Manager believes that the Equity Portfolio's
investment strategies should be sufficient to accomplish the Fund's investment
objective of total return, but there can be no assurance that this objective
will be achieved. The Fund is structured as an open-end investment company and
shareholders may redeem their shares at any time and may elect to receive
dividends and distributions in cash. However, pursuant to the terms of the
Manager's Guarantee, shareholders who wish to be certain of receiving the full
amount of their original investment must reinvest all dividends and
distributions in additional shares and hold all their shares until the Maturity
Date. There can be no assurance that shareholders who elect to receive
distributions in cash will receive the full amount of their original investment
on or after the Maturity Date. In addition, while the amount sought to be
returned on or after the Maturity Date to shareholders may equal or exceed the
amount originally invested, the present value of that amount may be
substantially less. The Manager's Guarantee is discussed in further detail in
"--The Manager's Guarantee" and in "The Manager's Guarantee" in the Statement of
Additional Information.
Shareholders also should be aware that a portion of the amount
returned on or after the Maturity Date represents accretion of interest on the
Fund's zero coupon Treasury Securities. The annual accretion will be taxable to
shareholders as ordinary income each year over the term of the Fund, even for
shareholders who reinvest all dividends and distributions. Shareholders are
urged to consult their tax advisers concerning the effect of federal, state, and
local income taxes in their individual circumstances. See "Taxes."
When the zero coupon Treasury Securities in the Fund's
portfolio mature on or about the Maturity Date, the Fund will reinvest the
principal amount in short-term, highly liquid obligations of the U.S.
Government. The value of these securities is not expected to fluctuate
significantly, so shareholders who reinvest all dividends and distributions and
who redeem their shares at any time on or after the Maturity Date should expect
to receive the amount of their initial investment (from the liquidation of the
Fund's zero coupon Treasury Securities) plus the value (if any) of their
proportionate share of the Fund's interest in the Equity Portfolio. After the
Maturity Date, the Board of Directors may, in its sole discretion and without
shareholder approval, cause the Fund to redeem all of its outstanding shares at
their net asset value and distribute the proceeds to shareholders if the Board
determines that continuing the existence of the Fund is not in the best
interests of the Fund. Pursuant to the terms of the Manager's Guarantee,
shareholders who have reinvested all dividends and distributions will be certain
to receive the full amount of their original investment in the event of such
redemption.
Zero Coupon Securities
A zero coupon security is a debt obligation that entitles the
holder to a specified sum at maturity but does not provide for any periodic
payments of interest prior thereto. Such a security is therefore issued and
traded at a discount from its amount due at maturity (the "face value"). Zero
coupon securities may be created by separating the interest and principal
components of securities issued or guaranteed by the U.S. Government or one of
its agencies or instrumentalities or issued by private corporate issuers. The
Fund,
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 7
however, will invest in zero coupon securities only if they are direct
obligations of the U.S. Treasury. The discount from face value at which zero
coupon securities are purchased varies depending on the time remaining to
maturity, prevailing interest rates and the liquidity of the security. Because
the discount from face value is known at the time of investment, investors
holding zero coupon securities until maturity know the total amount of their
investment return at the time of investment.
In contrast to zero coupon securities, a portion of the total
realized return from conventional interest-paying obligations comes from the
reinvestment of periodic interest. Because the rate to be earned on these
reinvestments may be higher or lower than the rate quoted on the interest-paying
obligations at the time of the original purchase, the investor's return on
reinvestments is uncertain even if the securities are held to maturity. This
uncertainty is commonly referred to as reinvestment risk. With zero coupon
securities, however, there are no cash distributions to reinvest, so investors
bear no reinvestment risk if they hold the zero coupon securities to maturity;
holders of zero coupon securities, however, forego the possibility of
reinvesting at a higher yield than the rate paid on the originally issued
security. For a discussion of risks associated with the sale of zero coupon
securities prior to maturity, see "Risk Factors -- Zero Coupon Securities."
First Global Equity Portfolio
The Fund seeks to achieve its investment objective of total
return on capital by investing the portion of its assets not invested in zero
coupon Treasury Securities in the Equity Portfolio, which is managed by the same
Manager as the Fund. The investment objective of the Equity Portfolio is to
achieve total return on capital through both capital growth (realized and
unrealized) and income. This objective is identical to the objective of the Fund
with respect to those assets invested in the Equity Portfolio. The Equity
Portfolio seeks to achieve its objective by making global investments in
securities of issuers from around the world. This investment objective is a
fundamental policy and cannot be changed without approval of the owners of
beneficial interests in the Equity Portfolio (which include the Fund and other
investors in the Equity Portfolio). There can be no assurance that the Equity
Portfolio will achieve its investment objective of total return on capital.
Under normal conditions at least 80% of the Equity Portfolio's
assets will be invested in securities of issuers organized in one or more of the
following countries: the United States, the United Kingdom, Canada, Australia,
Japan, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Hong
Kong, Singapore and Malaysia. The Manager has selected the securities markets of
these 15 countries because they are among the largest in the world. The Equity
Portfolio may, however, invest in securities of issuers incorporated or
organized in any country. No more than 30% of the Equity Portfolio's assets may
be invested in securities of issuers incorporated or organized in any one
country, except that up to 100% of such assets may be invested in securities of
issuers organized in the United States. Securities may be included in the Equity
Portfolio without regard to minimum capitalization of their issuers. For a
discussion of the risks associated with investment in securities of foreign
issuers, see "Risk Factors -- Foreign Investment."
In allocating investments among geographic regions and
individual countries, the Manager will normally consider such factors as the
relative economic growth potential of the various economies and securities
markets; expected levels of inflation; financial, social
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 8
and political conditions influencing the investment opportunities; and the
outlook for currency relationships.
The Equity Portfolio may invest in all types of securities
(subject to the limitations discussed below and in the Statement of Additional
Information), many of which will be denominated in currencies other than the
U.S. dollar. The Equity Portfolio will normally invest its assets in equity
securities, including common stock, securities convertible into common stock,
depositary receipts for these securities, and warrants. (A brief description of
these securities is provided in the next paragraph.) The Equity Portfolio will
not ordinarily invest in nonconvertible debt securities. The Equity Portfolio,
may, however, invest up to 25% of its assets in preferred stock. Dividends may
also be considered in selecting securities when the Manager believes that such
income will favorably influence the market value of a security in light of the
Equity Portfolio's objective of total return. Equity securities in which the
Equity Portfolio will invest may be listed on a U.S. or foreign stock exchange
or traded in U.S. or foreign over-the-counter markets, although the Equity
Portfolio may also invest in securities for which there is no active trading
market (subject to the limitations discussed below and in the Statement of
Additional Information).
Common Stock is capital stock of a corporation which denotes
ownership and provides the means to control the corporation, but which is
inferior to other classes of securities with respect to payment of dividends and
distribution of assets upon dissolution of the corporation. Preferred Stock is
capital stock usually entitled by a corporation's charter to priority over
common stock in payment of dividends and in the distribution of assets upon
dissolution of the corporation. A Convertible Security is any security capable
of being converted, at the election of the holder, into another security of the
same issuer (for example, a bond that is convertible into a specified number of
shares of common stock). A Warrant is a security issued by a corporation that
gives the warrant holder the right to purchase capital stock or another security
of the corporation at a stated price.
The Equity Portfolio may invest in securities represented by
Depositary Receipts, including European Depositary Receipts ("EDRs"), American
Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs"). ADRs are
receipts generally issued by a domestic bank or trust company that represent the
deposit of a security of a foreign issuer. EDRs are typically issued by foreign
banks or trust companies and traded in Europe. GDRs may be issued by a domestic
or foreign bank or trust company and may be traded in several markets. For
purposes of the Equity Portfolio's investment policies, an investment in
Depositary Receipts will be deemed to be an investment in the underlying
security.
The Fund may make certain negotiated investments with AIG
and/or its affiliates, subject to obtaining any necessary regulatory approvals.
As a matter of fundamental policy, the Equity Portfolio will
not engage in transactions intended to hedge foreign exchange risk. See "Risk
Factors -- Foreign Currencies." The Equity Portfolio is also subject to an
operating policy which prohibits it from borrowing any amount more than 5% of
its total assets. This effectively limits the ability of the Equity Portfolio to
"leverage" its assets by borrowing money and investing in additional securities.
Additional information about the Equity Portfolio has been included in the
Equity Portfolio's registration statement filed with the Securities and Exchange
Commission, a copy of which is available upon request and without charge by
calling or
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 9
writing the Fund at the telephone number and address set forth on the cover page
of this Prospectus.
Proposed Operations of the Fund
As noted above, the Fund will invest directly in zero coupon
Treasury Securities and, through its investment in the Equity Portfolio, in a
globally diversified portfolio of equity securities in pursuing its objectives.
Shares of the Fund will be offered to investors only from February 15, 1996
through November 30, 1996. During this Offering Period the shares will be
offered at their net asset value plus the applicable sales charge, if any. The
Fund does not expect that its shares will be offered after November 30, 1996.
See "Purchase of Shares." The zero coupon Treasury Securities that the Fund
acquires with the proceeds of the sale of its shares during the Offering Period
will be selected so as to mature at a specific face value on or about the
Maturity Date. The Manager will continually review and adjust where necessary
the proportion of the Fund's assets that are invested in zero coupon Treasury
Securities so that the value of the zero coupon Treasury Securities on the
Maturity Date (i.e., the aggregate face value of the zero coupon Treasury
Securities held by the Fund) will be at least sufficient to enable investors who
reinvest all dividends and hold their entire investment in the Fund until the
Maturity Date to receive on or after the Maturity Date the full amount of their
original investment, including any sales charge (the "Repayment Objective").
After the Offering Period, the Fund anticipates adjustments in its portfolio of
zero coupon Treasury Securities solely to meet requests for redemption and, if
required, to make payments of dividends and distributions. Thus, the minimum
face value of the zero coupon Treasury Securities per Fund share necessary to
provide for the Fund's Repayment Objective will be continually determined and
maintained.
The portion of the Fund's assets that will be allocated to
the purchase of zero coupon Treasury Securities will fluctuate during the
Offering Period. This is because the market value of the zero coupon Treasury
Securities and the shares of the Equity Portfolio, and therefore the offering
price of the Fund's shares, will fluctuate with changes in interest rates and
other market value fluctuations. If the offering price of the Fund's shares
increases during the Offering Period, the minimum par value of zero coupon
Treasury Securities per Fund share necessary to provide for the Fund's Repayment
Objective will increase. The Fund may hold zero coupon Treasury Securities in an
amount in excess of the amount necessary to provide for the Fund's Repayment
Objective in the discretion of the Manager. During the first year of operations,
under normal market conditions, the proportion of the Fund's portfolio invested
in zero coupon Treasury Securities may be expected to range from 50% to 80%; but
a greater or lesser percentage is possible.
During the Offering Period, as the percentage of zero coupon
Treasury Securities in the Fund's portfolio increases, the portion of the Fund's
assets invested in the Equity Portfolio will necessarily decrease. This will
result in less potential for total return from the Equity Portfolio. In order to
help ensure shareholders at least a minimum level of initial investment in the
global equity markets, the Fund will cease offering its shares if their
continued offering would cause more than 80% of its assets to be allocated to
zero coupon Treasury Securities. After the Offering Period is over, it is not
anticipated that any additional assets will be allocated to the purchase of zero
coupon Treasury Securities. However, since the market values of the zero coupon
Treasury Securities and the net asset value of interests in the Equity Portfolio
are often affected in different ways by changes in interest rates and other
market conditions and will often fluctuate independently, the percentage of the
Fund's
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 10
net asset value represented by zero coupon Treasury Securities will continue to
fluctuate after the end of the Offering Period. Zero coupon Treasury Securities
may be liquidated before the Maturity Date to meet redemptions and pay cash
dividends, provided that the minimum amount of zero coupon Treasury Securities
necessary to provide for the Fund's Repayment Objective is maintained.
When the zero coupon Treasury Securities in the Fund's
portfolio mature on or about the Maturity Date, the Fund will reinvest the
principal amount in short-term, highly liquid Treasury Securities. The value of
these securities is not expected to fluctuate significantly, with the result
that the full principal amount of Treasury Securities held by the Fund on the
Maturity Date should continue to be available to redeeming shareholders after
the Maturity Date.
After the Maturity Date, the Board of Directors of the Company
(the "Board") may, in its sole discretion and without shareholder approval,
cause the Fund to redeem all of its outstanding shares at their net asset value
and distribute the proceeds to shareholders if the Board determines that
continuing the existence of the Fund is not in the best interests of the Fund.
In such event, the Fund's Treasury Securities will be liquidated and the Fund's
interest in the Equity Portfolio shall be sold or otherwise reduced to cash, the
liabilities of the Fund will be discharged or otherwise provided for, the Fund's
outstanding shares will be mandatorily redeemed at the net asset value per share
determined on the date of redemption and, within three business days thereafter,
the Fund's net assets will be distributed to shareholders and the Fund shall be
thereafter terminated. Termination of the Fund may require disposition of the
Fund's interest in the Equity Portfolio at a time when it is otherwise
disadvantageous to do so and may involve selling such interest at a substantial
loss. The estimated expenses of liquidation and termination of the Fund are not
expected to affect materially the net asset value of the Fund. In the event of
termination of the Fund as noted above, the redemption of shares effected in
connection with such termination would for income tax purposes constitute a sale
upon which gain or loss will be realized depending upon whether the net asset
value of the shares being redeemed is more or less than the shareholder's
adjusted cost basis.
Subject to shareholder approval, other alternatives may be
pursued by the Fund after the Maturity Date. For instance, the Board may
consider the possibility of a reorganization between the Fund and another
registered open-end management investment company or any other series of the
Company. In the event of the liquidation or reorganization of the Fund after the
Maturity Date, all Eligible Investors will be deemed to have tendered their
shares for redemption, and, if the Manager's Guarantee is triggered by such
redemption, the Manager will make any required payment. Any such payment will
take into account any known liabilities in connection with the liquidation or
reorganization, and, therefore, Eligible Investors will in such event be assured
to receive from the Fund at least their original investment (including any
front-end sales charges paid). The Board has not made any determinations about
the continued operation of the Fund after the Maturity Date.
The Fund is structured as an open-end investment company and
shareholders may redeem their shares at any time and may elect to receive
dividends and distributions in cash. However, pursuant to the terms of the
Manager's Guarantee, shareholders who wish to be certain of receiving the full
amount of their original investment must reinvest all dividends and
distributions in additional shares and hold all their shares until the Maturity
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 11
Date. Shareholders who elect to receive dividends in cash are in effect
withdrawing a portion of the accreted income on the zero coupon Treasury
Securities that are held to protect their original principal investment at the
Maturity Date. These shareholders will receive the same net asset value per
share for any Fund shares redeemed at the Maturity Date as shareholders who
reinvest dividends, but they will have fewer shares to redeem than shareholders
similarly situated who had reinvested all dividends. Thus there can be no
assurance that such shareholders will receive the full amount of their original
investment on or after the Maturity Date. Investors are encouraged to reinvest
dividends and to evaluate their need to receive some or all of their investments
prior to the Maturity Date before making an investment in the Fund. See "--The
Manager's Guarantee" below.
The Manager's Guarantee
In order to ensure the return of the full amount of an
Eligible Investor's original investment (including any front-end sales charges
paid), the Company and the Manager have entered into a Guarantee Agreement with
respect to the Fund, dated February 15, 1996. The Manager's Guarantee operates
such that an Eligible Investor will be able to demand the return of the full
amount of his or her original investment in the Fund (including any front-end
sales charges paid) on or after the Maturity Date. An Eligible Investor who has
redeemed some shares prior to the Maturity Date is still an Eligible Investor
with respect to the shares not redeemed.
In determining the amount to be paid by the Manager to the
Fund in the event that the Manager's Guarantee is triggered, a "Reinvestment
Ratio" is employed. The Reinvestment Ratio is the number of shares that would be
owned on a particular date by a person who acquired one share during the
Offering Period and continuously reinvested all dividends and distributions. Due
to reinvestment of dividends and distributions, that person would own more than
one share at the Maturity Date. Dividends and distributions paid by the Fund
during the Offering Period will be taken into account in the calculation of the
Reinvestment Ratio such that an Eligible Investor who purchase shares after the
date of such dividend or distribution will still be ensured of the full benefits
of the Manager's Guarantee. Shares acquired therefrom will not, however, be
considered shares acquired during the Offering Period for purposes of
determining the amount of an Eligible Investor's original investment. The
Manager's Guarantee is triggered when an Eligible Investor tenders shares for
redemption and the then current net asset value per share multiplied times the
Reinvestment Ratio is less than the highest net asset value per share of the
Fund attained during the Offering Period plus the maximum front-end sales charge
of 4.75%. In such event, the Manager will promptly pay to the Fund an amount
sufficient to ensure that the total value of the shares then held by an Eligible
Investor who has not redeemed any of his or her shares (including shares
received through the reinvestment of dividends and distributions) is equal to
the amount of such investor's original investment in the Fund during the
Offering Period plus the maximum front-end sales charge and assuming that such
investor bought his or her shares at the highest net asset value during the
Offering Period.
Any payment made by the Manager pursuant to the Manager's
Guarantee will be to the Fund and will cause the net asset value of all
outstanding shares to increase by the same amount. Thus, a shareholder who has
not reinvested all dividends and distributions may benefit to some extent from
any payment under the Manager's Guarantee. However, a shareholder who has not
reinvested will own fewer shares on or after the Maturity Date than a
shareholder who invested the same amount during the Offering Period but has
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 12
reinvested continuously. Moreover, such shareholder will not be entitled to make
a demand for payment under the Manager's Guarantee.
The benefits of the Manager's Guarantee will not be available
with respect to shares redeemed prior to the Maturity Date, nor will they be
available after the Maturity Date if no shareholder of the Fund has reinvested
all of his or her dividends and distributions or if no Eligible Investor has yet
tendered his or her shares for redemption. The availability of the Manager's
Guarantee will not be affected by the termination or amendment of the Fund's
Management Agreement with the Manager.
The Manager's obligations under the Manager's Guarantee are
backed by its parent, AIG, pursuant to a Support Agreement, dated February 15,
1996. AIG is a holding company which through its subsidiaries is primarily
engaged in a broad range of insurance and insurance-related activities in the
United States and abroad. Other significant activities of AIG are financial
services and agency and service fee operations. See "American International
Group, Inc." The Manager is an indirect wholly owned subsidiary of AIG. Under
the Support Agreement, AIG has agreed that, if the Manager is unable to make
full payment of any amount required under the Manager's Guarantee, AIG will make
a capital contribution or a loan to the Manager to the extent of the Manager's
inability to pay. The Support Agreement provides that the full amount of such
capital contribution or loan will be paid directly to the Fund.
Other Investment Policies
Except where specifically noted below, the following
investment policies of the Fund and the Equity Portfolio are not fundamental and
the Board, or the Trustees of the Equity Portfolio, as relevant, may change such
policies without the vote of a majority of outstanding voting securities of the
Fund or the Equity Portfolio, as relevant. A more detailed description of the
Fund's and the Equity Portfolio's investment policies, including a list of those
restrictions of the Fund's and the Equity Portfolio's investment activities
which cannot be changed without such a vote, appears in the Statement of
Additional Information. Under the 1940 Act, a "vote of a majority of the
outstanding securities" of either the Fund or the Equity Portfolio means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or beneficial interests in the Equity Portfolio, as relevant, or (2)
67% or more of the shares of the Fund or beneficial interests in the Equity
Portfolio present at a meeting of holders, if more than 50% of the outstanding
shares of the Fund or the beneficial interests in the Equity Portfolio are
represented at the meeting in person or by proxy.
Borrowing. The Equity Portfolio and the Fund may from time to
time borrow money from banks for extraordinary or emergency purposes, but may
not invest borrowed funds in additional securities. Such borrowing will not
exceed 5% of the total assets of the Equity Portfolio or the Fund, as
applicable, and will be made at prevailing interest rates. This policy is
fundamental and may not be changed without the vote of a majority of the
outstanding voting securities of the Fund or the Equity Portfolio, as relevant.
Repurchase Agreements. The Equity Portfolio may enter into
repurchase agreements with commercial banks or broker/dealers under which
the Equity Portfolio acquires a U.S. Government security subject to resale
at a mutually agreed upon price and
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 13
time. The resale price reflects an agreed upon interest rate effective for the
period the Equity Portfolio holds the instrument that is unrelated to the
interest rate on the instrument.
The Equity Portfolio's repurchase agreements will at all times
be fully collateralized by U.S. Government securities, and the Equity Portfolio
will make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of its custodian. Repurchase agreements could
involve certain risks in the event of bankruptcy or other default of the seller,
including possible delays and expenses in liquidating the underlying security,
decline in the value of the underlying security and loss of interest.
The Fund may not enter into repurchase agreements in respect
of zero coupon Treasury Securities allocated to the Repayment Objective. In all
other respects, the Fund is subject to the same restrictions on repurchase
agreements as the Equity Portfolio. The Fund's and the Equity Portfolio's
policies concerning repurchase agreements are fundamental and may not be changed
without the vote of a majority of outstanding voting securities of the Fund or
the Equity Portfolio, as relevant.
Illiquid Securities. The Equity Portfolio may invest up to 15%
of its net assets in illiquid securities, including restricted securities (i.e.,
securities not readily marketable without registration under the Securities Act
of 1933 (the "1933 Act")) and other securities that are not readily marketable,
such as repurchase agreements of more than one week's duration. The Equity
Portfolio may purchase restricted securities that may be offered and sold only
to "qualified institutional buyers" under Rule 144A of the 1933 Act, and the
Equity Portfolio's Trustees may determine, when appropriate, that specific Rule
144A securities are liquid and not subject to the 15% limitation on illiquid
securities. Should the Equity Portfolio's Trustees make this determination, it
will carefully monitor the security (focusing on such factors, among others, as
trading activity and availability of information) to determine that the Rule
144A security continues to be liquid. It is not possible to predict with
assurance exactly how the market for Rule 144A securities will further evolve.
This investment practice could have the effect of increasing the level of
illiquidity in the Equity Portfolio to the extent that qualified institutional
buyers become for a time uninterested in purchasing Rule 144A securities.
The Fund may not invest in illiquid securities (except that it
may invest in beneficial interests in the Equity Portfolio).
Short Sales. The Equity Portfolio may sell securities short
only "against-the- box." A short sale "against-the-box" is a short sale in which
the Equity Portfolio owns an equal amount of the securities sold short or
securities convertible into or exchangeable without payment or further
consideration for securities of the same issue as, and equal in amounts to, the
securities sold short.
The Fund may not make short sales of securities. The Fund's
and the Equity Portfolio's policies on short sales are fundamental.
Temporary Investments. When the Manager believes that market
conditions warrant a temporary defensive position, the Equity Portfolio may
invest up to 100% of its assets in short-term instruments such as commercial
paper, bank certificates of deposit, bankers' acceptances, or repurchase
agreements for such securities and securities of the U.S. Government and its
agencies and instrumentalities, as well as cash and cash
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 14
equivalents denominated in foreign currencies. Investments in domestic bank
certificates of deposit and bankers' acceptances will be limited to banks that
have total assets in excess of $500 million and are subject to regulatory
supervision by the U.S. Government or state governments. The Equity Portfolio's
investments in commercial paper of U.S. issuers will be limited to (a)
obligations rated Prime-1 by Moody's Investors Service ("Moody's") or A-1 by
Standard & Poor's Ratings Group ("Standard & Poor's") or (b) unrated obligations
issued by companies having an outstanding unsecured debt issue currently rated A
or better by Standard & Poor's. A description of various commercial paper
ratings and debt securities appears in Appendix A to the Statement of Additional
Information. The Equity Portfolio's investments in foreign short-term
instruments will be limited to those that, in the opinion of the Manager, equate
generally to the standards established for U.S. short-term instruments.
RISK FACTORS
Zero Coupon Securities. Zero coupon securities of the type
held by the Fund can be sold prior to their due date in the secondary market at
their then prevailing market value which, depending on prevailing levels of
interest rates, the time remaining to maturity and liquidity (i.e., relative
levels of supply and demand for the particular zero coupon security), may be
more or less than the securities' "accreted value", that is, their value based
solely on the amount due at maturity and accretion of interest from the date of
purchase. The market prices of zero coupon securities are generally more
volatile than the market prices of securities that pay interest periodically
and, accordingly, are likely to respond to a greater degree to changes in
interest rates than do non-zero coupon securities having similar maturities and
yields. The current net asset value of the Fund attributable to zero coupon
securities and other debt instruments generally will increase as prevailing
interest rates decrease, and they will decrease as such rates increase. For
example, during the Offering Period, an increase in prevailing interest rates of
one-half of one percent could be expected to cause the market value of the
Fund's zero coupon securities to decrease by more than four percent, and a
one-half percent decrease in such rates could be expected to cause the market
value of such securities to increase by more than four percent. Such
fluctuations may be larger or smaller depending on, among other things, the
level of current rates and the time remaining to maturity. As a result, the net
asset value of shares of the Fund may fluctuate over a greater range than shares
of other mutual funds that invest in Treasury Securities having similar
maturities and yields but that make current distributions of interest.
As an open-end investment company, the Fund is required to
redeem its shares upon the request of any shareholder at the net asset value
next determined after receipt of the request. However, because of the price
volatility of zero coupon Treasury Securities prior to maturity, if it is
assumed that the value of the Fund's assets invested in the Equity Portfolio
remains constant, a shareholder who redeems shares prior to the Maturity Date
may realize an amount that is greater than or less than the purchase price of
those shares, including any sales charge paid. Even if the market value of the
zero coupon securities does not fluctuate substantially, any increase in their
value may be more than offset by declines in the value of the Equity Portfolio,
so that a shareholder redeeming shares prior to the Maturity Date could receive
less than the amount originally invested. Although the Manager's Guarantee will
terminate in respect of shares redeemed prior to the Maturity Date, and such
shares would no longer be subject to the Repayment Objective, the Manager's
Guarantee will still have effect, and the Repayment Objective will still apply,
to the
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 15
portion of the amount originally invested but not redeemed, provided dividends
and distributions with respect to those shares are reinvested. Thus, on or after
the Maturity Date, the holder of those remaining shares would receive, upon
redeeming them (together with shares acquired through reinvestment of dividends
and distributions thereon), an amount that equals or exceeds the purchase price
of the shares initially purchased. The Manager's Guarantee provides further
assurance that such amount will be received upon redemption. Nonetheless, the
amount received on the Maturity Date in respect of such shares, when combined
with the amount received in respect of shares redeemed prior to the Maturity
Date, may be more or less than the aggregate purchase price of all shares
purchased in the offering.
Each year the Fund will be required to accrue an increasing
amount of income on its zero coupon Treasury securities utilizing a constant
interest rate method which takes into account the compounding of accrued
interest. To maintain its tax status as a regulated investment company and also
to avoid imposition of excise taxes, however, the Fund will be required to
distribute dividends equal to substantially all of its net investment income,
including the accrued income on its zero coupon Treasury Securities for which it
receives no payments in cash prior to their maturity. Dividends of the Fund's
net investment income and distributions of its short-term capital gains will be
taxable to shareholders as ordinary income for income tax purposes, whether
received in cash or reinvested in additional shares. See "Taxes." However, a
shareholder who elects to receive dividends and distributions in cash, instead
of reinvesting these amounts in additional shares of the Fund, may realize an
amount on or after the Maturity Date that is less than the entire amount
originally invested. Accordingly, the Fund may not be appropriate for investors
who would require cash distributions from the Fund in order to meet their
current tax obligations resulting from their investment.
Two-Tier Structure. The two-tier master-feeder structure pursuant
to which the Fund invests in the Equity Portfolio involves certain risks to
investors in the Fund that would not arise in a conventional single-tier fund.
See "Special Information Concerning the Two- Tier Structure."
Liquidity. In order to generate sufficient cash to meet
distribution requirements and other operational needs and to redeem its shares
on request, the Fund may be required to limit reinvestment of capital on the
disposition of its interest in the Equity Portfolio and may be required to
liquidate some or all of its interest in the Equity Portfolio over time. The
Fund may be required to effect these liquidations at a time when it is otherwise
disadvantageous to do so. If the Fund realizes capital losses on dispositions of
interests in the Equity Portfolio that are not offset by capital gains on the
disposition of other interests in the Equity Portfolio, the Fund may be required
to liquidate a disproportionate amount of its zero coupon securities or borrow
money, in an amount not exceeding 5% of the Fund's total assets, to satisfy the
distribution and redemption requirements described above. The liquidation of
zero coupon Treasury Securities and the expenses associated with borrowing money
in these circumstances could render the Fund unable to meet its Repayment
Objective. Under the terms of the Manager's Guarantee, however, shareholders who
reinvest all dividends and other distributions will be certain of receiving the
full amount of their original investment.
Foreign Investment. Investments in securities of foreign
issuers may involve risks that are not associated with domestic investments, and
the Equity Portfolio's foreign
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 16
investments may present more risk than a portfolio of domestic securities.
Foreign issuers may lack uniform accounting, auditing and financial reporting
standards, practices and requirements, and there is generally less publicly
available information about foreign issuers than there is about U.S. issuers.
Governmental regulation and supervision of foreign stock exchanges, brokers and
listed companies may be less pervasive than is customary in the United States.
Securities of some foreign issuers are less liquid, and their prices are more
volatile, than securities of comparable domestic issuers. Foreign securities
settlements may in some instances be subject to delays and related
administrative uncertainties which could result in temporary periods when assets
of the Equity Portfolio are uninvested and no return is earned thereon and may
involve a risk of loss to the Equity Portfolio. Foreign securities markets may
have substantially less volume than U.S. markets and far fewer traded issues.
Fixed brokerage commissions on foreign securities exchanges are generally higher
than in the United States and transaction costs with respect to smaller
capitalization companies may be higher than those of larger capitalization
companies. Income from foreign securities may be reduced by tax withheld at
source or other foreign taxes. In some countries, there may also be the
possibility of expropriation or confiscatory taxation (in which case the Equity
Portfolio could lose its entire investment in a certain market), limitations on
the removal of moneys or other assets of the Equity Portfolio, political or
social instability or revolution, or diplomatic developments that could affect
investments in those countries. In addition, it may be difficult to obtain and
enforce a judgment in a court outside the United States.
Some of the risks described in the preceding paragraph may be
more severe for investments in emerging or developing countries. By comparison
with the United States and other developed countries, emerging or developing
countries may have relatively unstable governments. Companies in emerging
markets may generally be smaller, less experienced and more recently organized
than many domestic companies. Prices of securities traded in the securities
markets of emerging or developing countries tend to be volatile. Furthermore,
foreign investors are subject to many restrictions in emerging or developing
countries. These restrictions may require, among other things, governmental
approval prior to making investments or repatriating income or capital, or may
impose limits on the amount or type of securities held by foreigners or on the
companies in which the foreigners may invest.
The economies of individual emerging countries may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rates of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payment position and may
be based on a substantially less diversified industrial base. Further, the
economies of developing countries generally are heavily dependent on
international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been, and may
continue to be, adversely affected by economic conditions in the countries with
which they trade.
Depositary Receipts. The Equity Portfolio may invest in ADRs,
EDRs and GDRs. ADRs may be publicly traded on exchanges or over-the-counter in
the United States and are quoted and settled in dollars at a price that
generally reflects the dollar equivalent of the home country share price. EDRs
are typically issued by foreign banks or trust companies and traded in Europe.
GDRs may be issued by a domestic or foreign bank or
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 17
trust company and may be traded in several markets. Depositary Receipts may be
issued as sponsored or unsponsored programs. In sponsored programs, the issuer
has made arrangements to have its securities traded in the form of a Depositary
Receipt. In unsponsored programs, the issuer may not be directly involved in the
creation of the program. Although the regulatory requirements with respect to
sponsored and unsponsored programs are generally similar, the issuers of
unsponsored Depositary Receipts are not obligated to disclose material
information in the United States and, therefore, the import of such information
may not be reflected in the market value of such securities.
Foreign Currencies. As a matter of fundamental policy, neither
the Fund nor the Equity Portfolio will engage in transactions intended to hedge
foreign exchange risk. The Equity Portfolio may, however, enter into forward
foreign currency contracts to provide for its obligations at the time of
settlement of securities transactions. Investments in foreign securities will
usually be denominated in foreign currency, and the Equity Portfolio may
temporarily hold funds in foreign currencies. The value of the Equity
Portfolio's investments denominated in foreign currencies may be affected,
favorably or unfavorably, by the relative strength of the U.S. dollar, changes
in foreign currency and U.S. dollar exchange rates and exchange control
regulations. The Equity Portfolio may incur costs in connection with conversions
between various currencies. The Equity Portfolio's net asset value will be
affected by changes in currency exchange rates. Changes in foreign currency
exchange rates may also affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed by the Equity Portfolio to owners of beneficial
interests. The rate of exchange between the U.S. dollar and other currencies is
determined by the forces of supply and demand in the foreign exchange markets
(which in turn are affected by interest rates, trade flow and numerous other
factors, including, in some countries, local government intervention).
SPECIAL INFORMATION CONCERNING THE TWO-TIER STRUCTURE
The Fund is an open-end management investment company which
seeks to achieve its investment objectives by investing a portion of its
investable assets in the Equity Portfolio, a separate registered investment
company that is taxable as a partnership for Federal tax purposes, and investing
the remainder of its assets directly in zero coupon Treasury Securities. Both
the Fund and the Equity Portfolio are managed by AIG Capital Management Corp. By
investing in the Equity Portfolio, the Fund differs from mutual funds that
directly acquire and manage their entire portfolio of securities. The Fund has
adopted this two-tier structure because the Equity Portfolio, by offering
interests to other investors in addition to the Fund, may be able to allocate
certain expenses over a larger asset base than the Fund would be able to if it
were to invest all its assets directly. For this reason the Board believes that
the aggregate per share expenses of the Fund (including its proportionate share
of the expenses of the Equity Portfolio) will be less than or approximately
equal to the expenses that the Fund would incur if the assets of the Fund that
are invested in the Equity Portfolio were instead invested directly by the Fund
in the type of securities held by the Equity Portfolio, although there can be no
assurance that this will be the case. See "Investment Objectives and Management
Policies - First Global Equity Portfolio" and "- Other Investment Policies."
The investment objectives of the Fund may be changed only with
the approval of the holders of the outstanding shares of the Fund. The
investment objective of the Equity
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 18
Portfolio may be changed only with the approval of the holders of the
outstanding beneficial interests of the Equity Portfolio. Due to the two-tier
structure of the Fund, the overall investment objectives of the Fund differ from
those of the Equity Portfolio. Beneficial interests in the Equity Portfolio are
held by the Fund and may be held by other investors, including other open-end
investment companies. The Fund has agreed that, if any matter is put to a vote
of the holders of the Equity Portfolio's beneficial interests, the Fund will
vote its interest in the Equity Portfolio in accordance with instructions
received from the holders of the Fund's shares. Shareholders of the Fund will be
provided with at least 30 days' written notice of any proposed changes to the
investment objectives of the Fund or the Equity Portfolio.
The members of the Board of Directors of the Company are the
same as the Trustees of the Equity Portfolio. Both the Board and the Trustees
have adopted written procedures reasonably appropriate to deal with potential
conflicts of interest that may arise as a result. For information about the
Board and the Trustees, see the Statement of Additional Information.
In addition to selling a beneficial interest to the Fund, the
Equity Portfolio may sell beneficial interests to other mutual funds or
institutional investors. Beneficial interests may be offered and sold only in
transactions exempt from the registration requirements of the 1933 Act. The
Equity Portfolio's Declaration of Trust prohibits it from selling beneficial
interests to individuals, S-corporations (as defined in the Internal Revenue
Code ss.1361 et seq.), partnerships and grantor trusts. All investors will
invest in the Equity Portfolio on the same terms and conditions and will bear a
proportionate share of the Equity Portfolio's expenses. However, the other
mutual funds that may in the future invest in the Equity Portfolio may sell
their own shares with sales charges and expenses different from those of the
Fund. Such different pricing structures may result in differences in returns
experienced by investors in other funds that invest in the Equity Portfolio.
Such differences in return are not uncommon and are present in other mutual fund
structures. As of the date of this Prospectus, there is only one other mutual
fund that invests in the Equity Portfolio, the AIG Children's World Fund --
2005. In the future, information concerning the AIG Children's World Fund --
2005 and other funds sold by your broker that invest in the Equity Portfolio may
be obtained from your broker, or by calling the Fund's principal underwriter,
AIG Equity Sales Corp. (the "Distributor") at (800) 862-3984.
The Fund is a series of the Company. The Company may withdraw
the investment of the Fund from the Equity Portfolio at any time if the Board
determines that it is in the best interest of the Fund to do so and the
shareholders of the Fund approve such action. Upon any such withdrawal, the
Board would consider what action might be taken, including the investment of all
the assets of the Fund in another pooled investment entity with investment
objectives and restrictions consistent with the Fund's objectives and
restrictions or the retaining of a new investment adviser to manage the Fund's
assets in accordance with the investment policies described herein.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 19
Certain changes in the Equity Portfolio's investment
objectives, policies or restrictions, or a failure by the Fund's shareholders to
approve a change in the Equity Portfolio's investment objectives or
restrictions, may require withdrawal of the Fund's interest in the Equity
Portfolio. Any such withdrawal could result in a distribution of the Equity
Portfolio's securities to the Fund in kind (as opposed to a cash distribution).
In this case, the securities received by the Fund may or may not be readily
marketable. The distribution in kind may result in the Fund having a less
diversified portfolio of investments or adversely affect the Fund's liquidity
and the Fund could incur brokerage, tax or other charges in converting the
securities to cash. Notwithstanding the above, there are other means for meeting
shareholder redemption requests such as borrowing.
Smaller funds investing in the Equity Portfolio may be
materially affected by the actions of larger funds investing in the Equity
Portfolio. For example, if a large fund withdraws from the Equity Portfolio, the
remaining funds may subsequently experience higher pro rata operating expenses,
thereby producing lower returns. Additionally, because the Equity Portfolio
would become smaller, it may become less diversified, resulting in potentially
increased portfolio risk (however, these possibilities also exist for
traditionally structured funds which have large or institutional investors who
may redeem their shares). Also, funds with a greater pro rata ownership in the
Equity Portfolio could have effective voting control of the operations of the
Equity Portfolio. Whenever the Fund is requested to vote on matters pertaining
to the Equity Portfolio (other than a vote by the Fund to continue the operation
of the Equity Portfolio upon the withdrawal of another investor in the Equity
Portfolio), the Company will hold a meeting of shareholders of the Fund and will
cast all of its votes proportionately as instructed by the Fund's shareholders.
The Company will vote the shares held by the Fund shareholders who do not give
voting instructions in the same proportion as the shares of Fund shareholders
who do give voting instructions. Shareholders of the Fund who do not vote will
have no effect on the outcome of such matters.
INVESTMENT ADVISORY SERVICES
The Manager
The Manager, an investment adviser registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), is an indirect
wholly owned subsidiary of AIG. AIG is a holding company which through its
subsidiaries is primarily engaged in a broad range of insurance and
insurance-related activities in the United States and abroad. At December 31,
1994, AIG and its subsidiaries supervised investment portfolios which in the
aggregate exceeded $60 billion, of which more than $10 billion represented third
party assets under management. At such date, members of the Manager's Investment
Committee and their teams of investment professionals supervised the management
of assets in excess of $50 billion, of which more than $7 billion represented
third party funds. See "-The Investment Process" and "- The Subadvisors"
below.
The Manager also manages the AIG Children's World Fund - 2005,
another series of the Company, and the AIG Money Market Fund, a separate money
market investment portfolio of a registered investment company. The principal
business address of the Manager is 70 Pine Street, New York, New York 10270.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 20
The Manager serves as the Fund's and the Equity Portfolio's
investment adviser, is responsible for the management of the assets of the Fund
and the Equity Portfolio and continually reviews and supervises the Equity
Portfolio's investment program, subject to the supervision of, and policies
established by, the Board and the Trustees of the Equity Portfolio. The Manager
is assisted in the performance of these services by certain affiliated
Subadvisors. See "- The Subadvisors" below. The Manager is entitled to a fee,
which is calculated daily and paid monthly, at an annual rate of 0.20% of the
average daily net assets of the Fund (other than its interest in the Equity
Portfolio) and 1.20% of the average daily net assets of the Equity Portfolio.
The Fund and the Equity Portfolio will be responsible for all expenses other
than those assumed by the Manager including those for necessary professional and
brokerage services, costs of regulatory compliance, costs associated with
maintaining corporate existence, custody, shareholder relations and insurance
costs.
The Manager has agreed that, in the event that the total
expenses of the Fund during the Offering Period, including the Fund's
proportional share of the expenses of the Equity Portfolio, but excluding
interest, taxes, brokerage commissions and extraordinary expenses, should exceed
1.95% of the average daily net assets of the Fund, the Manager will limit the
Fund's expenses to the extent of any such excess, subject to reimbursement by
the Fund as described below. The total amount of any excess so limited by the
Manager is referred to as the "Refunded Amount." The Manager has no obligation
to waive its fee or reimburse any expenses of the Fund after the end of the
Offering Period. The Fund and the Manager have also agreed that, for the
thirty-six months following the end of the Offering Period, if the Fund's total
expenses (calculated as described above) are less than 1.95% per annum of
average daily net assets of the Fund, the Fund will pay to the Manager an
expense reimbursement fee, computed and paid monthly, such that after such
reimbursement the aggregate expenses of the Fund will not exceed 1.95% per
annum. The total amount of such expense reimbursement fees will not exceed the
Refunded Amount plus the Manager's related financing costs. The Board of
Directors of the Fund has agreed that any related financing costs would be
calculated at an interest rate of prime rate plus 1%.
The Investment Process
The Manager has established a committee (the "Investment
Committee") that is responsible for the asset allocation of the Fund and the
Equity Portfolio and carrying out their respective investment policies. The
members of the Investment Committee are officers of the Manager, affiliated
investment advisors (see "-- The Subadvisors" below) or regional affiliates of
the Manager to whom the Manager or Subadvisors have access under service
arrangements. The members of the Investment Committee meet monthly to determine
collectively the allocation of the assets of the Fund between zero coupon
Treasury Securities and the Equity Portfolio, as well as the allocation of the
assets of the Equity Portfolio on a regional basis. Members of the Investment
Committee, assisted by a team of investment professionals, are primarily
responsible for the Equity Portfolio's country and stock selection within their
respective global region. Currently the members of the Investment Committee are:
Ian P. Butter. Mr. Butter has been a Director of AIG Global
Investment Corp. (Europe) Ltd ("AIG Global Europe") in London since January
1992, where he also served in a trading capacity since 1988. In January 1996,
Mr. Butter transferred to AIG Global
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 21
Europe's Japanese affiliate where he currently serves as Chief Investment
Officer to AIG Global Investment Corp. (Japan).
Patrick Dempsey. Mr. Dempsey is Managing Director, Fixed
Income, of AIG Global Europe in London. He has been a Director of AIG Global
Europe since he joined it at its inception in 1988 as a founding Director.
Brian McCarthy. Mr. McCarthy is Vice President,
International Fixed Income of AIG Global Investment Corp. ("AIG Global"), which
he joined in March 1994. Prior to joining AIG Global, he was Vice President,
International Fixed Income Research of Alliance Capital.
Win J. Neuger. Mr. Neuger, who acts as Chairman of the
Investment Committee, is Chief Investment Officer of AIG, which he joined in
February 1995, and Chief Investment Officer of the Manager, which he joined in
August 1995. Mr. Neuger has been a Director, Chairman of the Board and President
of AIG Global since March 1995 and has served as a Director of AIG Global Europe
since April 1995. Prior to joining these companies, Mr. Neuger was with Bankers
Trust Company, where he was a Senior Vice President and, since October 1991, a
Managing Director in the investment management area.
Yukihiro Nishimiya. Mr. Nishimiya has been a portfolio
manager for AIG Global Investment Corp. (Japan) since October 1990.
Harry P. Rekas. Mr. Rekas is Managing Director, U.S.
Equities, of AIG Global, which he joined in April 1993. Prior to joining AIG
Global, he was a portfolio manager for Citibank in New York.
Peter Soo. Mr. Soo is Regional Director, Fund Management, of
AIG Global Investment Corp. (Asia), Limited, which he joined in 1989.
Peter Wignall. Mr. Wignall is Managing Director and Chief
Executive Officer of AIG Global Europe in London, which he joined as an
Executive Director in April 1992. Prior to April 1992 he acted as a portfolio
manager for Citicorp Investment Management in London and in Sydney, Australia.
A member of the Investment Committee will be responsible for
the day-to-day implementation of the Investment Committee's strategy. The
minimum percentage of the Fund's assets that must be allocated to zero coupon
Treasury Securities in order to provide for the Repayment Objective can be
mathematically determined on any given day from the yield on the zero coupon
Treasury Securities and the amount then entitled to the benefit of the Repayment
Objective. When shares are purchased, any adjustment to the portion of the
proceeds to be allocated to zero coupon Treasury Securities required by
variations in bond yield between Investment Committee meetings will be
determined under guidelines set down by the Investment Committee. The balance of
the purchase price will be invested in the Equity Portfolio. After the Offering
Period, the Fund anticipates adjustments in its holding
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 22
of zero coupon Treasury Securities solely to meet requests for redemption and,
if required, to make payments of dividends and distributions. See "Proposed
Operations of the Fund."
When shares are redeemed, the Manager will ordinarily redeem
the proportional interest of those shares in the Fund's zero coupon Treasury
Securities and in the Equity Portfolio, determined on the basis of current net
asset value. For defensive reasons, however, the Manager may elect to take a
greater proportion of a redemption from the Equity Portfolio. Should a
shareholder elect to have dividends paid by the Fund in cash rather than
reinvested in additional shares of the Fund, the amount required to be paid will
be taken from the Fund's zero coupon Treasury Securities and the Equity
Portfolio in the same proportion that the dividend income was generated,
provided that the amount of zero coupon Treasury Securities to be sold for this
purpose will be reduced (and the interest in the Equity Portfolio to be redeemed
correspondingly increased) to the extent necessary to protect the Repayment
Objective for those shareholders who reinvest all dividends and distributions.
Pursuant to the terms of the Manager's Guarantee, shareholders who wish to be
certain of receiving the full amount of their original investment must reinvest
all dividends and distributions in additional shares and hold all their shares
until the Maturity Date.
Generally, the regional allocations within the Equity
Portfolio will be managed between the regular meetings in accordance with the
policy established at the most recent meeting; however, in exceptional
circumstances, such as subsequent market developments of a material nature, an
ad hoc meeting will be called to review policy.
The Subadvisors
The Manager has entered into subadvisory agreements with AIG
Global Investment Corp. ("AIG Global"), which is a wholly owned subsidiary of
AIG and registered under the Advisers Act. Pursuant to its subadvisory
agreements, AIG Global provides investment advisory services to the Manager in
respect of the management of the Fund's zero coupon Treasury Securities and in
respect of the management of the assets of the Equity Portfolio and officers of
AIG Global provide representation on the Investment Committee (see "The
Investment Process"). Under the subadvisory agreements with AIG Global, the
Manager pays AIG Global a fee which is calculated daily and paid monthly at an
annual rate of 0.0825% of the average daily net assets of the Fund (other than
the Fund's interest in the Equity Portfolio) and 0.15% of the average daily net
assets of the Equity Portfolio. These fees are all paid from the management fee
paid to the Manager. The principal office of AIG Global is 200 Liberty Street,
New York, New York 10281.
The Manager has also entered into subadvisory agreements with
AIG Global Europe, which is a wholly owned subsidiary of AIG and registered
under the Advisers Act. AIG Global Europe is also a member of the Investment
Management Regulatory Organization Limited, a United Kingdom self-regulatory
organization. Pursuant to its subadvisory agreements, AIG Global Europe provides
investment advisory services to the Manager in respect of the management of the
Fund's Treasury Securities and in respect of the management of the assets of the
Equity Portfolio in their respective regions, and certain of its officers
provide representation on the Investment Committee (see "The Investment
Processs"). Under the subadvisory agreements with AIG Global Europe, the Manager
pays AIG Global Europe a fee which is calculated daily and paid monthly at an
annual rate of 0.0175% of the average daily net assets of the Fund (other than
the Fund's interest in the
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 23
Equity Portfolio) and 0.24% of the average daily net assets of the Equity
Portfolio. AIG Global Europe's fees are all paid from the management fees paid
to the Manager. AIG Global Europe has advised the Manager that it intends to
terminate its registration under the Advisers Act. Concurrently with such
termination, the Manager's subadvisory agreements with AIG Global Europe will
terminate. However, it is anticipated that personnel of AIG Global Europe will
continue to provide certain services to the Manager pursuant to a service
arrangement. The principal office of AIG Global Europe is Unit 1/11 Harbour
Yard, Chelsea Harbour, London SW10 0XD, England.
AIG Global and AIG Global Europe are referred to in this
prospectus as the "Subadvisors."
Portfolio Transactions. The agreements of the Fund and the
Equity Portfolio with the Manager recognize that in the purchase and sale of
portfolio securities, the Manager and the Subadvisors will seek the most
favorable price and execution and, consistent with that policy, may give
consideration to the research, statistical and other services furnished by
brokers or dealers to the Manager or a Subadvisor. The use of brokers who
provide investment and market research and securities and economic analysis may
result in higher brokerage charges than the use of brokers selected solely on
the basis of the most favorable brokerage commission rates, and research and
analysis received may be useful to the Manager and the Subadvisors in connection
with their services to other clients as well as the Fund and the Equity
Portfolio. In over-the-counter markets, orders are placed with primary
market-makers unless a more favorable execution price is believed to be
obtainable.
Consistent with the rules of the National Association of
Securities Dealers, Inc., and subject to seeking the most favorable price and
execution available and such other policies as the Board and the Trustees of the
Equity Portfolio may determine, the Manager and the Subadvisors may consider
sales of shares of other mutual funds managed by the Manager as a factor in the
selection of brokers or dealers to execute portfolio transactions for the Fund
or the Equity Portfolio.
Portfolio Turnover. A change in securities held by the Fund or
the Equity Portfolio is known as "portfolio turnover," which may result in the
payment by the Fund or the Equity Portfolio of dealer spreads or underwriting
commissions and other transaction costs on the sale of securities as well as on
the reinvestment of the proceeds in other securities. Although it is the policy
of both the Fund and the Equity Portfolio to hold securities for investment,
changes will be made from time to time when the Manager or a Subadvisor believes
such changes will strengthen the investments of the Fund or the Equity
Portfolio. After the Offering Period, the Manager does not expect any portfolio
turnover in the Fund's zero coupon Treasury Securities except for turnover
related to redemptions. The portfolio turnover of the Equity Portfolio is not
expected to exceed 100% per annum.
Valuation. The net asset value of the shares of the Fund is
determined each day, Monday through Friday, as of the close of regular trading
on the New York Stock Exchange ("NYSE") (usually 4:00 p.m. New York City time)
on each day that the NYSE is open. During the Offering Period, zero coupon
Treasury Securities will be valued at the average of the last reported bid and
ask prices; thereafter, in order to ensure that an adequate amount of zero
coupon Treasury Securities is maintained to achieve the Repayment Objective when
shares of the Fund are redeemed, zero coupon Treasury Securities will be valued
at the last reported bid. Securities traded on a foreign exchange
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 24
or over-the-counter market are valued at the last sales price on the primary
exchange or market in which they are traded. Securities for which there are no
recent sales transactions are valued based on quotations provided by primary
market makers in such securities. Any securities for which recent market
quotations are not readily available are valued at fair value determined in
accordance with procedures approved by the Board and by the Trustees of the
Equity Portfolio. Short-term holdings maturing in 60 days or less are generally
valued at amortized cost if their original maturity was 60 days or less.
Short-term holdings with more than 60 days remaining to maturity will be valued
at current market value until the 61st day prior to maturity, and will then be
valued on an amortized cost basis based on the value as of such date unless the
Board or the Trustees of the Equity Portfolio determines that this amortized
cost value does not represent fair market value.
AMERICAN INTERNATIONAL GROUP, INC.
AIG is a Delaware corporation which through its subsidiaries
is primarily engaged in a broad range of insurance and insurance-related
activities in the United States and abroad. AIG's primary activities include
both general and life insurance operations. Other significant activities of AIG
are financial services and agency and service fee operations. AIG's general
insurance subsidiaries are multiple line companies writing substantially all
lines of property and casualty insurance; one or more of these companies is
licensed to write substantially all of these lines in all states of the United
States and in more than 100 foreign countries. AIG's life insurance subsidiaries
offer a wide range of traditional insurance and financial and investment
products; one or more of these subsidiaries is licensed to write life insurance
in all states in the United States and in over 70 foreign countries. At December
31, 1994, AIG and its consolidated subsidiaries had total assets of $114.3
billion and capital funds of $16.4 billion; consolidated net income for the year
then ended was $2.2 billion. The Statement of Additional Information contains
AIG's financial statements and certain other information about AIG. At December
31, 1994, AIG and its consolidated subsidiaries had approximately 32,000
employees. The principal executive offices of AIG are located at 70 Pine Street,
New York, New York 10270 and its telephone number is (212) 770-7000.
DIVIDENDS AND DISTRIBUTIONS
Dividends consisting of substantially all of the Fund's net
investment income, if any, are declared and paid annually. The Fund may also
declare an additional dividend of net investment income and net realized capital
gains in a given year to the extent necessary to avoid the imposition of federal
excise taxes on the Fund. Distributions consisting of substantially all the
realized net capital gains for the Fund are declared and paid on an annual
basis, except that an additional capital gain distribution may be made in a
given year to the extent necessary to avoid the imposition of federal excise tax
on the Fund. Declared dividends and distributions are payable to the shareholder
of record on the record date.
Dividends and capital gain distributions paid by the Fund are
automatically reinvested in additional shares of the Fund unless the shareholder
has elected to have them paid in cash. Dividends and distributions to be paid in
cash are mailed by check or are wire transferred in accordance with the
shareholder's instructions. Pursuant to the terms of the
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 25
Manager's Guarantee, shareholders who wish to be certain of receiving the full
amount of their original investment must reinvest all dividends and
distributions in additional shares and hold all their shares until the Maturity
Date.
TAXES
The following is a summary of some of the tax considerations
relating to the Fund. This discussion is general in nature and should not be
regarded as an exhaustive presentation. Additional tax information is included
in the Statement of Additional Information, which shareholders may request.
The Fund intends to qualify as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). For each year
it so qualifies, the Fund will generally not be subject to federal income taxes
on its net investment income and realized net capital gains, if any, which it
timely distributes to its shareholders, provided that at least 90% of the sum of
its net investment income and net short-term capital gains are distributed to
shareholders each year.
Dividends from net investment income and distributions from
net short-term capital gains are taxable as ordinary income to the shareholders,
whether received in cash or reinvested in additional shares.
The zero coupon Treasury Securities will be treated as bonds
that were issued to the Fund at an original issue discount. Original issue
discount is treated as interest for federal income tax purposes and the amount
of original issue discount generally will be the difference between the bond's
purchase price and its stated redemption price at maturity. The Fund will be
required to include in gross income for each taxable year the daily portions of
original issue discount attributable to the zero coupon Treasury Securities held
by the Fund as such original issue discount accrues. Dividends derived from such
original issue discount that accrues for such year will be taxable to
shareholders as ordinary income. In general, original issue discount accrues
daily under a constant interest rate method which takes into account the
compounding of accrued interest. In the case of zero coupon Treasury Securities,
this method will generally result in an increasing amount of income to the Fund
each year.
Distributions by a regulated investment company from net
capital gains, i.e., the excess of net long-term capital gains over any net
short-term capital losses, designated by the Fund as capital gain dividends are
taxable as long-term capital gain, whether received in cash or invested in
additional shares, regardless of how long shares have been held by the
shareholders.
Any gain or loss realized upon a sale or redemption of shares
of the Fund by a shareholder who is not a dealer in securities will generally be
treated as a long-term capital gain or loss if the shares have been held for
more than one year and otherwise as a short-term capital gain or loss. However,
if shares on which a capital gain dividend has been received are subsequently
sold or redeemed and such shares have been held for six months or less, any loss
realized will be treated as long-term capital loss to the extent of the capital
gain dividend received. In addition, no loss will be allowed on the sale or
other disposition of shares of the Fund if, within a period beginning 30 days
before the date of such sale or
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 26
disposition and ending 30 days after such date, the holder acquires (such as
through dividend reinvestment) securities that are substantially identical to
the shares of the Fund.
The Fund will generally be subject to an excise tax of 4% on
the amount of any income or capital gains, above certain permitted levels, not
distributed to shareholders in accordance with a calendar year distribution
requirement. Furthermore, dividends declared in October, November or December
payable to shareholders of record on a specified date in such a month and paid
in the following January will be treated as having been paid by the Fund and
received by each shareholder in December. Under this rule, therefore,
shareholders may be taxed in one year on dividends or distributions actually
received in January of the following year.
Portions of the Fund's investment income may be subject to
foreign income taxes withheld at source. The Fund does not expect to qualify to
"pass through" to its shareholders credit for such foreign taxes paid. If,
however, the Fund does qualify to pass through foreign tax credits, the Fund
will elect to do so.
Investors should carefully consider the tax implications of
purchasing shares of the Fund just prior to the declaration of a dividend or
capital gain distribution, which would be subject to taxation as described above
notwithstanding that it is in effect a return of investment.
Unless a shareholder includes a certified taxpayer
identification number (social security number for individuals) on the Account
Application and certifies that the shareholder is not subject to backup
withholding, the Fund is required to withhold and remit to the U.S. Treasury a
portion of distributions and other reportable payments to the shareholder. The
rate of backup withholding is 31%. Shareholders should be aware that, under
regulations promulgated by the Internal Revenue Service, the Fund may be fined
$100 annually for each account for which a certified taxpayer identification
number is not provided. In the event that such a fine is imposed, the Fund may
charge a service fee of up to $100 annually that may be debited from the
shareholder's account and offset against any undistributed dividends and capital
gain distributions. The Fund also reserves the right to close any account which
does not have a certified taxpayer identification number.
Shareholders are urged to consult their tax advisers
concerning the effect of federal, state and local income taxes on the Fund and
in their individual circumstances.
THE ADMINISTRATOR
PFPC International Ltd. will serve as the Fund's and serves as
the Equity Portfolio's administrator and accounting agent. PFPC International
Ltd.'s principal business address is 80 Harcourt Street, Dublin, Ireland.
Pursuant to the administration and accounting agreements with the Fund and the
Equity Portfolio, it will assist the Fund and assists the Equity Portfolio in
all aspects of their administration and operations, including matters relating
to the maintenance of financial records and Fund and Equity Portfolio
accounting.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 27
THE TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
PFPC Inc. will serve as the Fund's transfer agent and dividend
disbursing agent. Some services may be provided by sub-transfer agents. PFPC
Inc.'s principal business address is 400 Bellevue Parkway, Wilmington, Delaware
19809.
CUSTODIAN
PNC Bank, National Association ("PNC Bank"), Airport Business
Center, International Court 2, 200 Stevens Drive, Lester, Pennsylvania 19113,
will serve as custodian of the assets of the Fund. State Street Bank and Trust
Company ("State Street"), 1776 Heritage Drive, Quincy, Massachusetts 02171
serves as custodian of the assets of the Equity Portfolio. State Street is
authorized to establish and has established separate accounts in foreign
currencies and is authorized to cause securities of the Equity Portfolio to be
held in separate accounts outside the United States in the custody of non-U.S.
banks. Rules adopted under the 1940 Act permit the Fund and the Equity Portfolio
to maintain their securities and cash in the custody of certain eligible foreign
banks and securities depositories. Pursuant to those rules, the Equity
Portfolio's securities and cash, when invested in securities of foreign
countries, are held by subcustodians who are approved by the Board and by the
Trustees of the Equity Portfolio in accordance with the rules of the Securities
and Exchange Commission. Selection of the subcustodians is made by the Board and
the Trustees following a consideration of a number of factors, including, but
not limited to, the reliability and financial stability of an institution, the
ability of the institution to capably perform custodial services for the Equity
Portfolio, the reputation of the institution in its national market, and the
political and economic stability of the countries in which the subcustodians
will be located. In addition, the 1940 Act requires that foreign subcustodians,
among other things, have stockholders' equity in excess of $200 million, have no
lien on the assets of the Fund or the Equity Portfolio, and maintain adequate
and accessible records.
SHAREHOLDER SERVICING AGREEMENT
Under the Shareholder Servicing Agreement, the Distributor
provides information and administrative services for Fund shareholders. The
Distributor enters into related arrangements with various financial services
firms, such as broker-dealer firms or banks (which may be affiliated with the
Distributor), that provide services and facilities for their customers or
clients who are shareholders of the Fund. Such administrative services and
assistance may include, but are not limited to, establishing and maintaining
shareholder accounts and records, processing purchase and redemption
transactions and answering routine shareholder inquiries regarding the Fund and
its special features. The Distributor bears all its expenses for providing
services pursuant to the Shareholder Servicing Agreement, including the payment
of any service fees. For services under the Shareholder Servicing Agreement, the
Fund pays the Distributor a fee, payable monthly, at the annual rate of up to
0.25% of average daily net assets of those accounts in the Fund that it
maintains and services. A broker-dealer or bank becomes eligible for the service
fee from the time of purchase based on assets in the accounts serviced by it,
and the fee continues until terminated by the Distributor or the Fund. The fees
payable to financial services firms are calculated monthly and paid quarterly by
the Distributor.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 28
The Distributor also may provide some of the above shareholder
services and may retain any portion of the fee under the Shareholder Servicing
Agreement not paid to broker-dealers or banks to compensate itself for
shareholder servicing functions performed for the Fund's shareholders.
Currently, the shareholder servicing fee payable to the Distributor is based
only upon Fund assets in accounts for which there is a broker-dealer or bank
listed on the Fund's records and it is intended that the Distributor will pay
all the shareholder servicing fees that it receives from the Fund to
broker-dealers or banks in the form of service fees. The effective shareholder
servicing fee rate to be charged against all assets of the Fund while this
procedure is in effect would depend upon the proportion of the Fund's shares
that are in accounts for which there is a broker-dealer or bank of record.
RULE 12b-1 PLAN
Under a plan of distribution adopted by the Board pursuant to
Rule 12b-1 under the 1940 Act (the "Plan"), the Fund may pay the Distributor a
distribution fee during the Offering Period at the annualized rate of up to
0.50% of the average daily net assets of the Fund. The Plan will terminate on
the last day of the Offering Period. The Plan is intended to reimburse the
Distributor for expenses it incurs in connection with the distribution of the
shares of the Fund. Distribution expenses of the Distributor that are
reimbursable under the Plan include the payment of commissions to broker-dealers
and interest on any unreimbursed amounts carried forward thereunder, the cost of
any additional compensation paid by the Distributor to broker-dealers, the costs
of printing and mailing to prospective investors prospectuses and other
materials relating to the Fund, the costs of developing, printing, distributing
and publishing advertisements and other sales literature, and allocated costs
relating to the Distributor's distribution activities, including, among other
things, employee salaries, bonuses and other overhead expenses. Rules adopted by
the National Association of Securities Dealers, Inc. effectively limit the total
amount of Rule 12b-1 fees and sales charges that may be charged to a shareholder
of the Fund to 6.25% of the amount invested plus the Distributor's associated
financing costs.
PURCHASES OF SHARES
Shares of the Fund may be purchased from investment dealers
during the Offering Period at the public offering price, which is the net asset
value next determined plus a sales charge that is a percentage of the public
offering price and varies as shown below. You may also purchase shares directly
from the Fund's transfer agent, PFPC Inc., by completing the Account Application
attached to this Prospectus and mailing it to AIG Retiree Fund -- 2003, PO Box
8935, Wilmington, Delaware 19899-9801. The minimum investment is $5,000, and the
minimum subsequent investment is $100. However, you may choose to make an
initial investment of as little as $1,000 and reach the $5,000 minimum with
several additional investments during the Offering Period. The minimum
investment for an Individual Retirement Account ("IRA") or employee benefit plan
account is $2,000, and the minimum subsequent investment is $50; for these
accounts you may choose to make an initial investment of as little as $250 and
reach the $2,000 minimum with several additional investments during the Offering
Period. To do this you must indicate on the Account Application your intent to
invest at least the $5,000 minimum (or $2,000 for IRAs and employee benefit
plans) by the end of the Offering Period. If you have not invested at least the
minimum amount by the end of the Offering Period, the Fund may redeem your
shares
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 29
(which may occur at a time when the net asset value is less than when you
invested) or the Fund may impose an annual account keeping fee of $10. This fee
may be changed at any time in management's discretion.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 30
<TABLE>
<CAPTION>
Investment Sales Load Schedule
Sales Load as a
Percentage of
------------------------------------------
<S> <C> <C> <C>
Regular
Dealer
Discount
Net Amount as a % of
Offering Invested Offering
Amount of Purchase Price (NAV)* Price
Less than $100,000 4.75% 4.99% 4.25%
$100,000 up to $249,999 4.00 4.17 3.60
$250,000 up to $499,999 3.00 3.09 2.70
$500,000 up to $999,999 2.00 2.04 1.80
$1 million and above 0.00** 0.00** ***
</TABLE>
- ------------------
* Rounded to the nearest one-hundredth of one percent.
** Redemption of shares may be subject to a contingent deferred sales
charge, as discussed below.
*** Commission may be payable by the Distributor as discussed below.
Shares of the Fund will be offered to investors only from
February 15, 1996 through November 30, 1996. During the Offering Period the
shares will be offered at their net asset value plus the applicable sales
charge, if any, as shown in the table above. The Fund does not expect that its
shares will be offered after November 30, 1996. However, the Fund may at its
option extend or shorten the Offering Period. The offering of shares of the Fund
shall be subject to suspension or termination as provided under "Investment
Objectives and Management Policies - Proposed Operations of the Fund." In
addition, the offering of shares may be suspended from time to time during the
Offering Period in the discretion of the Manager. During any period in which the
public offering of shares is suspended or terminated, shareholders will still be
permitted to reinvest dividends and distributions in shares of the Fund.
Certificates representing the Fund's shares will not be
issued. PFPC Inc., the Fund's transfer agent, maintains a record of each
shareholder's ownership. Shareholders receive confirmations of all transactions
in Fund shares and periodic statements reflecting share balances and dividends.
The Fund receives the entire net asset value of all shares
sold. The Distributor retains the sales charge from which it allows discounts
from the applicable public offering price to investment dealers, which discounts
are uniform for all dealers in the United States and its territories. The normal
discount allowed to dealers is set forth in the above table. Upon notice to all
dealers with whom it has sales agreements, the Distributor may reallow up to the
full applicable sales charge, as shown in the above table, during periods and
for transactions specified in such notice and such reallowances may be based
upon attainment of minimum sales levels. During periods when 90% or more of the
sales charge is reallowed, such dealers may be deemed to be underwriters as that
term is defined in the 1933 Act.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 31
Banks and other financial services firms may provide
administrative services related to order placement and payment to facilitate
transactions in shares of the Fund for their clients, and the Distributor may
pay them a transaction fee up to the level of the discount or other concession
allowable to dealers as described above. Banks currently are prohibited under
the Glass-Steagall Act from providing certain underwriting or distribution
services. Banks or other financial services firms may be subject to various
state laws regarding the services described above and may be required to
register as dealers pursuant to state law. If banking firms were prohibited from
acting in any capacity or providing any of the described services, management
would consider what action, if any, would be appropriate. Management does not
believe that termination of a relationship with a bank would result in any
material adverse consequences to the Fund.
In addition to the discounts or commissions described above,
the Distributor or the Manager may, from time to time, pay or allow additional
concessions or promotional incentives, in the form of cash or other
compensation, to firms that sell shares of the Fund. In some instances, such
discounts or other incentives will be offered only to certain firms that sell or
are expected to sell during specified time periods certain minimum amounts of
shares of the Fund or other funds underwritten by the Distributor. Such
concessions may be paid as a lump sum or be periodic and may be up to 0.25% of
the value of shares sold by a dealer, plus additional compensation for
continuing due diligence or other services.
Shares of the Fund may be purchased at net asset value by a
participant- directed qualified retirement plan described in Code Section 401(a)
or a participant-directed non-qualified deferred compensation plan described in
Code Section 457 provided in either case that such plan has not less than 200
eligible employees.
Shares of the Fund may also be purchased at net asset value by
any purchaser provided that the amount invested in the Fund or certain other
funds totals at least $1,000,000, including purchases pursuant to the "Letter of
Intent" and "Cumulative Discount" features described under "Special Features"
(the "Large Purchase Privilege"). The other funds for which the Large Purchase
Privilege is available will vary from time to time because they are generally
offered only for limited periods. As of the date of this Prospectus, the Large
Purchase Privilege is available only with respect to the Fund and the AIG
Children's World Fund--2005. In the future, you may obtain a list of the funds
for which the Large Purchase Privilege is available and request a prospectus by
telephoning (800) 862-3984.
A contingent deferred sales charge of 1% may be imposed upon
redemption of shares of the Fund that are purchased under the Large Purchase
Privilege if they are redeemed within one year of purchase. The charge will not
be imposed upon redemption of reinvested dividends or share appreciation. The
charge is applied to the value of the shares redeemed less the above exclusions.
The contingent deferred sales charge will be waived in the event of redemption
of shares of a shareholder (including a registered joint owner) who has died or
who, after purchase of the shares being redeemed, becomes totally disabled (as
evidenced by a determination by the federal Social Security Administration).
Shares of the Fund purchased under the Large Purchase
Privilege may be exchanged for shares of certain other funds managed by the
Manager under the exchange privilege described under "Special Features --
Exchange Privilege" without paying any contingent deferred sales charge at the
time of exchange. If the shares received in exchange are redeemed thereafter, a
contingent deferred sales charge may be imposed in
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 32
accordance with the foregoing requirements provided that the shares redeemed
will retain their original cost and purchase date for purposes of the contingent
deferred sales charge.
The Distributor may in its discretion compensate investment
dealers or other financial services firms in connection with the sale of shares
of the Fund to employer sponsored employee benefit plans at net asset value up
to the following amounts: 1.00% of the net asset value of shares sold on amounts
up to $5 million during the Offering Period, 0.50% on the next $5 million and
0.25% on amounts over $10 million during the Offering Period. The Distributor
may in its discretion compensate investment dealers or other financial service
firms in connection with the sale of shares of the Fund in accordance with the
Large Purchase Privilege up to the following amounts: 1.00% of the net asset
value of shares sold on amounts up to $3 million, .50% on the next $2 million
and .25% on amounts over $5 million. For purposes of determining the appropriate
commission percentage to be applied to a particular sale under the foregoing
schedule, the Distributor will consider the cumulative amount invested by the
purchaser in the Fund and other funds eligible for the Large Purchase Privilege.
Shares may be sold to officers, trustees, directors, employees
(including retirees) and sales representatives of the Fund, its investment
manager, its subadvisors, its principal underwriter or certain affiliated
companies, for themselves or members of their families, or to any trust,
pension, profit-sharing or other benefit plan for only such persons at net asset
value in any amount. Shares may be sold at net asset value in any amount to
registered representatives and employees of broker-dealers having selling group
agreements with the Distributor and officers, directors and employees of service
agents of the Fund, for themselves or their spouses or dependent children, or to
any trust or pension, profit-sharing or other benefit plan for only such
persons. Shares may be sold at net asset value in any amount to officers,
trustees, directors and employees of banks and other financial services firms
that provide administrative services related to order placement and payment to
facilitate transactions in shares of the Fund for their clients pursuant to an
agreement with the Distributor or one of its affiliates, for themselves or
members of their families, or to any trust, pension or profit-sharing or other
benefit plan for only such persons. Additionally, shares may be sold at net
asset value in any amount to officers, trustees, directors and employees of
certain other firms that provide services for the benefit of the Fund and their
affiliates, for themselves or members of their families, or to any trust,
pension, profit-sharing or other benefit plan for only such persons.
Shares of the Fund may be sold at net asset value through
certain investment advisers registered under the Advisers Act and other
financial services firms that adhere to certain standards established by the
Distributor, including a requirement that such shares be sold for the benefit of
their clients participating in a "wrap account" or similar program under which
such clients pay a fee to the investment adviser or other firm. Such shares are
sold for investment purposes and on the condition that they will not be resold
except through redemption or repurchase by the Fund. The Fund may also issue
shares at net asset value in connection with the acquisition of the assets of or
merger or consolidation with another investment company, or to shareholders in
connection with the investment or reinvestment of income and capital gain
dividends.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 33
The sales charge scale is applicable to purchases made at one
time by any "purchaser," which includes an individual, or an individual, his or
her spouse and children under the age of 21; or a trustee or other fiduciary of
a single trust estate or single fiduciary account, or an organization exempt
from federal income tax under Section 501(c)(3) or (13) of the Code; or a
pension, profit-sharing or other employee benefit plan whether or not qualified
under Section 401 of the Code; or 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 of redeemable
securities of a registered investment company at a discount. In order to qualify
for a lower sales charge, all orders from an organized group will have to be
placed through a single investment dealer or other firm and identified as
originating from a qualifying purchaser.
Investment dealers and other firms provide varying
arrangements for their clients to purchase and redeem Fund shares. Some may
establish higher minimum investment requirements than set forth above. Firms may
arrange with their clients for other investment or administrative services. Such
firms may independently establish and charge additional amounts to their clients
for such services, which charges would reduce the clients' return. Firms also
may hold Fund shares in nominee or street name as agent for and on behalf of
their customers. In such instances, the Fund's transfer agent will have no
information with respect to or control over accounts of specific shareholders.
Such shareholders may obtain access to their accounts and information about
their accounts only from their firm. Certain of these firms may receive
compensation from the Fund through the Distributor for recordkeeping and other
expenses relating to these nominee accounts. See "Shareholder Servicing
Agreement." In addition, certain privileges with respect to the purchase and
redemption of shares or the reinvestment of dividends may not be available
through such firms. Some firms may participate in a program allowing them access
to their clients' accounts for servicing including, without limitation,
transfers of registration and dividend payee changes; and may perform functions
such as generation of confirmation statements and disbursement of cash
dividends. Such firms, including affiliates of the Distributor, may receive
compensation from the Fund through the Distributor for these services. This
prospectus should be read in conjunction with such firms' material regarding
their fees and services.
Orders for the purchase of shares of the Fund will be
confirmed at a price based on the net asset value next determined after receipt
by the Distributor of the order accompanied by payment. However, orders received
by dealers or other firms prior to the determination of net asset value (see
"Investment Advisory Services - Valuation") and received by the Distributor
prior to the close of its business day will be confirmed at a price based on the
net asset value effective on that day. Dealers and other financial services
firms are obligated to transmit orders promptly. Payment for purchase orders
must be made by check (a check drawn on a foreign bank will not be accepted) or
Federal Reserve Draft or by wiring Federal Funds to the Fund's Transfer Agent.
Checks should be made payable to AIG Retiree Fund - 2003. See "Purchase and
Redemption of Shares" in the Statement of Additional Information.
The Fund reserves the right to withdraw all or any part of the
offering made by this prospectus and to reject purchase orders.
Shareholders should direct their inquiries to the Distributor
or to the firm from which they received this prospectus.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 34
REDEMPTION OR REPURCHASE OF SHARES
General
Any shareholder may require the Fund to redeem his or her
shares. However, as explained more fully in "Investment Objectives and
Management Policies--The Manager's Guarantee", shareholders who redeem some or
all of their shares before the Maturity Date will not be certain to receive the
full amount of their original investment (including any sales charge paid) on or
after the Maturity Date. As noted previously, pursuant to the terms of the
Manager's Guarantee, shareholders who wish to be certain of receiving the full
amount of their original investment must reinvest all dividends and
distributions in additional shares and hold all their shares until the Maturity
Date.
When shares are held for the account of a shareholder by the
Fund's Transfer Agent, the shareholder may redeem them by making a written
request with signatures guaranteed to AIG Retiree Fund - 2003, PO Box 8935,
Wilmington, Delaware 19899-9801. Written redemption instructions, indicating the
name of the Fund and the number of shares to be redeemed, must be received by
the Transfer Agent in proper form and signed exactly as the shares are
registered. All signatures must be guaranteed. The Transfer Agent has adopted
standards and procedures pursuant to which signature-guarantees in proper form
generally will be accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Stock Exchanges Medallion
Program and the Securities Transfer Agents Medallion Program ("STAMP"). Such
guarantees must be signed by an authorized signatory thereof with "Signature
Guaranteed" appearing with the shareholder's signature. If the signature is
guaranteed by a broker or dealer, such broker or dealer must be a member of a
clearing corporation and maintain net capital of at least $100,000. Signature-
guarantees may not be provided by notaries public. Redemption requests by
corporate and fiduciary shareholders must be accompanied by appropriate
documentation establishing the authority of the person seeking to act on behalf
of the account. Investors may obtain from the Fund or the Transfer Agent forms
of resolutions and other documentation which have been prepared in advance to
assist in compliance with the Fund's procedures.
The redemption price will be the net asset value next
determined following receipt by the Distributor of a properly executed request
with any required documents. Payment for shares redeemed will be made in cash as
promptly as practicable but in no event later than three business days after
receipt of a properly executed request in proper form for transfer. When the
Fund is requested to redeem shares for which it may not have yet received good
payment, it may delay transmittal of redemption proceeds until it has determined
that collected funds have been received for the purchase of such shares, which
will be up to 15 days from the purchase date. The redemption within one year of
shares purchased at net asset value under the Large Purchase Privilege may be
subject to a 1% contingent deferred sales charge (see "Purchase of Shares").
Shareholders can request the following telephone privileges:
expedited wire transfer redemptions and exchange transactions for individual and
institutional accounts and pre-authorized telephone redemption transactions for
certain institutional accounts. Shareholders may choose these privileges on the
account application or by contacting the Distributor or the Transfer Agent for
appropriate instructions. Please note that the telephone exchange privilege is
automatic unless the shareholder refuses it on the account application. Neither
the Fund nor its agents will be liable for any loss, expense or cost arising out
of any
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 35
telephone request pursuant to these privileges, including any fraudulent or
unauthorized request, and the shareholder will bear the risk of loss, so long as
the Fund or its agent reasonably believes, based upon reasonable verification
procedures, that the telephonic instructions are genuine. The verification
procedures include recording instructions, requiring certain identifying
information before acting upon instructions and sending written confirmations.
If the proceeds of the redemption are $25,000 or less and the
proceeds are payable to the shareholder of record at the address of record,
normally a telephone request or a written request by all registered account
holders without a signature guarantee is sufficient for redemptions by
individual or joint account holders, and trust, executor and guardian account
holders (excluding custodial accounts for gifts and transfers to minors),
provided the trustee, executor or guardian is named in the account registration.
Other institutional account holders may exercise this special privilege of
redeeming shares by telephone request or written request without signature
guarantee subject to the same conditions as individual account holders and
subject to the limitations on liability described above, provided that this
privilege has been pre-authorized by the institutional account holder by written
instruction to the Shareholder Service Agent with signatures guaranteed.
Telephone requests may be made by calling (800) 862-3984. Shares purchased by
check may not be redeemed under this privilege of redeeming shares by telephone
request until such shares have been owned for at least 15 days. This privilege
of redemption of shares by telephone request or by written request without a
signature guarantee may not be used if the shareholder's account has had an
address change within 30 days of the redemption request. During periods when it
is difficult to contact the Distributor by telephone, it may be difficult to use
the telephone redemption privilege, although investors can still redeem by mail.
The Fund reserves the right to terminate or modify this privilege at any time.
Repurchases (Confirmed Redemptions)
A request for repurchase may be communicated by a shareholder
through a securities dealer or other financial services firm to the Distributor,
which the Fund has authorized to act as its agent. There is no charge by the
Distributor with respect to repurchases; however, dealers or other firms may
charge customary commissions for their services. Dealers and other financial
services firms are obligated to transmit orders promptly. The repurchase price
will be the net asset value next determined after receipt of a request by the
Distributor. However, requests for repurchases received by dealers or other
firms prior to the determination of net asset value (see "Investment Advisory
Services - Valuation") and received by the Distributor prior to the close of the
Distributor's business day will be confirmed at the net asset value effective on
that day. The offer to repurchase may be suspended at any time. Requirements as
to stock powers, certificates, payments and delay of payments are the same as
for redemptions.
Expedited Wire Transfer Redemptions
If the account holder has given authorization for expedited
wire redemption to the account holder's brokerage or bank account, shares can be
redeemed and proceeds sent by federal wire transfer to a single previously
designated account. Requests received by the Distributor prior to the
determination of net asset value will result in shares being redeemed that day
at the net asset value effective on that day and normally the proceeds will be
sent to the designated account the following business day. Delivery of the
proceeds of a wire redemption request of $250,000 or more may be delayed by the
Fund for up to seven days if the Distributor deems it appropriate under then
current market conditions.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 36
Once authorization is on file, the Distributor will honor requests by telephone
at (800) 862-3984 or in writing, subject to the limitations on liability
described under "General" above. The Fund is not responsible for the efficiency
of the federal wire system or the account holder's financial services firm or
bank. The Fund currently does not charge the account holder for wire transfers.
The account holder is responsible for any charges imposed by the account
holder's firm or bank. There is a $5,000 wire redemption minimum. To change the
designated account to receive wire redemption proceeds, send a written request
to the Distributor with signatures guaranteed as described above or contact the
firm through which shares of the Fund were purchased. Shares purchased by check
may not be redeemed by wire transfer until such shares have been owned for at
least 15 days. During periods when it is difficult to contact the Distributor by
telephone, it may be difficult to use the expedited redemption privilege. The
Fund reserves the right to terminate or modify this privilege at any time.
Reinstatement Privilege
A shareholder who has redeemed shares of the Fund or certain
other funds may reinstate up to the full amount redeemed at net asset value at
the time of the reinstatement in shares of the Fund (but only prior to the end
of the Offering Period) or, if available, in shares of certain other funds
managed by the Manager. A shareholder of the Fund who redeems shares purchased
under the Large Purchase Privilege (see "Purchase of Shares") and incurs a
contingent deferred sales charge may reinstate up to the full amount redeemed at
net asset value at the time of the reinstatement in shares of the Fund (but only
prior to the end of the Offering Period) or, if available, in shares of certain
other funds managed by the Manager. The amount of any contingent deferred sales
charge also will be reinstated. The funds for which these privileges are
available will vary from time to time because they are generally offered only
for limited periods. As of the date of this Prospectus, the Reinstatement
Privilege is not available for any other funds. In the future, you may obtain a
list of the funds for which these privileges are available and request a
prospectus by telephoning (800) 862-3984. These reinstated shares will retain
their original cost and purchase date for purposes of the contingent deferred
sales charge. Purchases through the Reinstatement Privilege are subject to the
minimum investment requirements applicable to the shares being purchased and may
only be made for funds available for sale in the shareholder's state of
residence as listed under "Special Features - Exchange Privilege." The
Reinstatement Privilege can be used only once as to any specific shares and
reinstatement must be effected within six months of the redemption. If a loss is
realized on the redemption of Fund shares, the reinstatement may be subject to
the "wash sale" rules if made within 30 days of the redemption, resulting in the
postponement of the recognition of such loss for federal income tax purposes.
The Reinstatement Privilege may be terminated or modified at any time and is
subject to the limited Offering Period of the Fund.
SPECIAL FEATURES
Letter of Intent
By signing a Letter of Intent form, available from your broker
or the Transfer Agent, you may become eligible for the reduced sales load
applicable to the total number of shares of the Fund and shares of certain other
funds managed by the Manager purchased during the Offering Period pursuant to
the terms and under the conditions set forth in the Letter of Intent. A minimum
initial purchase of $1,000 is required. The Transfer Agent will hold in escrow
5% of the amount indicated in the Letter of Intent for payment of a higher sales
load if you do not purchase the full amount indicated in the Letter of Intent.
The
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 37
escrow will be released when you fulfill the terms of the Letter of Intent by
purchasing the specified amount. If your purchases qualify for a further sales
load reduction, the sales load will be adjusted to reflect the total purchase at
the end of the Offering Period. If total purchases are less than the amount
specified, you will be requested to remit an amount equal to the difference
between the sales load actually paid and the sales load applicable to the
aggregate purchases actually made. If such remittance is not received within 20
days, the Transfer Agent, as attorney-in-fact pursuant to the terms of the
Letter of Intent, will redeem an appropriate number of shares held in escrow to
realize the difference. Signing a Letter of Intent does not bind you to purchase
the full amount indicated at the sales load in effect at the time of the
signing, but you must complete the intended purchase to obtain the reduced sales
load. At the time you purchase shares of any of the eligible funds, you must
indicate your intention to do so under a Letter of Intent. The other funds that
may be purchased under a Letter of Intent will vary from time to time because
some funds will be offered only for limited periods, as described in the
applicable prospectus. As of the date of this Prospectus, the Letter of Intent
is not available for any other funds. For a list of the funds for which the
Letter of Intent is available in the future, and to request a prospectus,
telephone (800) 862-3984.
Right of Accumulation
You may qualify for a reduced sales charge. Pursuant to the
Right of Accumulation, certain investors are permitted to purchase shares of the
Fund at the sales charge applicable to the total of (a) the dollar amount then
being purchased plus (b) the current public offering price of all shares of the
Fund, shares of the other series of AIG All Ages Funds, Inc. and shares of
certain other funds managed by the Manager, then held by that investor. The
following purchases may be aggregated for the purposes of determining the amount
of purchase and the corresponding sales load: (a) individual purchases on behalf
of a single purchaser, the purchaser's spouse and their children under the age
of 21 years including shares purchased in connection with a retirement account
exclusively for the benefit of such individual(s), such as an IRA, and purchases
made by a company controlled by such individual(s); (b) individual purchases by
a trustee or other fiduciary account, including an employee benefit plan (such
as employer-sponsored pension, profit-sharing and stock bonus plans, including
plans under Section 401(k) of the Code, and medical, life and disability
insurance trusts); or (c) individual purchases by a trustee or other fiduciary
purchasing shares concurrently for two or more employee benefit plans of a
single employer or of employers affiliated with each other. Subsequent purchases
made under the conditions set forth above will be subject to the minimum
subsequent investment of $250 and will be entitled to the Right of Accumulation.
Exchange Privilege
Subject to the following limitations, shares of the Fund and
certain other funds may be exchanged for each other at their relative net asset
values. Shares purchased by check may not be exchanged until they have been
owned for at least 15 days. In addition, shares acquired by such an exchange may
not be exchanged thereafter until they have been owned for 15 days. The funds
for which this privilege is available will vary from time to time because some
funds will be offered only for limited periods, as described in the applicable
prospectus. As of the date of this Prospectus, the Exchange Privilege is not
available between the Fund and any other funds. For a list of the funds for
which the Exchange Privilege is available in the future, and to request a
prospectus, telephone (800) 862-3984. Exchanges may be made only for funds that
are available for sale in the shareholder's state
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 38
of residence. The Manager's Guarantee relates only to the Fund and will have no
effect on shares that are exchanged for shares of another fund.
The total value of shares being exchanged must at least equal
the minimum investment requirement of the fund into which they are being
exchanged. Exchanges are made based on relative dollar values of the shares
involved in the exchange. There is no service fee for an exchange; however,
dealers or other firms may charge for their services in effecting exchange
transactions. Exchanges will be effected by redemption of shares of the fund
held and purchase of shares of the other fund. For federal income tax purposes,
any such exchange constitutes a sale upon which a gain or loss may be realized,
depending upon whether the value of the shares being exchanged is more or less
than the shareholder's adjusted cost basis. Shareholders interested in
exercising the exchange privilege may obtain prospectuses of the other funds
from dealers, other firms or the Distributor. Exchanges may be accomplished by a
written request to the Distributor, or by telephone if the shareholder has given
authorization. Once the authorization is on file, the Distributor will honor
requests by telephone at (800) 862-3984 or in writing, subject to the
limitations on liability under "Redemption or Repurchase of Shares - General."
During periods when it is difficult to contact the Distributor by telephone, it
may be difficult to use the telephone exchange privilege. The exchange privilege
is not a right and may be suspended, terminated or modified at any time. Except
as otherwise permitted by applicable regulations, 60 days' prior written notice
of any termination or material change will be provided.
Automatic Investment Program
The Automatic Investment Program enables you to authorize
checks to be drawn on your checking account at regular monthly or quarterly
intervals during the Offering Period for fixed amounts of $100 or more to
purchase shares of the Fund. This Program permits you to use the
dollar-cost-averaging method to invest in the Fund. The Automatic Investment
Program will terminate on the last day of the Offering Period. See the terms and
conditions on the Account Application.
Retirement Plans
An investment in shares of the Fund may be appropriate for
certain Individual Retirement Accounts ("IRAs"), self-employed retirement plans
and corporate plans. In view of the limited Offering Period of the Fund (see
"Purchase of Shares"), the Fund may not be appropriate for periodic contribution
plans. Investors who are considering establishing, or purchasing shares of the
Fund for, any retirement plan should consult with their own tax advisers before
doing so.
The Fund sponsors IRAs which may also be used as Simplified
Employee Pension Plan ("SEP") IRA accounts. Eligible investors may establish an
IRA, or a SEP-IRA with their employer, to invest in the Fund.
PNC Bank, N.A. serves as custodian for the IRAs and SEP-IRAs
sponsored by the Fund. the current fees payable to PNC Bank, N.A. for its
services as IRA custodian are available upon request. Neither PNC Bank, N.A. nor
the Fund administers the SEP-IRAs and therefore no assurance can be given that a
particular SEP-IRA is properly administered.
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 39
PERFORMANCE
The Fund may advertise several types of performance
information, including "average annual total return" and "total return." Each of
these figures is based upon historical results and is not necessarily
representative of the future performance of the Fund.
Average annual total return and total return figures measure
both the net investment income generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the underlying investments in the
Fund's portfolio for the period referenced, assuming the reinvestment of all
dividends. Thus, these figures reflect the change in the value of an investment
in the Fund during a specified period. Average annual total return will be
quoted for at least the one, five and ten year periods ending on a recent
calendar quarter (or if such periods have not yet elapsed, at the end of a
shorter period corresponding to the life of the Fund). Average annual total
return figures represent the average annual percentage change over the period in
question. Total return figures represent the aggregate percentage or dollar
value change over the period in question.
The Fund's performance may be compared to that of the Consumer
Price Index or various unmanaged indexes including the Dow Jones Industrial
Average, the Standard & Poor's 500 Stock Index, the Europe Australia Far East
("EAFE") Index and other indexes prepared by Morgan Stanley Capital
International. The Fund's performance may also be compared to the performance of
other mutual funds or mutual fund indexes as reported by independent mutual fund
reporting services such as Lipper Analytical Services, Inc. and Micropal, Ltd.
Such performance calculations are generally based upon changes in net asset
value with all dividends reinvested.
The Fund may quote information from publications such as
Morningstar, Inc., The Wall Street Journal, Money Magazine, Forbes, Barron's,
Fortune, The New York Times, The Washington Post, The International Herald
Tribune, USA Today, Institutional Investor, Registered Representative and other
consumer journals and publications by the U.S. government and its agencies.
Also, investors may want to compare the historical returns of various
investments, performance indexes of those investments or economic indicators,
including but not limited to stocks, bonds, certificates of deposit, money
market funds, and U.S. Treasury obligations. Bank product performance may be
based upon, among other things, the BANK RATE MONITOR National Index(TM) or
various certificate of deposit indexes. Money market fund performance may be
based upon, among other things, the IBC/Donoghue Money Fund Report(R) or Money
Fund Insight(R), reporting services on money market funds. Performance of U.S.
Treasury obligations may be based upon, among other things, various U.S.
Treasury bill indexes. Certain of these alternative investments may offer fixed
rates of return and guaranteed principal and may be insured.
The Fund may depict the historical performance of the
securities in which the Fund and the Equity Portfolio may invest over periods
reflecting a variety of market or economic conditions either alone or in
comparison with alternative investments, performance indexes of those
investments or economic indicators. The Fund may also describe its portfolio
holdings (including those of the Equity Portfolio) and depict its size or
relative size compared to other mutual funds, the number and make-up of its
shareholder base and other descriptive factors concerning the Fund.
The Fund's shares are sold at net asset value plus a maximum
sales charge of 4.75% of the offering price. While the maximum sales charge is
normally reflected in the Fund's performance figures, certain total return
calculations may not include such charge and those results would be reduced if
it were included. The Fund's returns and net asset
<PAGE>
AIG RETIREE FUND -- 2003, PAGE 40
value will fluctuate. Except in limited cases described in "Purchases of
Shares," shares of the Fund are redeemable by an investor at the then current
net asset value, which may be more or less than original cost. Additional
information concerning the Fund's performance and concerning the historical
performance of various types of investments that may be used to provide for
retirement needs appears in the Statement of Additional Information. Additional
information about the Fund's performance also appears in its Annual Report to
Shareholders, which will be available without charge from the Fund.
ORGANIZATION AND CAPITALIZATION
The Fund is a series of the Company, an open-end management
investment company incorporated under the laws of the State of Maryland on April
4, 1995. The Board of Directors is authorized to issue, create and classify
shares of capital stock in separate series and classes thereof without further
action by shareholders. To date, shares in the AIG Retiree Fund - 2003 described
herein and the AIG Children's World Fund -- 2005 are the only shares authorized.
Shares of capital stock have a par value of $.001. Each share of the Company is
given one vote. Matters affecting a certain series of the Company, such as
approval of new investment advisory agreements and changes in the fundamental
policies of a series of the Company, will require the affirmative vote of the
shareholders of that series. All shares have non-cumulative voting rights for
the election of directors. Each outstanding share is fully paid and
non-assessable, and each is freely transferable. There are no liquidation,
conversion or preemptive rights. The Company will furnish without charge to each
shareholder upon request a full statement of (1) the designations and any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of the stock of each class that the Company is authorized to issue;
and (2)(a) the differences in the relative rights and preferences between the
shares of each series of preferred or special class and (b) the authority of the
Board to set the relative rights and preferences of subsequent series. The
Company does not presently intend to hold annual shareholder meetings, but will
do so if requested by the holders of at least ten percent of its outstanding
shares for the purpose of voting upon the removal of a director or directors and
to assist in communications with other shareholders as required by the 1940
Act.
The Equity Portfolio is an open-end management investment
company, organized under the laws of Delaware on June 23, 1995 as a trust with
limited liability.
<PAGE>
=====================================
AIG Retiree Fund -- 2003
a series of
AIG All Ages Funds, Inc.
=====================================
TABLE OF CONTENTS
Page
THE FUND'S AND THE EQUITY PORTFOLIO'S EXPENSES.............................. 4
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES............................... 5
RISK FACTORS................................................................ 14
SPECIAL INFORMATION CONCERNING THE TWO-TIER STRUCTURE................... ... 18
INVESTMENT ADVISORY SERVICES............................................... 20
AMERICAN INTERNATIONAL GROUP, INC.......................................... 24
DIVIDENDS AND DISTRIBUTIONS................................................ 25
TAXES ................................................................... 25
THE ADMINISTRATOR........................................................... 27
THE TRANSFER AGENT AND DIVIDEND DISBURSING AGENT.............................27
CUSTODIAN................................................................... 27
SHAREHOLDER SERVICING AGREEMENT............................................ 28
RULE 12b-1 PLAN............................................................. 29
PURCHASES OF SHARES..........................................................29
REDEMPTION OR REPURCHASE OF SHARES...........................................34
SPECIAL FEATURES............................................................ 36
PERFORMANCE................................................................. 38
=====================================
February 15, 1996
=====================================
No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in the Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Fund or
its Distributor. This Prospectus does not constitute an offering by the Fund or
by the Distributor in any jurisdiction in which such offering may not
lawfully be made.
<PAGE>
AIG RETIREE FUND - 2003 A Series of AIG All Ages Funds, Inc.
Statement of Additional Information
February 15, 1996
70 Pine Street
New York, NY 10270
(800) 862 - 3984
AIG Retiree Fund -- 2003 (the "Fund") is a series of AIG All
Ages Funds, Inc. (the "Company"). The Fund has two investment objectives. The
first objective is to provide a guaranteed return, on or after November 15,
2003, of the full amount originally invested (including any sales charge paid)
by each shareholder who has reinvested all dividends and distributions. The Fund
pursues its first objective by investing a portion of its assets in U.S.
Treasury zero coupon securities, combined with further assurance from a
guarantee by AIG Capital Management Corp., the Fund's investment adviser (the
"Manager"). The Manager's obligations under its guarantee will be backed by its
parent, American International Group, Inc. ("AIG").
The Fund's second objective is to achieve total return on
capital through both capital growth (realized and unrealized) and income, by
investing the balance of its assets in a globally diversified portfolio of
equity securities. There can be no assurance that the Fund's investment
objective of total return on capital will be achieved.
The Fund seeks to achieve the investment objective of total
return on capital by investing a portion of its investable assets in the First
Global Equity Portfolio (the "Equity Portfolio"), a diversified open-end
management investment company with the same investment objective. The Fund will
directly acquire and manage its portfolio of zero coupon securities. Both the
Fund and the Equity Portfolio are managed by AIG Capital Management Corp. and
investment advice is provided by affiliated companies.
This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Prospectus of the Fund, dated
February 15, 1996, as amended or supplemented from time to time, a copy of which
may be obtained from the Fund upon request. This Statement of Additional
Information is incorporated by reference in its entirety into the Prospectus.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION ....................................................... 3
INVESTMENT OBJECTIVES AND POLICIES ........................................ 3
THE MANAGER'S GUARANTEE ................................................... 9
DIRECTORS, TRUSTEES AND OFFICERS .......................................... 10
MANAGEMENT AND EXPENSES ................................................... 13
RULE 12b-1 PLAN ........................................................... 15
SHAREHOLDER SERVICING AGREEMENT ........................................... 15
PORTFOLIO TRANSACTIONS AND BROKERAGE ...................................... 16
PURCHASE AND REDEMPTION OF FUND SHARES .................................... 17
DISTRIBUTION SERVICES ..................................................... 18
VALUATION ................................................................. 18
TAXES ..................................................................... 19
PERFORMANCE INFORMATION ................................................... 21
OTHER INFORMATION ......................................................... 23
FINANCIAL STATEMENTS OF FIRST GLOBAL EQUITY PORTFOLIO ..................... 24
INFORMATION WITH RESPECT TO AIG ........................................... 24
- 2 -
<PAGE>
GENERAL INFORMATION
The Fund is a newly organized, diversified series of AIG All
Ages Funds, Inc. (the "Company"), an open-end management investment company, and
therefore has no prior history.
INVESTMENT OBJECTIVES AND POLICIES
Overview
The Fund has two investment objectives. The first is to
provide a guaranteed return, at any time on or after November 15, 2003 (the
"Maturity Date"), of the full amount originally invested by each shareholder who
has reinvested all dividends and distributions (the "Repayment Objective"). The
Fund pursues its first objective by investing a portion of its assets in zero
coupon securities that are the direct obligations of the U.S. Treasury
("Treasury Securities"), combined with further assurance from a guarantee by the
Manager (the "Manager's Guarantee"). The Manager's obligations under the
Manager's Guarantee will be backed by its parent, AIG. The Fund's second
objective is to provide total return on capital through both capital growth
(realized and unrealized) and income, through investment of the balance of its
assets primarily in a globally diversified portfolio of equity securities. The
Fund seeks to achieve its second investment objective of total return on capital
by investing a portion of its investable assets in the First Global Equity
Portfolio (the "Equity Portfolio"), an open-end diversified management
investment company, unlike other mutual funds that directly acquire and manage
their own portfolio of securities. The investment objectives of the Fund are
fundamental and cannot be changed without the approval of the holders of a
majority of the outstanding voting securities of the Fund, as defined under the
Investment Company Act of 1940, as amended (the "1940 Act"). The following
information regarding the Fund's and the Equity Portfolio's investment policies
supplements the information contained in the Prospectus.
Zero Coupon Securities. There are currently two basic types of
zero coupon securities, those created by separating the interest and principal
components of a previously issued interest-paying security and those originally
issued in the form of a face amount only security paying no interest. Zero
coupon securities of the U.S. Government and certain of its agencies and
instrumentalities and of private corporate issuers are currently available,
although the Fund will purchase only those that are direct obligations of the
U.S. Treasury.
Zero Coupon securities of the U.S. Government that are
currently available are called STRIPS (Separate Trading of Registered Interest
and Principal of Securities). STRIPS are issued under a program introduced by
the U.S. Treasury and are direct obligations of the U.S. Government. The U.S.
Government does not issue zero coupon securities directly. The STRIPS program,
which is ongoing, is designed to facilitate the secondary market stripping of
selected Treasury notes and bonds into individual interest and principal
components. Under the program, the U.S. Treasury continues to sell its shares
and bonds through its customary auction process. However, a purchaser of those
notes and bonds who has access to a book-entry account at a Federal Reserve bank
may
- 3 -
<PAGE>
separate the specified Treasury notes and bonds into individual interest and
principal components. The selected Treasury Securities may thereafter be
maintained in the book-entry system operated by the Federal Reserve in a manner
that permits the separate trading and ownership of the interest and principal
payments. The Federal Reserve does not charge a fee for this service; however,
the book-entry transfer of interest and principal components is subject to the
same fee schedule generally applicable to the transfer of Treasury
securities.
Under the program, in order for a book-entry Treasury Security
to be separated into its component parts, the face amount of the security must
be an amount which, based on the stated interest rate of the security, will
produce a semi-annual interest payment of $1,000 or a multiple of $1,000. Once a
book-entry security has been separated, each interest and principal component
may be maintained and transferred in multiples of $1,000 regardless of the face
amount initially required for separation or the resulting amount required for
each interest payment.
Investment banks may also strip Treasury Securities and sell
them under proprietary names. These securities may not be as liquid as STRIPS
and the Fund has no present intention of investing in these instruments in the
coming year.
STRIPS are purchased at a discount from $1,000. Absent a
default by the U.S. Government, a purchaser will receive face value for each of
the STRIPS provided the STRIPS are held to their due dates. While STRIPS can be
purchased on any business day, they all currently come due on February 15, May
15, August 15 or November 15.
Foreign Currency Transactions. The Equity Portfolio may enter
into forward foreign currency exchange contracts to fix the U.S. dollar value of
a security it has agreed to buy or sell for the period between the date the
trade was entered into and the date the security is delivered and paid for. A
forward foreign currency exchange contract is an agreement to purchase or sell a
specific currency at a future date and at a price set at the time the contract
is entered into.
The Equity Portfolio is not required to enter into forward
contracts with regard to settlement of its foreign currency-denominated
securities and will not do so unless deemed appropriate by the Manager, AIG
Global Investment Corp. ("AIG Global") or AIG Global Investment Corp. (Europe)
Ltd. ("AIG Global Europe") (AIG Global and AIG Global Europe are referred to as
the "Subadvisors"). Forward foreign currency exchange contracts do not eliminate
fluctuations in the underlying price of the securities. They simply establish a
rate of exchange at a future date. Additionally, although such contracts tend to
minimize the risk of loss due to fluctuations in the value of the currency being
traded, at the same time, they tend to limit any potential gain which might
result from an increase in the value of that currency.
Investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Equity Portfolio at one rate, while
- 4 -
<PAGE>
offering a lesser rate of exchange should the Equity Portfolio desire to resell
that currency to the dealer.
Borrowing. The Fund or the Equity Portfolio may from time to
time borrow money for extraordinary or emergency purposes in an amount up to 5%
of its total assets from banks at prevailing interest rates. This policy is
fundamental. Should the Fund or the Equity Portfolio, for any reason, have
borrowings that do not meet this test, then within three business days, it must
reduce such borrowings so as to meet the foregoing test. Under these
circumstances, the Fund or the Equity Portfolio may have to liquidate its
holdings at a time when it is disadvantageous to do so. Gains made with
additional funds borrowed will generally cause the net asset value of the Fund
or the Equity Portfolio, as relevant, to rise faster than could be the case
without borrowings. Conversely, if investment results fail to cover the cost of
borrowings, the net asset value of the Fund or Equity Portfolio, as relevant,
could decrease faster than if there had been no borrowings.
Lending of Portfolio Securities. Neither the Fund nor the
Equity Portfolio may lend its holdings of securities. These are fundamental
policies of the Fund and the Equity Portfolio.
Except as noted above, the foregoing investment policies of
the Fund and the Equity Portfolio are not fundamental and the Board of Directors
of the Company or the Trustees of the Equity Portfolio, as relevant, may change
such policies without the vote of a majority of outstanding voting securities of
the Fund or the Equity Portfolio, as relevant.
Portfolio Turnover. The Equity Portfolio may generally change
its portfolio investments at any time in accordance with the Manager's or the
Subadvisors' appraisal of factors affecting any particular issuer or the market
economy in general. The Equity Portfolio anticipates that the annual rate of
portfolio turnover will not exceed 100% per annum. After the Offering Period,
the Fund does not anticipate any portfolio turnover in its holding of zero
coupon securities except as necessary to meet requests for redemption.
Additional Investment Restrictions for the Fund and the Equity Portfolio
Except as expressly indicated otherwise, the following
additional restrictions are fundamental policies which cannot be changed without
the approval of the holders of a majority of the outstanding voting securities
of the Fund or the Equity Portfolio, as relevant. Under the 1940 Act, a "vote of
a majority of the outstanding voting securities" means the affirmative vote of
the lesser of (1) more than 50% of the outstanding shares, or (2) 67% or more of
the shares present at a shareholder's meeting, if more than 50% of the
outstanding shares are represented at the meeting in person or in proxy.
- 5 -
<PAGE>
The Fund may not:
(1) Issue senior securities (i.e., any security evidencing
indebtedness or any stock of a class having priority over
any other class as to distribution of assets or payment of
dividends), provided that the Fund may borrow money as
described in clause (5) below.
(2) Make short sales of securities.
(3) Purchase securities on margin, except for such short-term
credits as are necessary for the clearance of purchases and
sales of its Treasury Securities.
(4) Write put or call options on securities.
(5) Borrow money, except from banks for extraordinary or
emergency purposes and may not invest borrowed funds in
additional securities. Such borrowing may not exceed 5% of
the Fund's total assets.
(6) Engage in the underwriting of securities, except insofar as
the Fund may be deemed an underwriter under the Securities
Act of 1933, as amended (the "Securities Act") in disposing
of a portfolio security.
(7) Purchase, sell or hold any real estate or real estate
mortgage loans.
(8) Purchase or sell any commodities or commodity contracts,
including futures contracts.
(9) Make loans or lend the Treasury Securities it holds in
furtherance of the Repayment Objective.
(10) Invest in any securities other than (i) Treasury
Securities and (ii) beneficial interests in the
Equity Portfolio or of another issuer that has
investment objectives, policies and limitations
substantially similar to those of the Equity
Portfolio. Should the Directors determine that
investment in the Equity Portfolio or a similar
issuer is no longer in the best interest of the
Fund's shareholders, they will hold a vote of
shareholders to consider possible alternatives.
(11) Except for investments in (i) Treasury Securities and (ii)
beneficialinterests in the Equity Portfolio or of another
issuer that has investment objectives, policies and
limitations substantially similar to those of the Equity
Portfolio, purchase any security if, as a result,
more than 25% of the market value of its total assets would
be invested in securities of issuers principally engaged in
the same industry (except Treasury Securities). This
investment policy is not fundamental.
- 6 -
<PAGE>
The Equity Portfolio may not:
(1) Issue senior securities (i.e., any security evidencing
indebtedness or any stock of a class having priority over
any other class as to distribution of assets or payment
of dividends), provided that the Equity Portfolio may
borrow money as described in clause (5) below.
(2) Make short sales of securities except short sales against
the box.
(3) Purchase securities on margin, except for such
short-term credits as are necessary for the clearance
of purchases and sales of its portfolio securities.
(4) Write put or call options on securities.
(5) Borrow money, except from banks for extraordinary or
emergency purposes and may not invest borrowed funds
in additional securities. Such borrowing may not
exceed 5% of the Equity Portfolio's total assets.
(6) Engage in the underwriting of securities, except
insofar as the Equity Portfolio may be deemed an
underwriter under the Securities Act in disposing of
a portfolio security.
(7) Purchase, sell or hold any real estate, real estate
mortgage loans or real estate limited partnerships,
provided that the Equity Portfolio may invest in the
securities of companies that are engaged in
businesses related to real estate and real estate
mortgage loans.
(8) Purchase or sell any commodities or commodity
contracts, including futures contracts, provided that
the Equity Portfolio may enter into forward foreign
currency contracts to provide for its obligations at
the time of settlement of securities transactions.
(9) Make loans or lend portfolio securities except as described
in the Prospectus under "Other Investment Policies -
Repurchase Agreements."
(10) Invest more than 25% of the market value of its total
assets in securities of issuers principally engaged
in the same industry (except Treasury Securities).
(11) As to 75% of the value of its total assets, invest
more than 5% of its total assets, at market value, in
the securities of any one issuer (except Treasury
Securities).
(12) Own more than 10% of the outstanding voting
securities of any issuer, or more than 10% of any
class of securities of one issuer.
(13) Invest more than 5% of the value of its total assets,
at market value, in the securities of issuers which,
with their predecessors, have been in business less
than three years, provided that securities guaranteed
by a company that has been in operation at least
three continuous years shall be excluded from this
limitation, or in equity securities the resale of
which is restricted by law. This policy is not
fundamental.
- 7 -
<PAGE>
(14) Purchase securities of open-end or closed-end
investment companies, except as permitted by the 1940
Act, and only in open market purchases where no
commission or profit to a sponsor or dealer results
other than customary brokers' commissions.
(15) Invest in warrants if, at the time of acquisition,
the investment in warrants, valued at the lower of
cost or market value, would exceed 5% of the Equity
Portfolio's net assets. For purposes of this
restriction, warrants acquired by the Equity
Portfolio in units attached to securities or
distributed as dividends on another security may be
deemed to have been purchased without cost. This
policy is not fundamental.
(16) Invest in companies for the purpose of exercising control or
management.
(17) Purchase or retain securities of any issuer if those
officers and trustees of the Equity Portfolio and the
officers and directors of the Manager or any Subadvisor
who individually own beneficially more than 1/2 of 1% of
the outstanding securities of such issuer, together
own beneficially more than 5% of such outstanding
securities. This policy is not fundamental.
(18) Invest in oil, gas or other mineral exploration or
development programs or leases.
The prospectus states that the Equity Portfolio may invest up
to 15% of its assets in illiquid securities and that the Trustees of the Equity
Portfolio (the "Trustees") may determine that certain securities sold under Rule
144A of the 1933 Act are not subject to this 15% limitation. However, certain
state securities laws require that all Rule 144A securities and also securities
of certain unseasoned issuers be subject to the 15% limitation. So long as these
laws remain in effect, the Equity Portfolio will include all Rule 144A
securities and securities of such unseasoned issuers when determining the
percentage of illiquid securities in its portfolio.
With respect to limitation (5) of the Fund and the Equity
Portfolio, the directors of the Fund (the "Directors") and the Trustees have
only authorized the Fund and the Equity Portfolio to borrow money to meet
requirements for redemptions and to meet nonrecurring operating expenses.
With respect to limitation (15) above, certain state
securities laws require that no more than 2% of the net assets of the Equity
Portfolio may be invested in warrants not listed on either the New York Stock
Exchange or the American Stock Exchange. So long as these laws remain in effect,
the Equity Portfolio will be subject to this additional limitation.
- 8 -
<PAGE>
THE MANAGER'S GUARANTEE
The Company and the Manager have entered into a Guarantee
Agreement, dated February 15, 1996 (the "Manager's Guarantee"). The Manager's
Guarantee operates such that an investor who has reinvested all dividends and
distributions (an "Eligible Investor") will be able to demand the return of
the full amount of his or her original investment in the Fund (including
any front-end sales charges paid) after the Maturity Date. An Eligible Investor
who has redeemed some shares prior to the Maturity Date is still an Eligible
Investor with respect to the shares not redeemed.
In determining the amount to be paid by the Manager to the Fund in the
event that the Manager's Guarantee is triggered, a "Reinvestment Ratio" is
employed. The Reinvestment Ratio is the number of shares that would be owned on
a particular date by a person who acquired one share during the Offering Period
and continuously reinvested all dividends and distributions. Due to reinvestment
of dividends and distributions, that person would own more than one share at the
Maturity Date. Dividends and distributions paid by the Fund during the Offering
Period will be taken into account in determining the Reinvestment Ratio such
that an Eligible Investor who purchases shares after the date of such dividend
or distribution will still be ensured of the full benefits of the Manager's
Guarantee. Shares acquired therefrom will not, however, be considered shares
acquired during the Offering Period for purposes of determining the amount of
an Eligible Investor's original investment. The Manager's Guarantee is
triggered when an Eligible Investor tenders shares for redemption and the then
current net asset value per share multiplied times the Reinvestment Ratio is
less than the highest net asset value per share of the Fund during the
Offering Period plus the maximum front-end sales charge of 4.75%.
Any payment made by the Manager pursuant to the Manager's Guarantee
will be to the Fund and will cause the net asset value of all outstanding shares
to increase by the same amount. Thus, all shareholders may benefit to some
extent from any payment under the Manager's Guarantee. However, a shareholder
who has not reinvested all dividends and distributions will own fewer shares on
or after the Maturity Date than a shareholder who invested the same amount
during the Offering Period but has reinvested continuously. Moreover, such
shareholder will not be entitled to make a demand for payment under the
Manager's Guarantee. The benefits of the Manager's Guarantee will not be
available with respect to shares redeemed prior to the Maturity Date, nor will
they be available after the Maturity Date if no shareholder of the Fund has
reinvested all of his or her dividends and distributions or no Eligible Investor
has yet tendered shares for redemption. The availability of the Manager's
Guarantee will not be affected by the termination or amendment of the Fund's
Management Agreement with the Manager.
In the event of the liquidation or reorganization of the Fund after the
Maturity Date, all Eligible Investors will be deemed to have tendered their
shares for redemption, and, if the Manager's Guarantee is triggered by such
redemption, then the Manager will make any required payment. Any such payment
will take into account any known liabilities in connection with the liquidation
or reorganization, and, therefore, Eligible Investors will in such event be
assured to receive from the Fund at least their original investment (including
any front-end sales charges paid).
- 9 -
<PAGE>
The Manager's obligations under the Manager's Guarantee are backed by
its parent, AIG, pursuant to a Support Agreement, dated February 15, 1996. AIG
is a holding company which through its subsidiaries is primarily engaged in a
broad range of insurance and insurance-related activities in the United States
and abroad. Other significant activities of AIG are financial services and
agency and service fee operations. Under the Support Agreement, AIG has agreed
that, if the Manager is unable to make full payment of any amount required under
the Manager's Guarantee, AIG will make a capital contribution or a loan to the
Manager to the extent of the Manager's inability to pay. The Support
Agreement provides that the full amount of such capital contribution or loan
will be paid directly to the Fund.
Payment obligations under the Manager's Guarantee and the
Support Agreement will be solely the obligations of the Manager and AIG,
respectively. No other affiliate of the Fund, the Manager, AIG or any other
party has undertaken any obligation to the Fund or its shareholders with respect
to the Manager's Guarantee.
The foregoing is only a summary of the terms of the Manager's
Guarantee and the Support Agreement and is qualified in its entirety by
reference to such agreements, copies of which have been filed as exhibits to the
registration statement of which this Statement of Additional Information forms a
part.
DIRECTORS, TRUSTEES AND OFFICERS
Directors and officers of the Company, and Trustees and
officers of the Equity Portfolio, together with information as to their
principal business occupations during the past five years, are shown below. Each
Director/Trustee who is an "interested person" of the Fund and/or the Equity
Portfolio, as defined in the 1940 Act, is indicated by an asterisk.
<TABLE>
<CAPTION>
Position Position
with with
Company Equity Principal Occupations
Name, Address and Age Portfolio During Past 5 Years
- -------------------------------- ------------ ------------- -----------------------------------------
<S> <C> <C> <C>
Roger T. Wickers (60) Chairman Chairman Director, Keystone Investments,
339 Forest Road of the of the Inc.; Retired General Counsel,
Wolfeboro, New Board Board Keystone Investments, Inc.
Hampshire 03894 and and
Director Trustee
- --------
* "Interested" person, as defined in the 1940 Act, by reason of
affiliation with the Manager.
- 10 -
<PAGE>
Robert L. Ash* (50) Director Trustee Director, AIG Capital
70 Pine Street Management Corp.; Director and
New York, New York President, AIG Asset
10270 Management Services, Inc.;
Director, AIG Asset Management
Inc.; formerly Chairman, Kemper
Sales Co.; Senior Vice President,
Keystone; Vice President,
Alliance Capital.
Paul H. Friedman (41) Director Trustee Partner, Arter & Hadden, law firm.
1801 K Street N.W., Suite
400k
Washington, D.C 20006-
1301
Linda-Ann S. Director Trustee Executive Vice President, AIG
Goodwin* (47) Capital Management Corp.;
70 Pine Street Senior Vice President, Asset
New York, New York Management Services, Inc.;
10270 formerly Marketing Executive,
Kemper Financial; Marketing
Executive, Coca Cola, USA.
Charles Vinick (48) Director Trustee Independent Consultant;
214 South Venice Blvd. Director, SMR Natural Gas
Venice, California 90291 Income Fund 1995; Director,
Passage International
Incorporated; Advisory Board
Member, SMR Energy, Inc.;
formerly Vice President,
The Cousteau Society.
Gary M. Gardner (44) Secretary Secretary Chief Counsel, PNC Bank, N.A.;
400 Bellevue Parkway formerly Attorney, Federated
Wilmington, Delaware Investors, Inc., Sun America
19809 Asset Management Corp. and
the Boston Company.
- 11 -
<PAGE>
David T. Goss (37) Vice Vice Executive Vice President, AIG
70 Pine Street President President Asset Management Services,
New York, New York Inc.; Director and Vice Chairman,
10270 AIG Capital Management Corp.,
Formerly Director, Equitilink
Australia; Director, Equitilink,
Ltd; Chairman, Equitilink
Pacific, Ltd; President,
Equitilink USA, Inc., and
Director, Valufi (Pty), Ltd.
Daniel K. Kingsbury (37) President President President, AIG Asset
70 Pine Street Management, Inc.; President, AIG
New York, New York Capital Management Corp.;
10270 Senior Vice President, AIG Asset
Management Services, Inc.;
Vice President, AIG Equity
Sales Corp.; Executive Director,
AIG Fund Management Ltd.;
formerly Director of Strategy,
AIG Asset Manament International.
J. Fergus McKeon (34) Treasurer Treasurer General Manager, PFPC
80 Harcourt Street International; formerly Chief
Dublin, Ireland Accountant, SBC-ISL; Director,
Emerging Markets Fixed Income
Fund.
Elizabeth M. Tuck (40) Assistant Assistant Assistant Secretary, AIG;
70 Pine Street Secretary Secretary Corporate Secretary for various
New York, New York domestic affiliates and
10270 subsidiaries of AIG.
Jay F. Nusblatt (34) Assistant Assistant Vice President and Director of
103 Bellevue Parkway Treasurer Treasurer Fund Accounting and
Wilmington, Delaware Administration, PFPC Inc.;
19809 formerly Assistant Vice President
of Fund/Plan Services, PFPC Inc.
</TABLE>
==========================================================================
- 12 -
<PAGE>
Pursuant to the terms of the Management Agreement with the
Fund, the Manager pays all compensation of officers and employees of the Fund as
well as the fees and expenses of all Directors of the Company who are affiliated
persons of the Manager.
The following table sets forth the aggregate compensation the
Company expects to pay to each Director and the aggregate compensation paid to
each Director for service on the Company's Board and boards of other companies
in the family of funds sponsored by the Manager or its affiliates for the fiscal
year ending on November 30, 1996.
Compensation Table
(November 30, 1996)
<TABLE>
<CAPTION>
Pension
Retirement Total
Benefits Compensation
Aggregate Accrued Estimated From Company
Compensation As Part of Annual and Fund
From Fund Benefits Upon Complex Paid
Name and Position Company* Expenses Retirement to Directors*
<S> <C> <C> <C> <C>
Roger T. Wickers $15,000 None N/A $30,000
Director
Robert L. Ash 0 None N/A 0
Director
Paul H. Friedman $15,000 None N/A $30,000
Director
Linda-Ann S. Goodwin 0 None N/A 0
Director
Charles Vinick $15,000 None N/A $30,000
Director
</TABLE>
As of February 15, 1996, the directors and officers of the
Company, as a group, owned no shares of common stock of the Fund.
As of February 15, 1996, all of the outstanding shares of the
Fund were owned by AIG Asset Management Services, Inc., a Delaware corporation
and a subsidiary of AIG ("AIGAM Services"). The address of AIGAM Services is 70
Pine Street, New York, NY 10270. The Fund does not expect that AIGAM Services
will own a significant percentage of its shares once the Offering Period
commences.
* The amount shown is maximum compensation payable by the company and by
any unregistered investment companies that may invest in the Equity
Portfolio. To the extent that unregistered investment companies that
invest in the Equity Portfolio and the individuals listed above serve
as directors or trustees of such entities, these companies will bear a
portion of the aggregate compensation payable to such individuals,
allocated on the basis of relative net assets of the individual funds,
or such other basis as the directors may deem appropriate.
- 13 -
<PAGE>
MANAGEMENT AND EXPENSES
As indicated in the Prospectus, under the Fund's
agreement with the Manager dated _____________, 1996 and the Equity
Portfolio's agreement dated September 15, 1996, subject to the control of the
Board of Directors of the Fund and the Trustees of
the Equity Portfolio, the Manager administers the business and other affairs of
the Fund and the Equity Portfolio. The Manager provides both the Fund and the
Equity Portfolio with such office space, administrative and other services and
executive and other personnel as are necessary for the operations of the Fund
and the Equity Portfolio. The Manager pays all of the compensation of those
Directors and Trustees who are employees, consultants and/or directors of the
Manager and of the officers and employees of the Fund and the Equity Portfolio.
The Fund pays the Manager a management fee for its services, calculated daily
and payable monthly equal to 0.20% per annum of the average daily net assets of
the Fund (other than its interest in the Equity Portfolio). Similarly, the
Equity Portfolio pays the Manager a management fee, calculated daily and payable
monthly equal to 1.20% per annum of the average daily net assets of the Equity
Portfolio. As described in the Prospectus, the Manager has agreed to waive or
reimburse certain expenses subject to reimbursement under certain circumstances
by the Fund in later years. Assuming that 65% of the Fund's assets are invested
in zero coupon Treasury Securities and 35% in the Equity Portfolio, the combined
management fee paid by the Fund (which includes fees paid by the Equity
Portfolio for assets of the Fund held by the Equity Portfolio) would be equal to
0.55% per annum of the average total assets of the Fund. Assuming an allocation
of 50% to 80% of the Fund's assets to zero coupon Treasury Securities the
combined management fee paid by the Fund will range between 0.40% and 0.70% per
annum of the average total assets of the Fund. Fees paid by the Manager to the
Subadvisors (which do not affect the fees paid by the Fund) are described in the
Prospectus.
The Fund and the Equity Portfolio pay all of their respective
expenses other than those assumed by the Manager and the Subadvisors, including
brokerage commissions; administration, shareholder services and distribution
fees; fees and expenses of independent auditors and counsel; taxes and
governmental fees, including fees and expenses of qualifying the Fund and its
shares under federal and state securities laws; cost of stock certificates and
expenses of repurchase or redemption of shares; expenses of printing and
distributing reports, notices and proxy materials to shareholders; expenses of
printing and filing reports and other documents with governmental agencies;
expenses of shareholders' meetings; expenses of corporate data processing and
related services; shareholder recordkeeping and shareholder account services
fees and disbursements of custodians; expenses of distributing dividends and
distributions; fees and expenses of those Directors or Trustees not employed by
(or serving as a director of) the Manager or its affiliates; insurance premiums;
and extraordinary expenses such as litigation expenses. The Company's expenses
will be allocated among the Fund and any other series in a manner determined by
the Board of Directors to be fair and equitable.
The Fund and the Equity Portfolio will be subject to certain
state expense limitations, the most stringent of which currently requires
reimbursement of total expenses (including the management fee, but excluding
interest, taxes, brokerage commissions, distribution fees and extraordinary
- 14 -
<PAGE>
expenses) in any year that they exceed 2 1/2% of the first $30 million of
average net assets, 2% of the next $70 million of average net assets and 1/2%
thereafter.
The Fund's and the Equity Portfolio's agreements with the
Manager provide that the Manager will not be liable to the Fund or the Equity
Portfolio, as relevant, for any error of judgment or mistake of law, or for any
loss arising out of any investment, or for any act or omission in performing its
duties under any of these agreements, except for willful misfeasance, bad faith,
gross negligence, or reckless disregard of its obligations and duties under
these agreements.
The Fund's management agreement and the subadvisory agreement
with each Subadvisor were approved by the Board of Directors of the Fund at a
meeting held on December 18, 1995 and by the sole shareholder on ______________.
The Equity Portfolio's management agreement and subadvisory agreements were
approved by the Trustees of the Equity Portfolio at a meeting held on June 29,
1995 and by the sole owner of a beneficial interest in the Equity Portfolio on
June 29, 1995. These agreements shall continue in effect for a period of more
than two years from the date they were entered into only so long as such
continuance is approvedin the manner required by the 1940 Act (i.e., by a vote
of the majority of the Board of Directors or Trustees, as relevant, or of
the outstanding voting securities of the Fund or the Equity Portfolio, as
relevant, and by a vote of a majority of the Board of Directors or Trustees
who are not parties to the agreement being voted upon or interested persons
(as defined in the 1940 Act) of any such party). The Fund, the Equity
Portfolio, the Manager, or the Subadvisors, as relevant, can terminate any
of these agreements to which it is a party, without penalty, on 60 days'
written notice to the relevant counterparty and each of these agreements will
terminate automatically in the event of its assignment.
RULE 12b-1 PLAN
As indicated in the Prospectus, the Fund has adopted a Plan of
Distribution (the "Plan") in accordance with Section 12(b) of the 1940 Act and
Rule 12b-1 thereunder.
The Plan was originally approved on December 18, 1995 by the
Board of Directors of the Company, including a majority of the directors who are
not interested persons (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Fund (the "Qualified
Directors") and by the sole shareholder of the Fund on _____________, 1996. The
Plan will terminate on the last day of the Offering Period.
The Plan requires the Treasurer of the Fund to provide the
Directors, and that the Directors review at least quarterly, a written report of
the amounts expended (and purposes therefor) under the Plan. Rule 12b-1 also
requires that the selection and nomination of Directors who are not interested
persons of the Fund be made by such disinterested Directors.
- 15 -
<PAGE>
SHAREHOLDER SERVICING AGREEMENT
As indicated in the Prospectus, the Fund has entered into a
Shareholder Servicing Agreement with AIG Equity Sales Corp. (the "Distributor")
pursuant to which the Fund pays the Distributor a fee, payable monthly at the
annual rate of up to 0.25% of net assets of accounts in the Fund that it
maintains and services, in exchange for shareholder services. The Shareholder
Servicing Agreement was originally approved on June 29, 1995 by the Board of
Directors of the Fund, including a majority of the directors who are not
interested persons (as defined in the 1940 Act). The addition of the Fund to the
Shareholder Servicing Agreement was approved on December 18, 1995 by the Board
of Directors of the Fund and by the sole shareholder of the Fund on __________,
1996. The Shareholder Servicing Agreement may not be amended to increase
materially the amounts payable to the Distributor without the approval of a
majority of the outstanding voting securities of the Fund and no material
amendment to the Shareholder Servicing Agreement may be made except by a
majority of both the Directors and the Directors who are not interested persons
of the Fund (as defined in the 1940 Act).
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Fund's and the Equity Portfolio's agreements with the
Manager and the Subadvisors recognize that in the purchase and sale of portfolio
securities, the Manager and Subadvisors will seek the most favorable price and
execution and, consistent with that policy, may give consideration to the
research, statistical and other services furnished by brokers or dealers to the
Manager or Subadvisors for their use. Such services include supplemental
investment research, analysis and reports concerning issuers, industries and
securities deemed by the Manager and Subadvisors to be beneficial to the Fund or
the Equity Portfolio. In addition, the Manager and the Subadvisors are
authorized to place orders with brokers who provide supplemental investment and
market research and statistical and economic analysis through the use of such
brokers selected solely on the basis of seeking the most favorable price and
execution, although such research and analysis may be useful to the Manager and
the Subadvisors in connection with their services to clients other than the Fund
or the Equity Portfolio.
In over-the-counter markets, the Fund and the Equity Portfolio
deal with primary market-makers unless a more favorable execution or price is
believed to be obtainable. The Fund and Equity Portfolio may buy securities from
or sell securities to dealers acting as principal, except dealers with which
their directors and/or officers are affiliated.
When two or more investment advisory clients of the Manager or
the Subadvisors desire to buy or sell the same security at the same time, the
Manager or the Subadvisors may aggregate the securities to be sold or purchased
in order to obtain the most favorable price or lower brokerage commissions and
efficient execution. The securities purchased or sold are allocated by the
Manager and the Subadvisors in a manner believed to be equitable to each client.
There may be possible advantages or disadvantages of such transactions with
respect to price or the size of positions readily obtainable or saleable.
- 16 -
<PAGE>
PURCHASE AND REDEMPTION OF FUND SHARES
Purchase of Shares
Reductions Available. Shares of the Fund sold with a sales
load will be eligible for the following reductions, which are described in more
detail in the Prospectus:
Volume Discounts are provided if the total amount being
invested in the Fund alone, or in combination with shares of certain other
mutual funds managed by the Manager which are sold with a sales load, reaches
levels indicated in the sales load schedule set forth in the Prospectus. A
contingent deferred sales charge of 1% may be imposed upon redemption of shares
of the Fund that are purchased pursuant to a volume discount if they are
redeemed within one year of purchase.
The Right of Accumulation allows an investor to combine the
amount being invested in the Fund and shares of certain other mutual funds
managed by the Manager and sold with the same sales load to determine reduced
sales loads in accordance with the schedule in the Prospectus. The value of the
shares owned will be taken into account in orders placed through a dealer,
however, only if the Distributor is notified by the investor
or dealer of the amount owned at the time the purchase is made and is furnished
sufficient information to permit confirmation.
A Letter of Intent allows an investor to purchase shares
during the Offering Period at reduced sales loads in accordance with the
schedule in the Prospectus, based on the total amount of shares of the Fund that
the letter states the investor intends to purchase plus the total net asset
value of shares of certain other mutual funds managed by the Manager purchased
with a sales load by the investor. Reduced sales loads also may apply to
purchases made within the Offering Period starting up to 90 days before the date
of execution of a letter of intent.
Certain Affiliated Persons. Shares of the Fund may be sold at
net asset value to present and retired Directors, Trustees, officers, employees
(and their family members) of the Fund and to certain other persons, as more
completely described in the Fund's Prospectus under "Purchases of Shares".
Persons Entitled to Reductions. Reductions in sales loads
apply to purchases by a "single person" including an individual; members of a
family unit comprising husband, wife and minor children; or a trustee or other
fiduciary purchasing for a single fiduciary account. Employee benefit plans
qualified under Section 401 or 457 of the Internal Revenue Code or 1986, as
amended (the "Code"), organizations tax exempt under Section 501(c)(3) or (13),
and non-qualified employee benefit plans that satisfy uniform criteria are
considered "single persons" for this purpose.
Further Types of Reductions. Shares of the Fund may be issued
without a sales load in connection with the acquisition of cash and securities
owned by other investment companies and other personal holding companies, to
financial institution trust departments, to registered investment advisers
- 17 -
<PAGE>
exercising investment discretionary authority with respect to the purchase of
Fund shares, or pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitation of, its employees, members or
participants in connection with the purchase of shares of the Fund, to separate
accounts established and maintained by an insurance company which are exempt
from registration under Section 3(c)(11) of the 1940 Act, to registered
representatives and employees (and their spouses and minor children) of any
dealer that has a sales agreement with the Distributor and shareholders of
mutual funds with investment objectives and policies similar to the Fund who
purchase shares with redemption proceeds of such funds as described in the
Prospectus.
Shares of the Fund may be sold at net asset value to these
persons since such shares require less sales effort and lower sales related
expenses as compared with sales to the general public.
More About Redemptions. The procedures for redemption of
shares of the Fund under ordinary circumstances are set forth in the Prospectus.
In unusual circumstances, payment may be postponed, or the right of redemption
postponed for more than seven days, if the ordinary liquidation of securities
held is prevented by the closing of an exchange or market during periods of
emergency, or such other periods ordered by the Securities and Exchange
Commission. Under these circumstances, redemption proceeds may be made in
securities,subject to the review of some state securities commissions. If
payment is made in securities, a shareholder may incur brokerage expenses
in converting these securities to cash.
DISTRIBUTION SERVICES
The Distributor, an affiliate of the Manager, acts as general
distributor of the shares of the Fund and of other mutual funds in the family of
funds sponsored by the Manager or its affiliates. As general distributor of the
Fund's shares, the Distributor normally allows concessions to all dealers, as
indicated in the Prospectus, of up to 4.25% on purchases to which the 4.75%
sales load applies, but may allow the whole amount.
The Distributor is entitled to retain any contingent deferred
sales load imposed on certain redemptions occurring within one year of purchase
of shares purchased pursuant to a volume discount.
- 18 -
<PAGE>
VALUATION
Net asset value per share is determined as of the close of the
New York Stock Exchange ("NYSE") (currently 4:00 p.m. New York City time), on
each business day that the NYSE is open. Currently, the NYSE is closed on New
Year's Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
The net asset value per share is determined by dividing the
market value of the Fund's securities (including its interest in the Equity
Portfolio) as of the close of trading plus any cash or other assets (including
dividends and accrued interest receivable) less all liabilities (including
accrued expenses), by the number of shares outstanding. During the Offering
Period, zero coupon Treasury Securities will be valued at the average of the
last reported bid and ask prices; thereafter, in order to ensure that an
adequate amount of zero coupon Treasury Securities is maintained to achieve the
Repayment Objective when shares of the Fund are redeemed, zero coupon Treasury
Securities will be valued at the last reported bid. Equity Portfolio securities
are valued at the last sales price on the securities exchange or securities
market on which such securities are primarily traded. Securities for which there
are not recent sales transactions are valued based on quotations provided by
primary market makers in such securities. Any securities for which recent market
quotations are not readily available are valued at fair value determined in
accordance with procedures approved by the Board of Directors or the Trustees.
Short-term obligations with less than sixty days remaining to maturity are
generally valued at amortized cost. Short-term obligations with more than sixty
days remaining to maturity will be valued at current market value until the
sixtieth day prior to maturity, and will then be valued on an amortized cost
basis based on the value on such date unless the Board of Directors or the
Trustees, as relevant, determines that this amortized cost value does not
represent fair market value. Expenses and fees, including the investment
management fee are accrued daily and taken into account for the purpose of
determining the net asset value of Fund shares.
Generally, trading in foreign securities, as well as U.S.
Government securities, money market instruments and repurchase agreements, 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
Fund shares are determined at such times. Foreign currency exchange rates are
also generally determined prior to the close of the NYSE. Occasionally, events
affecting the value of such securities and such exchange rates may occur between
the times at which they are determined and the close of the NYSE, which
otherwise would not be reflected in the computation of net asset value. If
during such periods events occur which materially affect the value of such
securities, the securities will be valued at their fair market value as
determined in accordance with procedures approved by the Board of Directors or
the Trustees, as relevant.
For purposes of determining the net asset value per share of
the Fund, all assets and liabilities initially expressed in foreign currencies
will be converted into U.S. dollars at the mean between the bid and offer prices
of such currencies against U.S. dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
- 19 -
<PAGE>
TAXES
The Fund intends to qualify for the fiscal year ending
November 30, 1996 as a "regulated investment company" under the Code. In order
to qualify, the Fund must, among other things, (i) derive at least 90% of its
annual gross income from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stocks, securities
or foreign currencies, and other income (including but not limited to gains from
options, futures and forward contracts) derived with respect to the Fund's
business of investing in stocks, securities or foreign currencies; (ii) derive
less than 30% of its annual gross income from the sale or other disposition of
stocks or securities (or certain options, futures, forward contracts and foreign
currencies) held for less than three months; and (iii) diversify its holdings so
that, at the end of each fiscal quarter, (x) at least 50% of the value of the
Fund's assets is represented by cash, U.S. Government securities and other
securities limited, in respect of any one issuer, to an amount not greater than
5% of the value of the Fund's assets and 10% of the outstanding voting
securities of such issuer and (y) not more than 25% of the value of the Fund's
assets is represented by securities of any one issuer (other than U.S.
Government securities).
Income received by the Fund from sources within various
foreign countries may be subject to foreign income tax. If more than 50% of the
value of the Fund's assets at the close of its fiscal year consists of stocks or
securities of foreign corporations (which is not expected), the Fund may elect
to "pass through" to the Fund's shareholders the amount of foreign income taxes
paid by the Fund. In such a case, a shareholder of the Fund would be required to
include in income its share of such foreign income taxes but would be permitted
(subject to certain limitations) to either deduct such amounts in computing U.S.
taxable income or credit such amounts in computing U.S. tax payable.
If the Fund purchases shares in a foreign corporation that is
a "passive foreign investment company," the Fund itself might be subject to U.S.
federal income tax, and an additional charge in the nature of interest, on a
portion of any "excess distributions" from such corporation or on gain from the
disposition of such shares, even if the excess distribution is paid by the
Fund as a dividend to its shareholders. If the Fund were able and elected to
treat the passive foreign investment company as a "qualified electing
fund," the foregoing treatment would not apply and the Fund would instead be
required to include in income, and distribute to its shareholders in
accordance with the Fund's distribution requirements, the Fund's pro rata share
of the ordinary earnings and net capital gains of the qualified
electing fund, whether or not distributed to the Fund.
Gains or losses attributable to foreign currency contracts, or
to fluctuations in exchange rates that occur between the time the Fund or the
Equity Portfolio accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities are treated as
ordinary income or loss. Similarly, gains or losses on disposition of debt
securities denominated in a foreign currency attributable to fluctuations in the
value of the foreign currency between the dates of the acquisition and
disposition of the security are also treated as ordinary gain or loss.
- 20 -
<PAGE>
These gains or losses increase or decrease the amount of the Fund's net
investment income available to be distributed to its shareholders as ordinary
income.
Shareholders are urged to consult their tax advisers
concerning the effect of federal, state and local taxes on the Fund and in their
individual circumstances. There is a possibility that a portion of the Fund's
dividends may be exempt from state tax.
PERFORMANCE INFORMATION
The Fund may, from time to time, include "total return" in
advertisements or reports to shareholders or prospective investors. Quotations
of average annual total return will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in the Fund over periods
of 1, 5 and 10 years (up to the life of the Fund), calculated pursuant to the
following formula which is prescribed by the Securities and Exchange
Commission:
P(1 + T)n = ERV
where:
P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period.
All total return figures assume that all dividends are reinvested when paid.
From time to time, the Fund may advertise its average annual total
return over various periods of time. These total return figures show the average
percentage change in value of an investment in the Fund from the beginning date
of the measuring period. These figures reflect changes in the price of the
Fund's shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the period were reinvested in shares of
the Fund. Figures will be given for one, five and ten year periods (if
applicable) and may be given for other periods as well (such as from
commencement of the Fund's operations, or on a year-by-year basis).
- 21 -
<PAGE>
Additional Performance Quotations
Advertisements of total return will always show a calculation that
includes the effect of the maximum sales charge but may also show total return
without giving effect to that charge. Because these additional quotations will
not reflect the maximum sales charge payable, these performance quotations will
be higher than the performance quotations that reflect the maximum sales charge.
Total returns are based on past results and are not necessarily a
prediction of future performance.
Performance Comparisons
The Fund's performance may be compared to that of the Consumer
Price Index or various unmanaged indexes including the Dow Jones Industrial
Average, the Standard & Poor's 500 Stock Index, the Europe Australia Far East
("EAFE") Index and other indexes prepared by Morgan Stanley Capital
International. The Fund's performance may also be compared to the performance of
other mutual funds or mutual fund indexes as reported by independent mutual fund
reporting services such as Lipper Analytical Services, Inc. and Micropal, Ltd.
Such performance calculations are generally based upon changes in net asset
value with all dividends reinvested.
The Fund may quote information from publications such as
Morningstar, Inc., The Wall Street Journal, Money Magazine, Forbes, Barron's,
Fortune, The New York Times, The Washington Post, The International Herald
Tribune, USA Today, Institutional Investor, Registered Representative and other
consumer journals and publications by the U.S. government and its agencies.
Also, investors may want to compare the historical returns of various
investments, performance indexes of those investments or economic indicators,
including but not limited to stocks, bonds, certificates of deposit, money
market funds, and U.S. Treasury obligations. Bank product performance may be
based upon, among other things, the BANK RATE MONITOR National Index(TM) or
various certificate of deposit indexes. Money market fund performance may be
based upon, among other things, the IBC/Donoghue Money Fund Report(R) or Money
Fund Insight(R), reporting services on money market funds. Performance of U.S.
Treasury obligations may be based upon, among other things, various U.S.
Treasury bill indexes. Certain of these alternative investments may offer fixed
rates of return and guaranteed principal and may be insured.
OTHER INFORMATION
Capital Stock. The Board of Directors is authorized to classify or
reclassify and issue any unissued capital stock of the Fund into any number of
series or classes without further action by the shareholders. To date, two
series of shares have been authorized, which shares constitute interests in AIG
Children's World Fund - 2005 and AIG Retiree Fund - 2003; however, the Board of
Directors may authorize further series or classes in the future. The 1940
- 22 -
<PAGE>
Act requires that where more than one series or class exists, each series or
class must be preferred over all other series or classes in respect of
assets specifically allocated to such series or class.
Rule 18f-2 under the 1940 Act provides that any matter required to
be submitted by the provisions of the 1940 Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an investment
company such as the Fund shall not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of each
class or series affected by such matter. Rule 18f-2 further provides that a
class or series shall be deemed to be affected by a matter unless it is clear
that the interests of each class or series in the matter are substantially
identical or that the matter does not affect any interest of such class or
series. However, the Rule exempts the selection of independent public
accountants, the approval of principal distributing contracts and the election
of directors from the separate voting requirements of the Rule.
Custodian and Administrator. PNC Bank, National Association ("PNC
Bank"), Airport Business Center, International Court 2, 200 Stevens Drive,
Lester, Pennsylvania, 19113, will serve as custodian of the Fund, and will
maintain direct custody of the assets of the Fund. State Street Bank and Trust
Company ("State Street"), 1776 Heritage Drive, North Quincy, Massachusetts
02171, serves as custodian of the assets of the Equity Portfolio. State Street
is authorized to establish and has established separate accounts in foreign
currencies and is authorized to cause securities of the Equity Portfolio to be
held in separate accounts outside the United States in the custody of non-U.S.
banks. PFPC International Ltd., 80 Harcourt Street, Dublin, Ireland, as
Administrator, maintains, under the general supervision of the Manager, certain
accounting records and determines the net asset value for the Fund. PFPC Inc.,
400 Bellevue Parkway, Wilmington, Delaware 19809 acts as the Fund's Transfer
Agent and Dividend Disbursing Agent.
Accountants. Coopers & Lybrand L.L.P., independent auditors, have
been selected as auditors of the Fund. Their address is 1301 Avenue of the
Americas, New York, New York
10019.
FINANCIAL STATEMENTS OF FIRST GLOBAL EQUITY PORTFOLIO
The following pages include the Equity Portfolio's Statement of
Assets and Liabilities as of September 11, 1995 and the report of Coopers &
Lybrand L.L.P. thereon.
- 23 -
<PAGE>
INFORMATION WITH RESPECT TO AIG
The following information with respect to AIG is incorporated herein by
reference. Copies of this information will be provided to any shareholder of the
Fund who requests a copy of this Statement of Additional Information.
From AIG's Report on Form 10-K for the fiscal year ended December 31, 1994:
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Audited Financial Statements:
Report of Independent Accountants
Consolidated Balance Sheet at December 31, 1994 and 1993
Consolidated Statement of Income for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Capital Funds for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
Notes to Financial Statements
From AIG's Form 10-Q for the quarter ended September 30, 1995:
Financial Statements (unaudited):
Consolidated Balance Sheet at September 30, 1995 and December 31,
1994 Consolidated Statement of Income for the nine months and the
three months ended September 30, 1995 and 1994
Consolidated Statement of Cash Flows for the nine months
ended September 30, 1995 and 1994
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition
and Results of Operations
- 24 -
<PAGE>
FIRST GLOBAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
September 11, 1995
Assets:
Cash ...................................................... $101,000
Deferred organization expenses ............................ 170,200
--------
Total assets ..................................... 271,200
--------
Liabilities:
Organization expenses payable and accrued ................. 170,200
--------
Net assets ....................................... $101,000
========
NOTES:
(1) First Global Equity Portfolio (the "Portfolio") was organized as a
Delaware business trust on June 23, 1995 and has been inactive since
that date except for matters relating to its organization and
registration as an investment company under the Investment Company Act
of 1940, the sale of beneficial interest therein at the purchase price
of $100,000 to AIG All Ages Funds, Inc. and the sale of a beneficial
interest therein at the purchase price of $1,000 to AIG Asset
Management Services, Inc. ("AIGAM Services").
(2) Organization expenses are being deferred and will be amortized on a
straight line basis over a period not to exceed five years from the
date that operations commence. AIGAM Services and AIG All Ages Funds,
Inc. will reimburse the Portfolio for any unamortized organization
expenses upon the withdrawal of any initial beneficial interest. The
amount to be reimbursed will be determined by the proportion of the
amount of initial beneficial interest withdrawn to the initial
beneficial interest of all holders after taking into account any prior
withdrawals of any of such initial beneficial interest.
(3) The value of an investor's beneficial interest in the Portfolio is
equal to the product of (i) the aggregate net asset value of the
Portfolio multiplied by (ii) the percentage representing that
investor's share of the aggregate beneficial interest in the Portfolio
effective for that day.
(4) The Portfolio will enter into a Management Agreement with AIG Capital
Management Corp. and an Administration and Accounting Services
Agreement and a Transfer Agency Agreement with PFPC International Ltd.
("PFPC") under which PFPC provides administration accounting and
transfer agency services to the Portfolio pursuant to the
Agreements.
- 25 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTS
To the Trustees of an Investors In First Global Equity Portfolio:
We have audited the accompanying statement of assets and liabilities of the
First Global Equity Portfolio as of September 11, 1995. This financial statement
is the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Portfolio as of September 11, 1995, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
September 11, 1995
- 26 -
<PAGE>
APPENDIX A
CORPORATE BOND AND COMMERCIAL PAPER RATINGS
Corporate Bonds. Bonds rated Aa by Moody's Investors Service, Inc.
("Moody's") are judged by Moody's to be of high quality by all standards.
Together with bonds rated Aaa (Moody's highest rating), they comprise what are
generally known as high-grade bonds. Aa bonds are rated lower than Aaa bonds
because margins of protection may not be as large as those of Aaa bonds, or
fluctuations 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 those applicable to Aaa securities. Bonds which are rated A by Moody's
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.
Moody's Baa rated bonds are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payment 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.
Bonds which are rated Ba are judged to have speculative elements
because their future cannot be considered as well assured. Uncertainty of
position characterizes bonds in this class, because the protection of interest
and principal payments often may be very moderate and not well safeguarded.
Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period of time may be small. Bonds
which are rated Caa are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
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.
Bonds rated AAA by Standard & Poor's Ratings Group ("S&P") are
considered by S&P to be the highest grade obligations and possess the ultimate
degree of protection as to principal and interest. Bonds rated AA are judged by
S&P to be high-grade obligations and in the majority of instances differ only in
small degree from issues rated AAA (S&P's highest rating). Bonds rated A by S&P
have a strong capacity to pay principal and interest, although they are somewhat
more susceptible to the adverse effects of changes in circumstances and economic
conditions.
S&P's BBB rated bonds, or medium-grade category bonds, are between
sound obligations and those where the speculative elements begin to predominate.
Although these bonds have adequate asset coverage and normally are protected by
satisfactory earnings, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and principal.
- 27 -
<PAGE>
Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. While such bonds
may have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
Commercial Paper. The Prime rating is the highest commercial paper
rating assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by management of
obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations. Issuers within this Prime
category may be given ratings 1, 2 or 3, depending on the relative strengths of
these factors.
Commercial paper rated A by S&P has the following characteristics: (i)
liquidity ratios are adequate to meet cash requirements; (ii) long-term senior
debt rating should be A or better, although in some cases BBB credits may be
allowed if other factors outweigh the BBB; (iii) the issuer should have access
to at least two additional channels of borrowing; (iv) basic earnings and cash
flow should have an upward trend with allowances made for unusual circumstances;
and (v) typically the issuer's industry should be well established and the
issuer should have a strong position within its industry and the reliability and
quality of management should be unquestioned. Issuers rated A are further
referred to by use of numbers 1, 2 and 3 to denote relative strength within this
highest classification.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements and Schedules:
Part A - Financial Highlights for the AIG Retiree Fund - 2003 are
not included because it is a new series for which financial highlights are not
required to be filed.
Part B - Statement of Assets and Liabilities of the Registrant with
respect to AIG Retiree Fund - 2003 are not included because it is a new series
for which a Statement of Assets and Liabilities is not required to be filed.
Statement of Assets and Liabilities of First Global Equity Portfolio
as of September 11, 1995 and report of independent auditors thereon.
Financial Information of American International Group, Inc. is
incorporated by reference into Part B.
(b) Exhibits:
(1) Articles of Incorporation.1
(1)(a) Articles of Amendment, dated June 29, 1995.2
(1)(b) Articles of Amendment, dated August 16, 1995.3
(1)(c) Certificate of Correction, dated September 11, 1995.4
(1)(d) Articles Supplementary, dated November 3, 1995.5
(1)(e) Articles of Amendment, dated January 11, 1996.6
(2) By-laws of Registrant.1
(3) Not Applicable.
(4) Specimen Common Stock Certificate.2
(5)(a) Form of Management Agreement relating to AIG Children's World Fund
-- 2005.2 (5)(b) Form of Subadvisory Agreement with AIGAM International
Limited relating to AIG
- --------
1 Filed with the initial filing of this Registration Statement on April 13,
1995.
2 Filed with Pre-Effective Amendment No. 1 to this Registration Statement on
July 21, 1995.
3 Filed with Pre-Effective Amendment No. 2 to this Registration Statement on
September 7, 1995.
4 Filed with Pre-Effective Amendment No. 3 to this Registration Statement on
September 13, 1995.
5 Filed with Post-Effective Amendment No. 2 to this Registration Statement on
November 3, 1995.
6 Filed with Post-Effective Amendment No. 3 to this Registration Statement on
January 16, 1996.
c - i
<PAGE>
PART C. OTHER INFORMATION (continued)
Children's World Fund -- 2005.2
(5)(c) Form of Subadvisory Agreement with AIG Global Investors, Inc.
relating to AIG Children's World Fund -- 2005.2
(5)(d) Form of Management Agreement relating to AIG Retiree Fund -- 2003.5
(5)(e) Form of Subadvisory Agreement with AIGAM International Limited
relating to AIG Retiree Fund -- 2003.5
(5)(f) Form of Subadvisory Agreement with AIG Global Investors Inc.
relating to AIG Retiree Fund -- 2003.5
(6)(a) Form of Distribution Agreement relating to AIG Children's World Fund
-- 2005.2
(6)(b) Form of Distribution Agreement relating to AIG Retiree
Fund -- 2003.5
(7) Not Applicable.
(8) Form of Custody Agreement.2
(9)(a) Form of Shareholder Servicing Agreement.2
(9)(b) Form of Administration and Accounting Services Agreement.2
(9)(c) Form of Transfer Agency Agreement.2
(9)(d) Powers of Attorney (included on the signature page of the referenced
filing):
(i) Registrant (other than Ms. Linda-Ann Goodwin)1
(ii) First Global Equity Portfolio (other than Ms. Linda-Ann
Goodwin)2
(iii) AIG Capital Management Corp.3
(iv) American International Group, Inc. (other than Mr.
Houghton Freeman)3
(v) Mr. Houghton Freeman (Director of American International
Group, Inc.)4
(vi) Ms. Linda-Ann S. Goodwin (Director of Registrant and of
First Global Equity
Portfolio)6
(9)(e) Form of Guarantee Agreement relating to AIG Children's World Fund --
2005.4
(9)(f) Form of Support Agreement relating to AIG Children's World
Fund -- 2005.4
(9)(g) Form of Guarantee Agreement relating to AIG Retiree Fund -- 2003.5
(9)(h) Form of Support Agreement relating to AIG Retiree
Fund -- 2003.5
(10)(a) Opinion and Consent of counsel with respect to shares of AIG
Children's World Fund -- 2005.4
(10)(b) Opinions and Consents of counsel with respect to the Guarantee and
the Support Agreement relating to AIG Children's World Fund --
2005.4
(10)(c) Opinion and Consent of counsel with respect to shares of AIG
Retiree Fund - 2003.6
(10)(d) Opinions and Consents of counsel with respect
to the Guarantee and the Support
Agreement relating to AIG Retiree Fund -- 2003.7
(11) Consent of independent auditors.7
(12) Not Applicable.
(13) Form of Agreement with respect to provision of initial capital.3
(14) Not Applicable.
(15)(a) Rule 12b-1 Plan relating to AIG Children's World Fund -- 2005.2
(15)(b) Form of Rule 12b-1 Plan relating to AIG Retiree Fund -- 2003.5
(16) Not Applicable.
(17) Not Applicable.
(18) Not Applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
As of February 13, 1996, there were ____ holders of shares of the AIG
Children's World Fund -- 2005 series of the Registrant and no holders of
shares of the AIG Retiree Fund -- 2003 series of the Registrant.
Item 27. Indemnification
Section 2-418 of the General Corporation Law of the State of Maryland
provides that the Registrant may indemnify its directors, officers,
employees and agents. Article Twelfth of the Registrant's Articles of
Incorporation and Article VII of the Registrant's By-Laws provide that the
Registrant shall indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to any action, suit or
proceeding by reason of the fact that such person or such person's testator
or intestate is or was a director, officer or employee of the
- --------------------
2 Filed with Pre-Effective Amendment No. 1 to this Registration Statement on
July 21, 1995.
4 Filed with Pre-Effective Amendment No. 3 to this Registration Statement on
September 13, 1995.
5 Filed with Post-Effective Amendment No. 2 to this Registration Statement
on November 3, 1995.
6 Filed with Post-Effective Amendment No. 3 to this Registration Statement
on January 16, 1996.
7 Filed herewith.
c - ii
<PAGE>
PART C. OTHER INFORMATION (continued)
Registrant, provided that no representative of the Registrant shall be
indemnified to the extent liability results from misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of such representative's office.
Insofar as indemnification for liabilities 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 the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant for 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, 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 as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The Registrant maintains or intends to obtain, subject to availability and
the determination of the directors as to the reasonableness of insurance
premiums from time to time, insurance insuring its officers and directors
against certain liabilities incurred in their capacities as such, and
insuring the Registrant against any payments which it is obligated to make
to such persons under the foregoing indemnification provisions.
c - iii
<PAGE>
PART C. OTHER INFORMATION (continued)
The Restated Certificate of Incorporation of AIG (the "Certificate")
provides:
"The Company shall indemnify to the full extent permitted by law any
person made, or threatened to be made, a party to an action, suit or
proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that he, his testator or
intestate is or was a director, officer or employee of the Company
or serves or served any other enterprise at the request of the
Company."
Section 6.4 of AIG's By-laws contains a similar provision.
The Certificate also provides that a director will not be personally liable
to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that such an exemption
from liability or limitation thereof is not permitted by the Delaware
General Corporation Law (the "GCL").
Section 145 of GCL permits indemnification against expenses, fines,
judgments and settlements incurred by any director, officer or employee of
AIG in the event of pending or threatened civil, criminal, administrative
or investigative proceedings, if such person was, or was threatened to be
made, a party by reason of the fact that he is or was a director, officer
or employee of AIG. Section 145 also provides that the indemnification
provided for therein shall not be deemed exclusive of any other rights to
which those seeking indemnification may otherwise be entitled. In addition,
AIG and its subsidiaries maintain a directors' and officers' liability
insurance policy.
Item 28. Business and Other Connections of Investment Adviser
AIG Capital Management Corp. (Manager)
AIG Capital Management Corp. is a U.S. registered investment advisor which
manages the assets of the AIG Money Market Fund, a separate money market
investment portfolio of The Advisors' Inner Circle Fund. The Advisors'
Inner Circle Fund is an open end investment company that is registered
under the Investment Company Act of 1940. Current total assets under
management by the Manager is approximately $300 million.
c - iv
<PAGE>
PART C. OTHER INFORMATION (continued)
The officers and directors of the Manager are:
<TABLE>
<CAPTION>
OFFICER/ NAME OF
DIRECTOR BUSINESS/ TIME
NAME ADDRESS CAPACITY PERIOD
AIG CAPITAL MANAGEMENT CORP.:
<S> <C> <C> <C>
Robert L. Ash AIG Capital Management Corp. Chairman/Director 3/95 to
Present
AIG Asset Management, Inc. Chairman of the 3/95 to
70 Pine Street Board/Director Present
New York, NY 10270
William N. Dooley AIG Capital Management Corp. Director 6/94 to
Present
AIG Global Investment Corp. (Europe) Director/ 3/88 to
Ltd. Present
1/11 Harbour Yard
Chelsea Harbour
London SW10 OXD, United Kingdom
American International Group, Inc. Treasurer 7/92 to
70 Pine Street Present
New York, NY 10270
AIG Asset Management, Inc. Treasurer 8/92 to
70 Pine Street Present
New York, NY 10270
David T. Goss AIG Capital Management Corp. Vice Chairman 2/95 to
and Director Present
Ronald A. Latz AIG Capital Management Corp. Director 6/94 to
Present
Helen Stefanis AIG Capital Management Corp. Director 3/95 to
Present
Daniel K. Kingsbury AIG Capital Management Corp. Director/President 3/95 to
Present
c - v
<PAGE>
PART C. OTHER INFORMATION (continued)
AIG Equity Sales Corp. Vice President 4/95 to
70 Pine Street Present
New York, NY 10270
AIG Asset Management, Inc. Director/President 3/95 to
70 Pine Street Present
New York, NY 10270
Win J. Neuger AIG Asset Management, Inc. Chief Investment 8/95 to
70 Pine Street Officer Present
New York, NY 10270
AIG Capital Management Corp. Chief Investment 8/85 to
Officer Present
American International Group, Inc. Senior Vice President 2/95 to
70 Pine Street Present
New York, NY 10270
AIG Global Investment Corp. Director/Chairman of 3/95 to
200 Liberty Street the Board/Chief Present
New York, NY 10281 Executive Officer
Linda-Ann S. AIG Capital Management Corp. Executive Vice 8/95 to
Goodwin President Present
Edward J. Lieber AIG Capital Management Corp. Vice President 6/94 to
Present
John H. Blevins AIG Capital Management Corp. Vice President 3/95 to
Present
Compliance Officer 12/94 to
Present
AIG Asset Management, Inc. Vice President 3/95 to
70 Pine Street Present
New York, NY 10270
Compliance Officer 5/94 to
Present
c - vi
<PAGE>
PART C. OTHER INFORMATION (continued)
Neil Friedman AIG Capital Management Corp. Vice President/ 3/95 to
Comptroller Present
Lori Carrick AIG Capital Management Corp. Assistant Comptroller 3/95 to
Present
Elizabeth M. Tuck AIG Capital Management Corp. Secretary 6/94 to
Present
AIG Global Investment Corp. Secretary 3/91 to
200 Liberty Street Present
New York, NY 10281
AIG Asset Management, Inc. Secretary 6/92 to
70 Liberty Street Present
New York, NY 10270
AIG Equity Sales Corp. Secretary 4/91 to
70 Pine Street Present
New York, NY 10270
</TABLE>
AIG Global Investment Corp. (Europe) Ltd.
AIG Global Investment Corp. (Europe) Ltd. ("AIG Global Europe"), based in
London, is an investment advisor registered with the Investment Management
Regulatory Organization Limited. AIG Global Europe provides fixed income
and international equity management services primarily to AIG and its
subsidiaries, but also provides investment advisory services to third
parties including two registered investment companies as described below.
AIG Global Europe has entered into a sub-advisory agreement with an
affiliate, AIG Asset Management, Inc. (a U.S. registered investment
advisor), which in turn has entered into a sub- advisory agreement with
SunAmerica Asset Management Corp. to provide foreign equity investment
expertise to the SunAmerica Global Balanced Fund, a registered investment
company.
AIG Global Europe has also been retained by Alliance Capital Management
L.P. to act as sub- advisor to the Global Bond Portfolio, a separate
portfolio of Alliance Variable Products Series Fund, Inc., a registered
investment company.
Current total assets under management by AIG Global Europe exceeds $2.9
billion of which approximately $1 billion represents third party assets.
c - vii
<PAGE>
PART C. OTHER INFORMATION (continued)
The Officers and Directors of AIG Global Europe are:
<TABLE>
<CAPTION>
OFFICER/ NAME OF
DIRECTOR BUSINESS/ TIME
NAME ADDRESS* CAPACITY PERIOD
AIG Global Investment Corp. (Europe) Ltd.:
<S> <C> <C> <C>
Ian P. Butter AIG Global Investment Corp. Director 1/92 to
(Europe) Ltd. Present
Patrick J. Dempsey AIG Global Investment Corp. Director 3/88 to
(Europe) Ltd. Present
William N. Dooley AIG Global Investment Corp. Director 3/88 to
(Europe) Ltd. Present
AIG Capital Management Corp. Director 6/94 to
70 Pine Street Present
New York, NY 10270
American International Group, Inc. Treasurer 7/92 to
70 Pine Street Present
New York, NY 10270
AIG Asset Management, Inc. Treasurer 8/92 to
70 Pine Street Present
New York, NY 10270
Siegfried Herzog AIG Global Investment Corp. Director 3/88 to
(Europe) Ltd. Present
Lynda A. Loomes AIG Global Investment Corp. Secretary 11/94 to
(Europe) Ltd. Present
Edward E. Matthews AIG Global Investment Corp. Chairman/Director 3/88 to
(Europe) Ltd. Present
American International Group, Inc. Director 3/73 to
70 Pine Street Present
New York, NY 10270
Vice Chairman 5/89 to
Present
c - viii
<PAGE>
PART C. OTHER INFORMATION (continued)
AIG Equity Sales Corp. Director 5/87 to
70 Pine Street Present
New York, NY 10270
AIG Global Investment Corp. Director 12/85 to
200 Liberty Street Present
New York, NY 10281
Stephen C. Penney AIG Global Investment Corp. Director 3/93 to
(Europe) Ltd. Present
Peter G. Wignall AIG Global Investment Corp. Director 4/92 to
(Europe) Ltd. Present
Ian M. Coulman AIG Global Investment Corp. Director 4/95 to
(Europe) Ltd. Present
Win J. Neuger AIG Global Investment Corp. Director 4/95 to
(Europe) Ltd. Present
American International Group, Inc. Senior Vice President 2/95 to
70 Pine Street Present
New York, NY 10270
AIG Global Investment Corp. Director/Chairman of the 3/95 to
200 Liberty Street Board/Chief Executive Present
New York, NY 10281 Officer
AIG Capital Management Corp. Chief Investment Officer 8/95 to
70 Pine Street Present
New York, NY 10270
AIG Asset Management, Inc. Chief Investment Officer 8/95 to
70 Pine Street Present
New York, NY 10270
</TABLE>
* Address of AIG Global Investment Corp. (Europe) Ltd. is 1/11 Harbour Yard,
Chelsea Harbour, London SW10 OXD, United Kingdom.
c - ix
<PAGE>
PART C. OTHER INFORMATION (continued)
AIG Global Investment Corp.
AIG Global Investment Corp. is a U.S. registered investment advisor that
provides domestic asset management services primarily to AIG and its
subsidiaries, but also provides investment advisory services to third
parties (none of which, except for series of AIG All Ages Funds, Inc., are
registered investment companies). As of December 31, 1994 total assets
under management exceed $20.9 billion of which approximately $2.9 billion
represents third party assets.
The Officers and Directors of AIG Global Investment Corp. are:
<TABLE>
<CAPTION>
OFFICER/ NAME OF
DIRECTOR BUSINESS/ TIME
NAME ADDRESS CAPACITY PERIOD
AIG Global Investment Corp.
<S> <C> <C> <C>
Edward E. Matthews AIG Global Investment Corp. Director 12/85 to
200 Liberty Street Present
New York, NY 10281
American International Group, Inc. Director 3/73 to
70 Pine Street Present
New York, NY 10270
Vice Chairman 5/89 to
Present
AIG Global Investment Corp. (Europe) Director/Chairman 3/88 to
Ltd. Present
1/11 Harbour Yard
Chelsea Harbour
London SW10 OXD, United Kingdom
AIG Equity Sales Corp. Director 5/87 to
70 Pine Street Present
New York, NY 10270
Petros K. AIG Global Investment Corp. Director 3/92 to
Sabatacakis 200 Liberty Street Present
New York, NY 10281
American International Group, Inc. Senior Vice President 2/92 to
70 Pine Street Present
New York, NY 10270
Robert E. Sherby AIG Global Investment Corp. Vice President/ 12/93 to
200 Liberty Street Chief Financial Officer Present
New York, NY 10281
c - x
<PAGE>
PART C. OTHER INFORMATION (continued)
Win J. Neuger AIG Global Investment Corp. Director/Chairman of 3/95 to
200 Liberty Street the Board/President Present
New York, NY 10281
AIG Global Investment Corp. (Europe) Director 4/95 to
Ltd. Present
1/11 Harbour Yard
Chelsea Harbour
London SW10 OXD
American International Group, Inc. Senior Vice President 2/95 to
70 Pine Street Present
New York, NY 10270
AIG Capital Management Corp. Chief Investment 8/95 to
70 Pine Street Officer Present
New York, NY 10270
AIG Asset Management, Inc. Chief Investment 8/95 to
70 Pine Street Officer Present
New York, NY 10270
Robert B. Meyer AIG Global Investment Corp. Senior Vice President 12/94 to
200 Liberty Street Present
New York, NY 10281
Robert Morello AIG Global Investment Corp. Senior Vice President 1/93 to
200 Liberty Street Present
New York, NY 10281
Thomas Lanza AIG Global Investment Corp. Vice President 1/95 to
200 Liberty Street Present
New York, NY 10281
Brian McCarthy AIG Global Investment Corp. Vice President 3/94 to
200 Liberty Street Present
New York, NY 10281
Kerry O' Sullivan AIG Global Investment Corp. Vice President 5/94 to
200 Liberty Street Present
New York, NY 10281
c - xi
<PAGE>
PART C. OTHER INFORMATION (continued)
David B. Pinkerton AIG Global Investment Corp. Vice President 9/89 to
200 Liberty Street Present
New York, NY 10281
Managing Director 2/95 to
Present
Harry P. Rekas AIG Global Investment Corp. Vice President 4/93 to
200 Liberty Street Present
New York, NY 10281
Delia M. Thompson AIG Global Investment Corp. Vice President 10/93 to
200 Liberty Street Present
New York, NY 10281
Director of Operations 2/95 to
Present
Richard Thompson AIG Global Investment Corp. Vice President 12/85 to
200 Liberty Street Present
New York, NY 10281
Peter Tierney AIG Global Investment Corp. Vice President 5/90 to
200 Liberty Street Present
New York, NY 10281
Robert M. Troyano AIG Global Investment Corp. Comptroller 12/93 to
200 Liberty Street Present
New York, NY 10281
Elizabeth M. Tuck AIG Global Investment Corp. Secretary 3/91 to
200 Liberty Street Present
New York, NY 10281
AIG Capital Management Corp. Secretary 6/94 to
70 Pine Street Present
New York, NY 10270
AIG Equity Sales Corp. Secretary 4/91 to
70 Pine Street Present
New York, NY 10270
c - xii
<PAGE>
PART C. OTHER INFORMATION (continued)
AIG Asset Management, Inc. Secretary 6/92 to
70 Pine Street Present
New York, NY 10270
Steve Ruoff AIG Global Investment Corp. Portfolio Analyst 2/95 to
200 Liberty Street Present
New York, NY 10281
</TABLE>
Item 29. Principal Underwriters
AIG Equity Sales Corp. also acts as a principal underwriter for:
1. AIG Life Insurance Company, as depositor on behalf of Variable
Account I and Variable Account II; and
2. American International Life Assurance Company of New York, as
depositor for Variable Account A and Variable Account B.
The Officers and Directors of the Distributor are:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Distributor with Registrant
<S> <C> <C>
Michele L. Abruzzo President None
80 Pine Street and Director
New York, NY 10005
Kevin N. Clowe Vice President None
70 Pine Street and Director
New York, NY 10270
Florence A. Davis General Counsel and None
70 Pine Street Director
New York, NY 10270
Kenneth F. Judkowitz Treasurer & Comptroller None
80 Pine Street
New York, NY 10005
c - xiii
<PAGE>
PART C. OTHER INFORMATION (continued)
Edward E. Matthews Director None
70 Pine Street
New York, NY 10270
Jerome T. Muldowney Director None
One Chase Manhattan Plz.
New York, NY 10005
Robert J. O'Connell Director None
80 Pine Street
New York, NY 10005
Julia Perlman Assistant Vice None
80 Pine Street President, Officer
New York, NY 10005
Daniel K. Kingsbury Vice President President
70 Pine Street
New York, NY 10270
Philomena Scamardella Vice President and None
80 Pine Street Compliance Officer
New York, NY 10005
Ernest E. Stempel Director None
70 Pine Street
New York, NY 10270
Elizabeth M. Tuck Secretary Assistant Secretary
70 Pine Street
New York, NY 10270
Karen F. McDonald Assistant Secretary None
70 Pine Street
New York, NY 10270
</TABLE>
c - xiv
<PAGE>
PART C. OTHER INFORMATION (continued)
Item 30. Location of Accounts and Records - All accounts, books and other
documents 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
will be maintained by the following:
AIG Capital Management Corp., 70 Pine Street, New York, New York 10270
(records relating to its function as investment adviser).
PFPC International Ltd., 80 Harcourt Street, Dublin, Ireland (records
relating to its functions as Administrator).
PNC Bank, National Association, Airport Business Center, International
Court 2, 200 Stevens Drive, Lester, Pennsylvania 19113 (records relating to
its function as Custodian).
AIG Equity Sales Corp., 80 Pine Street, New York, New York 10005 (records
relating to its function as Distributor).
Item 31. Management Services - None not discussed in the Prospectus or
Statement of Additional Information for the Registrant.
Item 32. Undertakings
The Registrant (a) undertakes to file a post-effective amendment
under the Securities Act of 1933 with financial statements as of a
reasonably current date, that may be unaudited, of the AIG Retiree
Fund - 2003 within four to six months after the date on which the
AIG Retiree Fund - 2003 commences selling its shares to the public,
and (b) if requested to do so by holders of at least ten percent of
its outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the removal of a director or directors and to
assist in communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.
c - xv
<PAGE>
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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, the State of New York, on the 14th day
of February, 1996.
AIG ALL AGES FUNDS, INC.
By: /s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, in the
capacities indicated, on February 14, 1996.
Signature Title
* Chairman of the Board and Director
Roger Wickers
* Director
Robert Ash
* Director
Paul Friedman
* Director
Linda-Ann S. Goodwin
* Director
Charles Vinick
/s/ Daniel K. Kingsbury President (principal
Daniel K. Kingsbury executive officer)
* Treasurer (principal financial and
J. Fergus McKeon accounting officer)
*By: /s/ Daniel K. Kingsbury
Daniel K. Kingsbury
As Attorney-in-Fact
c - xvi
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the First Global Equity Portfolio has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, the
State of New York on the 14th day of February, 1996.
FIRST GLOBAL EQUITY PORTFOLIO
By: /s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, in the
capacities indicated, on the 14th day of February, 1996.
Signature Title
* Chairman of the Board and Trustee of First
Roger Wickers Global Equity Portfolio
* Trustee of First Global Equity Portfolio Robert Ash
* Trustee of First Global Equity Portfolio
Paul Friedman
* Trustee of First Global Equity Portfolio
Linda-Ann S. Goodwin
* Trustee of First Global Equity Portfolio
Charles Vinick
/s/ Daniel K. Kingsbury President (principal executive
Daniel K. Kingsbury officer) of First Global Equity Portfolio
* Treasurer (principal financial and
J. Fergus McKeon accounting officer) of First Global Equity
Portfolio
*By: /s/ Daniel K. Kingsbury
Daniel K. Kingsbury
As Attorney-in-Fact
c - xvii
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-registrant AIG Capital Management Corp. has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York, the State of New York on the 14th day
of February, 1996.
AIG CAPITAL MANAGEMENT CORP.
By: /s/ Daniel K. Kingsbury
Daniel K. Kingsbury
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 indicated, on the 14th day of February, 1996.
Signature Title
* Chairman of the Board and Director of AIG
Robert L. Ash Capital Management Corp.
* Director of AIG Capital Management Corp.
William N. Dooley
* Director of AIG Capital Management Corp.
Ronald A. Latz
* Director of AIG Capital Management Corp.
Helen Stefanis
/s/ Daniel K. Kingsbury Director and President of AIG Capital
Daniel K. Kingsbury Management Corp.
* Vice President and Comptroller (principal
Neil Friedman financial and accounting officer) of AIG
Capital Management Corp.
*By: /s/ Daniel K. Kingsbury
Daniel K. Kingsbury
As Attorney-in-Fact
c - xvii
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-registrant American International Group, Inc. has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of New York, the State of New York on the
14th day of February, 1996.
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Edward E. Matthews
Edward E. Matthews
Vice Chairman
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 indicated, on the 14th day of February, 1996.
Signature Title
* Chairman and Director (Principal Executive
M.R. Greenberg Officer) of American International Group, Inc.
/s/ Edward E. Matthews Vice Chairman and Director (Principal Financial
Edward E. Matthews Officer) of American International Group, Inc.
* Executive Vice President and Comptroller
Howard I. Smith (Principal Accounting Officer) of American
International Group, Inc.
* Director of American International Group, Inc.
M. Bernard Aidinoff
* Director of American International Group, Inc.
Lloyd M. Bentsen
* Director of American International Group, Inc.
Marshall Cohen
* Director of American International Group, Inc.
Barber B. Conable Jr.
* Director of American International Group, Inc.
Martin Feldstein
* Director of American International Group, Inc.
Houghton Freeman
c - xix
<PAGE>
* Director of American International Group, Inc.
Leslie L. Gonda
* Director of American International Group, Inc.
Carla A. Hills
* Director of American International Group, Inc.
Frank Hoenemeyer
* Director of American International Group, Inc.
John I. Howell
* Director of American International Group, Inc.
Dean P. Phypers
* Director of American International Group, Inc.
John J. Roberts
* Director of American International Group, Inc.
Ernest E. Stempel
* Director of American International Group, Inc.
Thomas R. Tizzio
*By: /s/ Edward E. Matthews
Edward E. Matthews
As Attorney-in-Fact
c - xx
<PAGE>
EXHIBIT INDEX
A complete list of exhibits is included in Part C, Item 24(b) of the
Registration Statement. The following exhibits are filed herewith:
Sequentially
Numbered
Exhibit Page
(10)(d) Opinions and consents of counsel with respect to the
Guarantee and the Support Agreement relating to the AIG
Retiree Fund - 2003.
(11) Consent of independent auditors.
c - xxi
<PAGE>
February 15, 1996
American International Group, Inc.
70 Pine Street
New York, New York 10270
AIG All Ages Funds, Inc.
70 Pine Street
New York, New York 10270
AIG Capital Management Corp.
70 Pine Street
New York, New York 10270
RE: AIG Retiree Fund - 2003
Ladies and Gentlemen:
As special Delaware counsel, we have been requested by
American International Group, Inc., a Delaware corporation (the
"Parent"), and AIG Capital Management Corp., a Delaware
corporation (the "Manager"), to render this opinion with respect
to certain matters of Delaware law relating to that certain
Guarantee Agreement (the "Guarantee"), by and between the Manager
and AIG All Ages Funds, Inc., a Maryland corporation (the
"Company") on behalf of AIG Retiree Fund - 2003, a series of the
Company (the "Fund"), substantially in the form attached as
Exhibit 9(g) to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A of the Company as filed with
the Securities and Exchange Commission ("SEC") on November 3,
1995 (the "Form N-1A"), and that certain Support Agreement (the
"Support Agreement") by and among the Parent and the Manager,
12892.1\320992
<PAGE>
American International Group, Inc. February 15, 1996
AIG All Ages Funds, Inc. Page 2
AIG Capital Management Corp.
substantially in the form attached as Exhibit 9(h) to the Form N-
1A.
In rendering this opinion, we have examined and relied upon
the following documents: (a) the Guarantee; (b) the Support
Agreement; and (c) the Form N-1A. (All the foregoing documents
shall be herein referred to as the "Reviewed Documents"). For
purposes of rendering this opinion, we have not reviewed any
other documents.
With respect to the Reviewed Documents, we have assumed and
relied upon the authenticity of all documents submitted to us as
originals, the conformity with the originals of all documents
submitted to us as copies or forms, the genuineness of all
signatures, the legal capacity of natural persons and that the
Reviewed Documents, in the forms submitted to us for our review,
have not been and will not be altered or amended in any respect
material to our opinion as stated herein. In rendering this
opinion, we have relied as to factual matters solely upon the
Reviewed Documents, the representations, statements and
information set forth therein, and the additional matters recited
or assumed herein, all of which we assume to be true, complete
and accurate in all material respects. All terms used herein,
other than those defined or the definition of which is otherwise
referred to herein, are intended to have the meaning set forth in
the Guarantee and Support Agreement.
This opinion is based upon the application of the General
Corporation Law of the State of Delaware, 8 Del.C. Ch. 1 (the
"DGCL") and Delaware contract law to the matters set forth below
which, in our experience, are the laws of Delaware normally
applicable to such matters. We have not been requested to and do
not opine as to the applicability of the laws of any other
jurisdiction.
For the purposes of rendering the opinions hereinafter
expressed, we have made the following additional assumptions:
(a) The Parent and the Manager are each corporations
duly organized, validly existing and in good standing under
the laws of the State of Delaware;
(b) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Maryland;
12892.1\320992
<PAGE>
American International Group, Inc. February 15, 1996
AIG All Ages Funds, Inc. Page 3
AIG Capital Management Corp.
(c) Each of the parties to the Guarantee has all
requisite corporate power and authority to execute and
deliver the Guarantee, to perform its respective obligations
thereunder and to consummate the transactions contemplated
thereby, and has taken all requisite corporate action
necessary to authorize its execution and delivery of the
Guarantee and the performance of its obligations thereunder.
(d) Each of the parties to the Support Agreement has
all requisite corporate power and authority to execute and
deliver the Support Agreement, to perform its respective
obligations thereunder and to consummate the transactions
contemplated thereby, and has taken all requisite corporate
action necessary to authorize its execution and delivery of
the Support Agreement and the performance of its obligations
thereunder.
(e) Neither the Guarantee nor the Support Agreement
conflicts with the terms of any other agreement to which the
Parent, Manager or the Company is a party and, other than
the Reviewed Documents, no document or agreement exists
between any party to the Guarantee or Support Agreement and
any other person or entity that would restrict or preclude
the performance by the parties to the Guarantee or Support
Agreement of the transactions contemplated by the Guarantee
or Support Agreement;
(f) There is no action, suit or proceeding, at law or
in equity, before or by any court, governmental authority or
arbitrator, pending or threatened against the parties to the
Guarantee or Support Agreement in any jurisdiction, wherein
an unfavorable decision, ruling or finding would adversely
affect the enforceability of the transactions contemplated
by the Guarantee or the Support Agreement;
(g) The parties to the Guarantee or Support Agreement
shall seek to enforce their respective rights thereunder
only in good faith and only in circumstances and in a manner
in which it is commercially reasonable to do so; and
(h) The Guarantee is necessary and convenient to the
conduct, promotion or attainment of the business of the
Manager.
Our opinion is subject to the following qualifications:
12892.1\320992
<PAGE>
American International Group, Inc. February 15, 1996
AIG All Ages Funds, Inc. Page 4
AIG Capital Management Corp.
(i) We express no opinion as to the effect on the
parties' respective rights under the Guarantee or Support
Agreement of any statute, rule, regulation or other law or
any court decision which becomes effective after the date of
this opinion. This opinion is rendered, and speaks only, as
of the date hereof, and we assume no obligation to advise
you of any change, whether or not material, that may be
brought to our attention at a later date with respect to the
matters described herein.
(ii) We express no opinion as to the effect of rules of
equity governing specific performance, injunctive relief or
other equitable remedies or involving the exercise of
judicial discretion in any proceedings at law or in equity.
(iii) We express no opinion on the rights of the parties
to the Guarantee or Support Agreement under any applicable
bankruptcy, receivership, insolvency, reorganization,
liquidation, moratorium, fraudulent conveyance or other laws
affecting the rights and remedies of creditors generally
from time to time in effect, the judicial imposition of an
implied covenant of good faith and fair dealing, public
policy or the discretion of any court as to the enforcement
of remedies.
(iv) We express no opinion with respect to any
provision contained in the Guarantee or Support Agreement
which purports to limit the parties' ability to waive,
modify, terminate or amend the Guarantee or Support
Agreement except in writing.
Based upon the foregoing, subject thereto and in reliance
thereon, we are of the opinion that, under Delaware law:
1. Upon the due execution and delivery of the
Guarantee by the parties thereto, the Guarantee will
constitute a legal, valid and binding agreement of the
Manager, enforceable against the Manager in accordance with
its terms.
2. Upon the due execution and delivery of the Support
Agreement by the parties thereto, the Support Agreement will
constitute a legal, valid and binding agreement of the
Parent and the Manager, enforceable against the Parent and
the Manager in accordance with its terms.
12892.1\320992
<PAGE>
American International Group, Inc. February 15, 1996
AIG All Ages Funds, Inc. Page 5
AIG Capital Management Corp.
This opinion is limited to the matters of Delaware law
stated herein and no opinion is implied or may be inferred beyond
the matters expressly stated. We do not purport to represent
the Company, the Fund, shareholders of the Fund or other
potential investors in the Fund or the Company. The opinions
expressed herein may be relied upon only by the Fund, the
Company, the Manager and Parent. Without our express prior
written consent, the opinions expressed herein may not otherwise
be used, circulated or quoted. Notwithstanding the foregoing,
you may deliver a copy of this opinion to the Securities and
Exchange Commission and include it in any filings with the
Securities and Exchange Commission or rely on it in connection
with any opinion you render with respect to the Fund. In giving
the foregoing consents, we do not admit that we are within the
class of persons required to consent under Section 7 of the
Securities Act of 1933, as amended, and the Rules and Regulations
promulgated thereunder. We do not otherwise consent to the use
of our name or opinion in any other document or for any other
purpose except as may be required by law.
Very truly yours,
JHS/EOH/TAM
12892.1\320992
AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
Telephone: (212) 770-7000
LINDSAY GLICKMAN HOLLISTER Telephone: 212 770-6852
Associate General Counsel Facsimile: 212 785 1584
February 15, 1996
AIG All Ages Funds, Inc.
70 Pine Street
New York, New York 10270
American International Group, Inc.
70 Pine Street
New York, New York 10270
AIG Capital Management Corp.
70 Pine Street
New York, New York 10270
Dear Ladies and Gentlemen:
In connection with Post-Effective Amendment No. 4 to
the Registration Statement on Form N-1A (File No. 33-91174) of
AIG All Ages Funds, Inc., a Maryland corporation (the "Company"),
AIG Capital Management Corp., a Delaware corporation (the
"Manager") and American International Group, Inc., a Delaware
corporation ("AIG"), which is expected to be filed under the
Securities Act of 1933, as amended, with respect to an indefinite
number of shares of Capital Stock of the Company, par value $.001
per share, of the series designated as AIG Retiree Fund - 2003
(the "Fund"), I, Associate General Counsel of American
International Group, Inc., have examined such corporate records,
certificates and other documents, and such questions of law, as I
have considered necessary or appropriate for the purposes of this
opinion.
Upon the basis of such examination, I advise you that,
in my opinion:
(a) The Manager and AIG are each corporations duly
organized, validly existing and in good standing under
the laws of the State of Delaware.
(b) The Manager and AIG each have all requisite
corporate power and authority to execute and deliver
the Guarantee Agreement, dated February 15, 1996,
between AIG Capital Management Corp. and AIG All Ages
Funds, Inc. (the "Guarantee Agreement") and the Support
Agreement, dated February 15, 1996, between American
International Group, Inc. and AIG Capital Management
Corp. (the "Support Agreement"), in the case of the
Manager, and the Support Agreement, in the case of AIG,
and to perform their respective obligations thereunder.
(c) Each of the Manager and AIG have taken all
requisite corporate action necessary to authorize the
execution and delivery by the Manager of the Guarantee
Agreement and the Support Agreement, and by AIG of the
Support Agreement, and the performance of their
respective obligation thereunder.
The foregoing opinion is effective only as of the date
set forth above and is limited to the General Corporation Law of
the State of Delaware, and I am expressing no opinion as to the
effect of the laws of any other jurisdiction.
I have relied as to certain matters on information
obtained from public officials, officers of the Manager and AIG
and other sources believed by me to be responsible.
I hereby consent to the filing of this opinion as an
exhibit to the Post-Effective Amendment referred to above. In
giving such consent, I do not thereby admit that I am in the
category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended.
Very truly yours,
Lindsay Hollister
Associate General Counsel
LH/rdw
620
COOPERS & LYBRAND
Letterhead
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post Effective Amendment No. 4 to
the Registration Statement of AIG All Ages Funds, Inc. on Form N-
1A (File No. 33-91174) (the "Registration Statement") of our
report dated September 11, 1995 on our audit of the financial
statement of First Global Equity Portfolio, and we consent to the
incorporation by reference in the Registration Statement of our
report dated February 23, 1995 on our audit of the financial
statements of American International Group, Inc. which is
included in the Annual Report on Form 10-K of American
International Group, Inc. for the year ended December 31, 1994.
We also consent to the reference to our Firm under the heading
"Other Information - Accountants" and "Financial Statements of
First Global Equity Portfolio" in the Statement of Additional
Information which is part of the Registration Statement.
COOPERS & LYBRAND L.L.P.
New York, New York
February 15, 1996
